Why are people allowed to challenge a Will? Shouldn't people be allowed to leave their assets to however they want to?
Generally, when there is a valid Will, this is how an estate is dealt with. The Courts do acknowledge 'freedom of testation' – being that people should generally have the right to decide how their assets are distributed upon their death – and this is interfered with only when good cause is shown.
The policy behind allowing a challenge is essentially that sometimes people are unreasonable, and make decisions that are objectively considered to be unfair. There is also a public policy issue about a Willmaker not providing financial assistance to a family member who is reliant on taxpayer funding, such as unemployment or disability pensions.
For example, if Sarah has a son who is a multi-millionaire and a daughter who has a disability, is struggling to find housing, and is completely reliant on a disability support pension, it would not seem fair for Sarah to give all of her assets to her son, and leave her daughter nothing.
It can be very frustrating for people who find themselves in situations where they do believe the Will is fair, but someone has lodged a claim anyway. The legal system does not have a quick or inexpensive process for 'weeding out' whether a claim is reasonable or not, so the legal costs involved in the argument may sometimes compel a settlement even when it doesn't feel deserved.
In order to try to limit these frustrating scenarios, the law does limit who can claim for provision from an Estate (that is, who can challenge a Will). The definition of who is eligible to claim is different between states, but in general terms it will include a spouse, domestic partner, children (including adult children), member of the household, and financial dependent.
Who could challenge my Will?
Situations often arise where someone brings a claim for better provision from a deceased person’s estate – in other words, they contest the will. Such claims are also commonly referred to as “Part IV claims” or “Testator Family Maintenance claims”.
A person may wish to contest a Will for any number of reasons. For example, they may believe the Will is invalid, or think they were unfairly treated in the Will.
Victoria’s approach to eligibility has changed over time. Currently, Victoria uses a category- based system, and the following conditions must be satisfied by the applicant to become eligible for a claim:
- There must be responsibility of the deceased person to provide for the applicant, for example, a dependent under the age of 18; and
- The provision for the maintenance and support of the applicant, after the distribution
of the deceased person’s estate, must be insufficient.
- relationship between the applicant and the deceased person;
- responsibility of the deceased to provide for the applicant;
Additionally, the court also considers the following while making decisions in the case of such applications:
- size of the estate;
- financial needs of the applicant;
- applicant’s contributions in building up the estate.
Can someone still challenge a Will if they have received a benefit?
In Victoria, in general, a Will can be challenged by a domestic partner, child, financial dependent or member of your household if they consider that they have not received enough financial support from a Will. Some people think if they leave a gift of $1 to someone in a Will, this will prevent them from challenging. This is not correct in Victoria.
For example, if Brian has three children, and gives his eldest child 60% of his Estate, the youngest one 30% and the middle child 10%, the middle child may feel this is unfair and, depending on their circumstances, may decide to claim for more of the Estate. However, if we consider that the eldest and middle children are both financially comfortable and gainfully employed, but the youngest child has always lived with Brian, has no assets, and has a disability meaning they cannot work and need significant care, it is possible that the youngest child may need more than the 30% of the Estate, which would likely have, in usual circumstances, been considered a fair share.
It is very important to discuss a potential claim with an experienced legal professional, as there can be significant costs involved in taking an unreasonable position when lodging or defending a claim.
What happens if I challenge a Will? Is it very expensive?
The process of challenging a Will is fairly standard. The first step is to discuss with a lawyer whether you are an eligible person, and to determine the strength of your claim. If, after you have received advice about your position, you decide to continue with the challenge, an Originating Motion is lodged on your behalf with either the Supreme Court of Victoria or the County Court of Victoria. We will advise which Court is more appropriate, depending on the circumstances of the Estate.
In most cases, the challenge needs to be lodged with the Court within six months from Probate being granted. This may be extended in some cases if the assets have not been distributed.
There is a fee payable to the Court when you lodge the Originating Motion, along with a Certification of Proper Basis and Overarching Obligations. Generally, the fee for bringing the proceeding is approximately $750, unless you hold a health care card and are eligible for a concession. This cost is payable up front by the person bringing the claim, and is separate from the fees charged by the lawyer for preparing the documents.
