Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 11 August 2018.
Susan and Gordon have been in a relationship for 20 years.
Susan has two children to a previous relationship.
When Susan dies, her will makes provision for Gordon by way of an indexed annuity of $52,000 per year.
This means that Susan’s executors must pay Gordon one thousand dollars per week for the rest of his lifetime. This amount is adjusted in-line with CPI.
Susan’s children receive the rest of her estate.
Gordon owns a house valued at $300,000, has approximately $300,000 in superannuation and $150,000 in savings.
When Gordon becomes aware that Susan’s estate is worth approximately $5 million, he makes a claim against her estate.
Gordon says that he should receive a lump sum of $2 million and that the annuity alone is not “proper and adequate”.
Susan’s two children earn modest incomes and have no significant assets.
The court notes that there is no general rule that a widower should be deserving of more favourable treatment than the deceased’s children.
The court further notes that a person’s right to make a will should not be interfered with unless that right has been abused.
In the circumstances, the court orders that the terms of the will provide Gordon with provision that is adequate for his proper maintenance and dismisses his claim.
The court also ordered that Gordon, as the unsuccessful party, must pay the legal costs of the whole of the proceedings, which exceeded $150,000.
This case demonstrates that payment of an annuity under a will can be an effective way of making proper provision for a beneficiary.
This case is also a reminder that there are significant risks and uncertainties involved in litigation of this nature.
If you would like Manny to address a particular legal issue, send your request to manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
