In 2017, British television presenter and entertainer, Bruce Forsyth, passed away at the age of 89 years. According to media reports, he left an estate worth 17 million pounds to his third wife. He had 6 children, 9 grandchildren and 3 great grandchildren, but he reportedly left his entire estate to his third wife to avoid paying inheritance tax.
We don’t have inheritance tax in Australia, but this story begs an interesting question….would you leave your whole estate to one person and trust them to share the estate with the rest of your family?
As lawyers who practice in the area of contested estates, we’ve seen many examples of families falling apart over inheritance disputes, despite being close and getting along well for many years beforehand. There is always a risk in naming someone as a beneficiary and trusting that they’ll “do the right thing” and share the estate with others.
What if the trusted person fails to “do the right thing”?
Interestingly, there is a concept in wills and estates law known as “secret trusts” – where a person leaves their estate to someone in their will, having told the person they are to hold the estate for others. One option available to aggrieved relatives who may find themselves in this type of situation is to claim that a secret trust exists. Another option may be for the aggrieved relatives to make a “family provision claim” – but people can only make this type of claim if they fit within the definition of an “eligible person” and if they satisfy certain other criteria, such as having a financial need. (You can read more about family provision claims in our Information Sheet here).
So there may be legal avenues for the intended recipients, but if the named beneficiary decides to keep it all for themselves the onus will be on the intended recipients to take legal action and they need to be able to prove their case – for example in the case of a secret trust, it may be one person’s word against another – who will the Judge believe? There are always risks in legal action, and court cases can be long, drawn out and expensive.
Make your intentions clear
If you want to give your intended beneficiaries the best chance of receiving what you intend, you need to be clear in your will. There are many things to think about when making your Will. For example, are there sentimental items such as jewellery that you wish to leave to particular people? How can you make sure your assets are dealt with in a tax effective way? At what age do you want your beneficiaries to receive their inheritance? What if one or more of your intended beneficiaries predeceases you – where do you want their share to go? What if one of your beneficiaries isn’t capable of managing their inheritance themselves? There are just some things to consider and they are matters you should discuss with your estate planning lawyer when planning your will.
If you wish to discuss your will, or any other matters relating to your estate planning, please do not hesitate to contact our estate planning team on (02)4929 3995. Or for a quick and obligation free assessment of your situation click here.