Once the Originating Motion has been lodged, a date is set for what is called a 'Directions Hearing'. This is essentially when the timeline for the case is set out. You do not need to go to Court for the Directions Hearing. No witnesses are heard – it is an administrative session.
After the Directions Hearing, Orders are provided which outline when certain things need to happen. Usually, the person bringing the claim will need to provide either an affidavit or position statement detailing why they don't feel the Will was fair, and then the Executor of the Will or Defendant(s) do the same.
Once each party has had the opportunity to review the other side's position, a mediation or judicial settlement conference will take place, providing the opportunity to negotiate and settle the matter. There are various costs along the way, and each proceeding is different, but as a general rule of thumb, you may expect that each party's costs by the end of the mediation would be around $30,000.
In an Estate claim, most matters are successfully negotiated during the mediation or settlement conference, or fairly shortly afterwards. However, if the matter progresses to trial, it is likely to be expensive. You may expect costs in the vicinity of $80,000 for each side – more if the trial runs over a few days, there are multiple parties or the matter is otherwise complex.
At Burke & Associates, we have successfully negotiated matters without even lodging an Originating Motion, and many more in the early stages before mediation. We also have significant experience with estate litigation trials, where matters have not settled prior.
In each matter, we are mindful of the importance of reviewing the ongoing risks and potential commercial benefits at each stage of the process. It is our role to guide you through the litigation process, and to ensure that you understand the options, and relevant potential costs, risks, and benefits of each potential option at every stage, to enable you to make the best decision for your particular circumstances.
I am thinking of challenging a Will. Do you do 'No Win, No Fee'?
At Burke & Associates, our priority is to maximise the financial benefit our clients end up receiving from the Estate – whether you are a beneficiary defending your position in a Will, or a person who has been excluded who is challenging the Will.
'No Win, No Fee' arrangements can put you at risk of not achieving the best outcome, for the following reasons:
- a) The legal fees are often higher than they would be with a standard costs engagement, as law firms may imbed an additional fee levy to offset the potential risk of not getting paid;
- b) A 'Win' is generally considered to be an offer of settlement, and if the lawyer recommends that the offer be accepted but the client refuses, this can negate the 'No Win, No Fee' arrangement such that the fee becomes due. Additionally, this can lead to issues of conflict (including conflict of interest) between the lawyer and the client.
In Estate litigation matters, the process is generally focussed on settlement, and an estimated 96% of all Estate litigation matters do settle before trial. In general, when these matters settle, the legal costs of all parties are paid from the Estate.
Even in cases which do progress to trial, it is not uncommon for the costs to be borne by the Estate. As such, the majority of people involved in estate litigation do not end up out of pocket for legal expenses. Of course, it's important to understand that there is always a risk that the legal costs will not be borne by the Estate, however this is a matter for discussion on a case by case basis.
Although we do not offer 'No Win, No Fee' arrangements per se, we are happy to discuss the option of holding over our fees until the matter has been finalised and to liaise with our barrister instructed in the matter to seek a similar position with respect to their fees. In most
cases, this has a similar impact to a 'No Win, No Fee' arrangement, as the legal fees are payable when the funds are released from the Estate and the matter is over. However, the fundamental difference is that the fees are payable regardless of the outcome of the litigation.
I don't get along with the other people involved in the Estate. Do I have to see them if I challenge the Will?
If you think you may have a claim against an Estate, the first step is to seek advice from an experienced lawyer. One of the benefits of having legal representation is that your lawyer will liaise with the other parties (or their lawyers) on your behalf, and you do not need to be directly involved in the conversations.
In general, your lawyer will communicate on your behalf in relation to the lodging of the claim, and will appear on your behalf at the First Directions Hearing. Any preliminary negotiations will also be undertaken by your lawyer on your behalf.
In most cases, an estate claim will involve a mediation or judicial settlement conference. All parties must be present at this conference, and usually it commences with a joint session. Only the lawyers and the mediator speak in this joint session, but some people still find it very uncomfortable to be present, and to have to see the other party. In some situations, the level of discomfort is so intense that the lawyers agree beforehand not to have the joint session. This is a matter to discuss with your lawyer, so that you can decide whether or not a joint session is worthwhile, or something you can emotionally handle.
