Battle of wills is costly and rarely delivers
There's nothing quite so grubby and unseemly as adult children battling over the last will and testament of a parent but such bitter skirmishes are constantly being fought through the courts.
A will, properly done, is no guarantee against a legal challenge from a family member who feels they have not been left a fair slice of the family wealth.
But courts tend to respect the wishes of testators to leave their wealth to whomever or whatever they wish, as long as they have not breached their “moral duty” to family members (for example entirely excluding one of three children without good reason or promising to leave something to a carer and then not doing so) or have failed to provide adequately for young children.
September is Public Trust's designated Wills Month. To underline the importance of wills, the Sunday Star-Times has scoured court files to see what lessons may be learned from this year's will-related wrangles.
While relatively few people die intestate, it does appear a fair number of wills are made in people's dying days, often varying earlier wills as they ponder how they want to dispose of their worldly wealth.
While it's always tempting to draw conclusions from a limited number of cases, it is hard not to theorise that wills drawn up in dying days are more likely to be challenged under the notion the writer lacked mental capacity, or that they were more susceptible to undue influences.
But while these challenges may be costly to the estate - and enriching to lawyers - case law shows that mere unfairness will not be overturned by the courts, and that courts will only do the minimum needed to remedy any “breach of moral duty”.
And, to quote one judgment, just because a judge “sitting in the testator's armchair” might see the matter differently, does not mean they should rewrite a will.
Leaving it late
A Temuka resident died in April of leukaemia before he had time to sign the will he was making.
In such cases the High Court must rule the will to be the valid testamentary intentions of the deceased, which in this case was relatively easy. In other cases documents existed which show development towards a will, which made the court's job harder. There is a time and legal cost in cases like these, and a risk the court won't recognise the “will”. A number of such cases came up this year. In one, the will was a series of notes found on the kitchen table. In another it was an email from a man just before he committed suicide.
Late will challenged by aggrieved son
A woman made her will while terminally ill in a hospice. It was only two weeks after the death of her husband of 50 years. In the will she left nothing to one son, preferring other family members.
This estranged son, who did not acknowledge his mother while filing past the casket at his father's funeral, challenged the will.
The challenge failed in the High Court as there were plenty of witnesses to the woman's mental capacity but it does appear that leaving it late may increase the chance of a will being challenged and that brings costs.
A good will can be challenged
Testators cannot be sure their will won't be challenged even if they make small bequests to recognise their moral duties to all their issue and justify their decisions in writing - something Public Trust asks testators to do. This tends to include citing the help given to family members in life. In one case a woman left most of her wealth to her granddaughter, who she had raised and who had looked after her later in life.
The woman's two sons chose to challenge the will, which left one nothing (he had been helped financially in his parents' lives and had later squabbled over money with his mother) and the other a token amount. The brothers lost the legal tussle.
Mother cut out of daughter's will
One case involved the unusual situation of a mother seeking to have the will of her daughter altered. The daughter, dying of cancer, changed her will as she neared death, leaving all her money to friends, the Cancer Society and the hospice that was caring for her. The mother, included in a previous will, alleged her daughter lacked the mental capacity to make a will and also that “undue influence” had been brought to bear on her by a friend who inherited from the will. The allegations were backed by no evidence. Besides, the daughter had shown she had thought about her mother in notes stating that her mother was now financially independent.
Getting the sums right
In life a testator helped his son buy the family farm. When he died, his son's debts were forgiven, thereby passing the farm entirely to his son.
The residual estate was then to be split among his other two children, both daughters.
That meant the daughters got much less than the son, whose farm they believed was now worth about $10 million in part due to significant capital gains.
The daughters challenged the will but the court said they could not maintain there had been a moral breach as both were left sums of about $300,000, even though there was written evidence the testator and his wife understood they put in place "arrangements which would give our three children an approximate equal share of our estates”.
Unfortunately, their desires were not achieved in the legal documents. It appears the testator's professional advisers may not have done a good job.
The capital gain issue
A woman living in a posh part of Auckland was struggling to manage on NZ Super. One of her two daughters bought a half share in the house. The other only found this out when her mother's estate was being distributed by the sister who had bought the half share, who was also the estate's only executor.
The aggrieved daughter felt not only had her sister got half the house for a song before the Auckland housing boom but some of the money had been put by their mother into maintaining the house, adding to its value.
In addition, the mother got a reverse mortgage, meaning there was still less to inherit. There may be an argument for the mother having given both daughters a chance to buy part shares and greater financial openness might have saved family relations. But the court saw no reason to remove the sister as executor nor any reason to alter the will.
Bad choice of executors
The High Court removed all three executors of a will because after nearly four years they had not distributed the estate due to conflict. They were two brothers and a sister, all apparently highly qualified and experienced.
Conflicts of interest by the brothers were found to be significant but the court also decided to remove the sister as executor for fear conflict would continue. It appointed Guardian Trust as executor.
Care needs to be taken in naming executors. It may seem a good idea to have the major beneficiaries do it but if they are conflicted - in this case both brothers owed money to the family trust at the centre of the estate - an independent executor may be the sensible way to go.
One case this year involved the divvying up of about $350,000 in assets in a trust which was “overlooked” when a man's estate was distributed in 2003.
Happily, the family worked out a deal for distributing the assets and the court agreed. That shows families do not have to fight over significant sums of money but, as always, the lawyers get paid first.
A man who challenged his parents' will, in which he was left $70,000 of their $400,000 estate, got nothing more despite claims he deserved a half share.
The man had Asperger's Syndrome but the judge decided the abusive way he treated his parents was only partly a result of the syndrome. The judge found the parents had treated the man well but that he had been abusive - documents were quoted in the judgment including one telling his parents to "f... off out of my life" - and that the relationship had been a “one-way street”. They had also given him $50,000 to pay off debts before they died and while they had considered cutting the son out of the will entirely, they had not. They had not, therefore, failed in their moral duty to him.
Kids, treat your parents well.
Sunday Star Times