Family feuds can arise from disputes over inheritance, family businesses, relationship collapses, and superannuation death benefits claims. They are as old as time itself and increasingly common whether they are of the size and magnitude of a Gina Rinehart’s empire or a fight over Dad’s favourite wrist watch. Personal sensitivities, pride, jealously and greed all conspire insidiously over time to wipe to nought years of loving and memorable relationships with siblings, cousins, uncles and aunts. Failing to update a Will is a contributing reason why major disputes erupt. The house you Willed to your son/daughter years ago may have since been sold leaving the other child benefitted to the detriment of the other.
TERRIBLE TOLL: Evan Sarinas says children become enemies.
I recommend open and frank discussion with members of the family to avoid future family conflict from arising. I call this the “tough talk”. It’s the discussion every family has to have at some point about what is to happen to the family property or business in the event of death or illness. The “tough talk” is bound hurt some feelings but may save hundreds of thousands of dollars in legal fees in the event of a dispute. Sometimes problems arise when children aren’t dealt with evenly under a Will and the affected child may want to contest the Will. These disputes can turn very ugly as the dirty laundry of the family is aired for all to see. It is not uncommon to contend with allegations that the Parent was not of sound mind (especially if the Will was made just prior to death), or was unduly influenced or defrauded by another. Failure to document reasons for favouring one child over another can assist in the creation of these complexities.
To avoid these issues, documented explanations are sometimes necessary as well as ensuring the Will was made in accordance with the requirements of the law. The right to leave your property on death to whomever you choose is of fundamental importance to most Australians. However the courts have a wide discretion to make awards contrary to the express provisions contained in a Will in what are known as Family Provision Applications. A Family Provision Application is the most common type of challenge to a Will and can be brought where for example most property is left to one child and the others get little or nothing. Spouses or de facto spouses may also have a right to claim if they have been excluded from the Will. In a previous information release (The Black Sheep of the Family) I summarised the bizzare case of Keep v Bourke  NSWSC 88 where despite a 38 year estrangement between mother and daughter the court awarded the daughter $200,000. Failure to properly plan for business succession also leads to family problems and scapegoating. A child left with the responsibility of taking over the family business that ultimately fails may well lead to more disputation. On the other hand allegations of a child profiting at the expenses of others and greed accusations are also common. Sometimes the solution is to implement proper management mechanisms and allow all children to inherit the business so no issues arise about fair distribution.
The wealth of many Australians is invested in Superannuation. What happens to superannuation death benefits on death?Many are under the mistaken belief that the death benefits form part of the estate and can be disposed of in the Will. However that is not the case. Unless there is a valid Binding Nomination, the Trustees of the fund will have a discretion as to who will receive the death benefits. Binding Nominations need to be carefully drafted and executed in compliance with the terms of the trust deed and the law. An improperly executed or out of date binding nomination could be disastrous. A nomination given more than 3 years ago may be invalid.
This firm acted in an extremely complicated family dispute involving a secret deal done 20 years before the death of the father. The father gifted the 10 Million dollar family business, by way of transfer of shares to one of the children without the knowledge of the other children. The business owned much of the family real estate and investments. When the father died, there was much less left in the estate because the oldest child had already taken it 20 years before. The two younger children were disadvantaged. What ensued was a bitter dispute involving allegations of fraud, undue influence and complicity not only against the scheming child but also against the lawyers and accountants engaged in the original transaction. The case settled but could have been avoided with open and frank discussions and the “tough talk” that needed to be had 20 years before.
For more information please contact Evan Sarinas of Sarinas Legal Townsville.
This release is not intended as legal advice and all liability is disclaimed for reliance on it.
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