In New Zealand, the Family Protection Act 1955 (FPA) enables adult children to bring claims for further provision from a parent’s estate. A claimant is not required to be in financial need and can be awarded further provision from his or her parent’s estate to recognise the claimant’s place in the family.
Claims under the FPA often arise in situations where a parent has left more under his or her will to one child than another. However, the court will not intervene in the terms of a will that is unequal or perceived to be unfair. The court will only intervene if the will-maker has breached his or her “moral duty” to provide for the proper maintenance and support of his or her children.
Section 4 of the FPA provides that where the deceased has not made “adequate provision” in his or her will for the “proper maintenance and support” of certain close family members, the court may order “any provision the court thinks fit” to be made for them out of the deceased’s estate.
This gives the court a discretionary power to intervene in the terms of a deceased’s will if it finds the deceased has breached his or her “moral duty” to provide for the proper maintenance and support of family members. What constitutes “proper maintenance and support” is interpreted broadly by the court. Support is interpreted more broadly than maintenance and includes “recognition of belonging to the family and of having been an important part of the life of the deceased”.[1]
The court draws a distinction between children who are in financial need or unable to support themselves and children who are not in any economic need. Children in financial need may bring a claim based on requiring maintenance whereas children who are not in need may only bring a claim based on support.
It is clear from case law that courts should take a conservative approach to assessing whether the provision made by the deceased is adequate. If the court finds there has been a breach of moral duty, the court will only intervene to the extent necessary to remedy the breach.[2]
Awards for claims based on support, rather than maintenance, will be relatively modest. It has been suggested that the quantum of these awards will usually be around ten per cent of the estate.[3]
However, the court must determine the amount of an award based on the circumstances of the particular case, having regard to the size of the estate and any competing claims. The amount required for proper maintenance and support in each case involves “a highly fact-specific inquiry within the context of the history and dynamics of each family”.[4] The court has emphasised that relying on a percentage-based calculation may be of limited usefulness.[5]
Where an estate is worth upwards of $10million, an award of ten per cent is likely to be at odds with the conservative approach of the court in awarding no more than is necessary to repair the breach of moral duty. There are few cases in New Zealand involving estates of over $5,000,000. In Talbot v Talbot [2017] NZCA 507, the Court of Appeal commented “it is hard to see how, in the circumstances prevailing in this case, an inheritance of just over $1 million is insufficient to adequately provide for [the claimant’s] proper maintenance and support”.[6] In Thurston v Thurston [2014] NZHC 2267, a son was left $200,000 from an estate of around $12.3million. The High Court awarded him a further $800,000, which meant he received a total of $1million from the estate.
It remains to be seen whether New Zealand courts would make an award much larger than $1million. In Australia, a family protection claim was recently made against an estate valued at around $1billion. In the first instance, the claimant was awarded $25million, but on appeal this was reduced to $6million.[7]
There is no presumption under the FPA that children should be treated equally. Disparity in itself is not sufficient to succeed in a claim under the FPA.[8] The court may only intervene where there has been a breach of moral duty and not where there is perceived “unfairness” or inequality in a will.[9] The court will not be concerned with achieving equality between siblings.
The recent High Court decision in Ware v Reid [2019] NZHC 506 demonstrates that a sense of perceived unfairness can arise due to differing treatment of the children during their parents’ lifetime, as well as through what they are left under a will.
In Ware v Reid, the applicant advanced her claim on the basis that her mother breached her moral duty to treat her four daughters equally. The applicant received significantly less than two of her sisters under their mother’s will. The applicant argued that she received less financial assistance during her parents’ lifetime and that the will exacerbated the inequality. The applicant relied on expert evidence regarding the value of gifts the daughters had received, adjusted for inflation.
The High Court held that the concept of moral duty is objective and is not defined by the testator’s intentions. Accordingly, any intention to provide for the daughters equally was not relevant. The will provided adequate provision for the claimant’s proper maintenance and support and therefore no award was made.
It is becoming more common for parents to provide financial support to adult children during their lifetimes, such as assistance with buying a first home. Such assistance can provoke feelings of unfairness and inequality among siblings, leading to FPA claims after their parents’ death. However, these claims will only succeed if there has been a breach of moral duty. Further, awards for adult children who are not in financial need are likely to be limited, even where an estate is large. As larger estates become more common, the upper limit of the awards that can be made to adult children not in financial need may be tested.
If you have any questions about this article, please contact the authors.
[1] Willliams v Aucutt [2000] 2 NZLR 479 (CA) at 492.
[2] Little v Angus [1981] 1 NZLR 126 (CA) at 127; Williams v Aucutt at 488.
[3] Richard Sutton and Nicola Peart “Testamentary Claims by Adult Children – The Agony of the ‘Wise and Just Testator’” (2003) OLR 385 at 409.
[4] AB v RT and ST [2015] NZHC 3174 at [22].
[5] At [22].
[6] Talbot v Talbot [2017] NZCA 507 at [62].
[7] Lemon v Mead [2017] WASCA 215.
[8] Willliams v Aucutt at 497.
[9] At 497.
Aria Newfield is a senior solicitor at Morris Legal. Prior to joining Morris Legal, Aria was a solicitor in the general litigation team at Russell McVeagh. Aria provides expert legal and strategic advice to private clients and charities on a diverse range of trust, estate and family law issues. Aria received her LLB and BA from the University of Auckland. Aria is a skilled advocate and has competed at a national and international level in debating. Contact Aria at aria.newfield@morrislegal.co.nz or connect via LinkedIn
Freya McKechnie is a solicitor at Morris Legal. Since joining Morris Legal, Freya has appeared in the Family Court as junior counsel in matters regarding the division of relationship property. Freya has also assisted with High Court and Court of Appeal litigation involving contentious trust claims and estate disputes. Contact Freya at freya.mckechnie@morrislegal.co.nz or connect via LinkedIn
You can also connect with Morris Legal via the firm’s website, Facebook