Hypothetical by Manny Wood published on 1 August 2020.
Eliza and Paolo are in their late twenties and have been married for three years. They have done quite well financially and are now looking to start a family.
With the protection of their future children in mind, they head to their nearest lawyer to discuss estate planning. Their lawyer suggests that they make Wills and enter-into mutual contracts not to change their Wills. They each create a Will giving their whole estate firstly to each other and then to their children after they both die.
Eliza and Paolo go on to have three children before Paolo is killed when a Foxtrot goes horribly wrong. As his Will states, his entire estate goes to Eliza, his surviving spouse.
Eventually, Eliza commences a loving relationship with a much younger man, Steve who has a young daughter Issy. Eliza worries about what would happen to Steve and Issy when she dies, knowing that under her original Will her whole estate is to go only to her children.
Eliza visits an Accredited Specialist in Wills and Estates who advises her of the pitfalls of contracts not to change a Will.
Firstly, as Eliza is aware, they do not allow adequate flexibility to deal with the unknowns of the future.
Secondly, they leave the estate open to Family Provision claims. Eliza is advised that Steve and his daughter, as Eliza’s dependents with minimal assets of their own, would not only be eligible to commence a claim, but would most likely be successful, at considerable cost to her estate.
Thirdly, if Eliza and Steve marry, the terms of the contract mean that although their marriage has the legal effect of revoking her previous Will, she would not be in breach of the contract because she has technically not changed her Will.
Finally, Eliza could dispose of her assets during her lifetime and her estate would not have sufficient assets to pay damages if her children were to attempt to enforce their rights under the contract.
If you would like a particular issue addressed, or you have friends or family that wish to subscribe and receive future Hypotheticals emailed to them, email me at manny.wood@ticliblaxland.com.au or call (02) 6648 7487.
Thank you to our junior lawyer, Jamie Visco for his input into this article.