If the matter settles at this stage, you will not need to see or speak with the other parties again. If not, then you may encounter them at the trial. If your matter goes to trial, and you do not want to see the other parties, let your lawyer know, and they can take steps to minimise the contact that you will have with one another. In some cases, it is possible to give written evidence, and not be required to attend the trial.
I feel that I have a claim, but I'm worried a dispute will cause problems with my family. What should I do?
This is a valid concern. In most cases, litigation does cause, or contribute to, relational issues between the parties. It is important to carefully consider your position, and make a decision about what is most important to you. If you feel that the relationship between yourself and other family members is a priority, you may decide that the pursuit of a claim for further provision from an estate is not worthwhile. However, in many cases we find that the relationship between parties is already relatively strained, or even hostile, before a claim commences. In those cases, a person may feel there is nothing to lose by bringing the claim.
In any case, it is worth discussing your position with a lawyer experienced in the area of estate litigation. Once you have determined the strength of your claim and the likely outcome, you are at least in a better position to decide whether or not it is worthwhile to proceed, and to make an informed decision about the best way forward.
I need immediate access to money from the Estate. Can I receive a payment before a dispute is resolved?
The Executors of an Estate have a discretionary power to make interim (part) distributions from funds in an Estate at any time. The issue is that, where there is a potential or actual dispute, to the extent that the person claiming a benefit from the Estate (the Plaintiff), or the legal fees involved in the battle, exceed the funds remaining in the Estate, the Executor may be held personally liable to pay these costs.
In practical terms, this means that an Executor is likely to be reluctant to make any payments to beneficiaries before the matter is settled. However, the decision may depend on the size of the Estate, and the risks involved. For example, if the Estate is valued at $5million, and the Will passes 100% of the Estate to the spouse of the deceased, and an estranged adult child makes a claim, the Executor may feel that it is quite 'safe' to make a small distribution to the spouse who is the beneficiary, as it is highly unlikely that they will end up with none of the Estate at the end of the dispute.
Similarly, if the Executor is the beneficiary, they may decide to make an interim distribution to themselves, knowing that they will have to refund the money to the Estate if the Plaintiff is successful and there are insufficient funds in the Estate to meet the value of their awarded benefit.
In general, though, if you are the beneficiary of an Estate, and the Executor is a third party, you are unlikely to receive a benefit until the dispute has been finalised.
I just found out that my parents left all their money to my sibling, and I have been left out. Can I challenge the Will?
This will depend on a number of factors, but timing is likely to be the most significant consideration in this case. You can't challenge a Will if your parents are still alive. If they've both passed away, then there is a timeframe for a possible challenge. This runs for six (6) months after Probate has been granted by the Supreme Court.
It is not uncommon for people to approach us years after the death of a parent, asking if they can contest the Will. Unfortunately, if the Estate has been distributed in accordance with the Will, and more than 6 months has elapsed since the Grant of Probate, it is highly unlikely that you will be able to challenge. Sometimes, though, the Estate may still hold assets. For example, if your parent died and left their partner with a life interest in the family home, the home may still be in the Estate years later. In this case, if you have the basis for a claim, you may be able to lodge an application to bring your claim outside of the usual time limit.
My sister was the Executor of my mother's Will, and distributed everything to herself as soon as Probate was granted. Can I do anything?
If you are named as the beneficiary of a Will, and the Executor has not distributed your share of the Estate to you, then they have breached their duties and you can take action against them.
If you were not named as a beneficiary, then you will need to obtain legal advice to determine whether you have a claim under Part IV of the Administration and Probate Act 1958 (Vic). If so, and the estate was distributed within six months after the Grant of Probate was issued, you still have the right to lodge a claim for provision. The Executor will be personally liable for any award made by the Court in this situation, including any legal costs awarded.
I don't think my parent had the capacity to make the Will. Is there anything I can do about this?
If a person makes a Will and does not have the mental capacity to do so, then the Will is not valid. You would need to be able to clearly demonstrate the lack of capacity, for example, by producing medical reports, test results and opinions. It is not enough to cite anecdotal evidence that indicate the person was confused. Even the fact that a person was under a VCAT Administration Order at the time the Will was made is not necessarily sufficient evidence that they lacked capacity to make a Will.
