Yukio Hayashi 27 Nov 2018
Q: I have three children, and I am going to write a will that leaves my second son with no heritage. However, I heard that there is a Family Provision regime in Australia, similar to the Japanese mortgage system, and it may not be possible to remove the inheritance of a child no matter how the will is drafted. How can I avoid these possibilities?
A: The Family Provision states that "even if the will does not specify the right to inheritance, the deceased’s children and dependents have the right to inherit part of the estate." However, unlike the Japanese mortgage system, there is no clear distribution ratio, so it is necessary to determine what distribution is appropriate based on individual situations. In this regard, if an agreement is not reached at the consultation stage, the case would be brought before the court.
In determining the Family Provision, the court takes into account various factors such as individual circumstances and common sense.
Most of all, the Family Provision claim is likely to be accepted if the distribution of heritage described in the will is determined to be fair and equitable. In this regard, the reason why you do not want to leave an inheritance to the second son will be important. For instance, if you have reasons such as "I gave my second son a lot of money for my business" and "I gave him a down payment to buy a house,"the right of the second son to request the Family Provision is thought to be weaker. If there is such a reason, it is recommended that the reason be stated in a will or a separate sheet, and that it be preserved securely.
In addition, the smaller the total estates, the less likely the court will be to recognize Family Provision claims.
On the other hand, it is also possible to give the property to other children prematurely. However, it should be noted that non-cash gifts may give rise to a tax issue (including stamp duty). Also, when deciding how to distribute the Family Provision, prenatal gifts may be taken into account.
Life insurance at the time of death is not a legacy and will be passed on to the designated recipient separately from the inheritance process. Also, for superannuation, if you specify the recipient, the designated person can receive it without it becoming part of the inheritance. You can take advantage of these, but as with prenatal gifts, they can also be factored into the Family Provision distribution.
Ultimately, it is impossible to completely remove heirs who have Family Provision rights without objectively just and fair reasons.