Trusts / Asset Planning

Making a will – Estate considerations when you’ve already helped your children financially

That parents provide for their children is inherent in the parent-child relationship, and sometimes continues even as children reach adulthood. Parents with more than one adult child must often assess the merits of helping children at different times and in different ways, with outcomes that cannot be readily equalised or compared. These considerations may be at the forefront of your mind when making a will. In the High Court case of Ware v Reid & Ors [2019] NZHC 506 Dunningham J addressed this issue where the four adult children of a farming couple had each been helped into farm ownership during their parents’ lifetimes. The parents then sought to equalise this financial assistance as between their children in their respective wills.

When the children’s father passed away, he excluded the eldest child (D) from his will because he believed she had already benefited from the purchase of a family farm on favourable terms. The father also left half of his estate to another child (H), again because he believed she had received the least amount of assistance during her parents’ lifetimes. While the father’s decisions caused some family tension, no formal legal steps were taken at that time. Some years later the mother passed away, leaving D a nominal sum of $30,000 from what was an estate of almost two million dollars. H also benefited under her mother’s will, receiving approximately $405,000. The remaining two siblings received approximately $743,000 each. Both D and H brought claims under the Family Protection Act 1955, asserting that their mother breached her moral duty to treat them equally as compared to their siblings. D abandoned her claim, but H continued, claiming that the disparity in her mother’s provision for her warranted the intervention of the Court. The Court noted issues with the scope of the evidence, and the limits of its ability to weigh up family transactions and assistance that sometimes cannot be readily quantified.

While H pointed to what she believed were her parents’ intentions, the Court focused on the Family Protection Act 1955 and whether the mother had made adequate provision for H’s maintenance and support, in circumstances where she was not in financial need. In the years since the mother had made her will, property transactions within the family had also changed the position.

While H’s claim for further provision from her mother’s estate ultimately failed, the family circumstances outlined by the Court highlight the importance of ensuring that when making your will, you consider any prior financial assistance provided to your children and the basis on which you are dividing your estate. We recommend a written record of the reason for your decisions is left with your will, if your estate is being distributed unequally. In some situations, it may be appropriate to include a clause in your will outlining the financial assistance provided to each child during your lifetime and stipulating that these sums are to be deducted from that child’s share of your estate.

Turning your mind to these issues can be difficult but doing so can prevent or minimise the corrosion of family relationships, and the costly litigation that can result.

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