My sibling wrote a Will for my parent and got them to sign it. I'm sure the Will is not an accurate reflection of what my parent wanted to do. What do I do?
In some cases, a Will may be invalid on the basis of duress, or undue influence. These can both be extremely difficult to prove. Examples may include a person saying words to the effect of "If you want me to drive you to all your medical appointments, you should sign this Will", or to a parent living with them "I'm only going to be able to have you stay with me if you sign this". That is, when a person is made to feel that they really have no option but to sign a Will that they're not particularly happy with, it can be undue influence or even duress, and the Will can be invalid as a result. As you may expect, finding an appropriate level of proof in this type of situation can be a daunting task but if suspect this to have occurred, it may be helpful to get legal advice.
My Mum died a few months ago, and my uncle is the Executor. I still haven't received anything. Should I be concerned? How long does an Estate take to administer?
An Estate can often take 6-12 months to administer, and sometimes substantially longer. Ideally, an Executor should make contact with the beneficiaries of the will to let them know the process and the estimated timeframe. It can take up to 6 weeks after the death before a death certificate is issued. Once the death certificate has been obtained and all the information required about the nature and extent of assets has been identified, an application for Probate or Letters of Administration can be lodged. This generally takes around 3-4 weeks to be processed by the Supreme Court.
Once the Grant has been issued, this is sent to banks, share registries, aged care etc. and it may take 14-30 days for the funds to be released.
Therefore, in many cases, it may take up to 3 months before funds are released to the Estate even for straightforward estates.
It is also important to note that there is a period of 6 months after a Grant during which a person may make a claim with the Court for provision, or further provision, from an Estate. In most situations, Executors are advised not to make distributions within this timeframe, which is likely to mean around 9 months after the date of death.
There may be other reasons for delay – for example, there may be real property (a house) which needs to be sold, or there are private companies or trusts which need to be dealt with. In these cases, or if there is a challenge to (or issues with) the Will, the Estate may well take far longer to administer.
My friend made a Will but didn't sign it or have any witnesses. Is this a problem?
This may or may not pose a significant issue. If a Will is not signed, or if it is not witnessed, it does not conform to the requirements of a valid Will, and is not recognised by the Supreme Court as being a formal Will. However, in some cases a Will may be admitted to Probate as an Informal Will. This is basically a Will which is clearly intended by the deceased to have been their last Will, but has not been properly executed.
You will need to take the document in to a lawyer experienced with estate administration to determine the position.
How long does an Estate dispute take to run its course?
This depends very much on the circumstances of the case, and the personalities of the people involved. We have been involved in matters which settled quickly by negotiation between lawyers – some even prior to a formal claim being lodged; others shortly after. In the usual course of events, once a claim is lodged with the Court (which may be up to 6 months after the Grant of Probate is issued), it is likely to take around 6 months if the matter settles at mediation, and 12-24 months if a trial is involved before the matter is resolved.
Will I have to pay any costs if I lose?
You need to be prepared for the possibility that you will need to pay the costs of both your legal fees, and the other side's legal fees if you lose. However, this will depend significantly on how reasonable your claim was, and how you conduct yourself throughout the process. If the matter settles at any time during the course of the litigation – that is, you and the other side agree on a negotiated outcome – then in most cases your settlement will include some provision for your legal fees, and you will not need to pay the other side's legal fees.
Even if the matter does progress to trial, the Court will consider the most appropriate outcome for the payment of costs. If the Court can agree that it was not unreasonable for you to lodge the claim, and that you have been genuinely trying throughout the process to minimise the legal fees and achieve a settlement, then it is common for the Court to award costs be paid from the Estate, even if you are not successful in your claim. However, if the Estate is small, or the other side has significant financial need, or your claim is not considered to be reasonable, the Court has the power to order that you personally pay your costs, and may also order you to pay the other side's costs.
It is also important to note that, even if you are successful in your claim, in some situations your actual legal fees may exceed the costs awarded by the Court. For example the Court may order the Estate to pay you $20,000 and a further $20,000 towards your legal fees, but your actual legal fees may be $60,000. It is important to discuss your claim with a lawyer who has experience with estate litigation, and to be assessing the commercial viability of your claim throughout each state of the process.