Mar 1, 2016

It’s a battle of wills when estates are contested

An innocuous looking letter in the post rent Kim Pearce’s life asunder, precipitating what she describes as a “year of hell” that fractured her relationship, destroyed her family and led to doses of antidepressants. “I’d known them for 30 years and never imagined they were nasty,” she says of the person who out of the blue decided they wanted a stake in her aunt’s estate. “Their true colours showed once there was money involved.”
Kim’s animal-loving aunt Shirley left her a two-bedroom cottage “with a beautiful garden” in rural Chewton, Victoria, valued at more than $300,000, on the proviso she bought the house for a nominal sum and gave the proceeds to the RSPCA. “Her dying wish was also that I look after her dogs,” says Kim, 36.
After moving her two sons and partner to live in Chewton, near Castlemaine, Kim unexpectedly found herself in a bitter dispute with a friend of her aunt’s.
The matter ended up in a court-ordered mediation and Kim says the stress became so intense she agreed to walk away with $80,000, of which half went to lawyers and a small amount to the RSPCA. The friend got the house and its contents.
“Everything was fine. Then I suddenly got a letter in the post which said he was taking me to court,” she says. “I had no idea it was coming or what was going on. I was devastated.”
While the property boom and compulsory superannuation laws have increased our national wealth, it has also contributed to an increase in disputes over wills in the past decade, which are up by 52 per cent in NSW and 73 in Victoria.
Families from every strata and postcode find themselves dragged into the mire of money squabbles, from Kim Pearce to Shari-lea Hitchcock, Richard Pratt’s long-term mistress, and, in a previously unreported case, former AFL Hawthorn president Andrew Newbold, whose mother did not leave a will.
Modest family homes worth a small fortune in today’s market and super nest eggs become a battleground as bickering middle-aged kids tear each other apart in the pursuit of money. “They treat it like a game of monopoly,” says high-profile estate barrister Shane Newton. He says estates become war zones as perceived childhood slights and suspicions of favouritism come to the fore. Lies are told; flesh and blood turns against each other.
Blended families complicate vexed questions of entitlement. Throw in a new partner and a couple of extra kids, step or otherwise, and the mix can be explosive.
“I often feel like an expensive therapist,” says Ken Collins, principal of leading estate firm Wills & Probate Victoria, a practitioner in the area for 32 years.
“In many ways it’s bad, if not worse, than an ugly divorce,” says Slater and Gordon’s Rod Cunich.
Newbold, the wealthy former president of the Hawthorn football club, widely touted as the next chairman of the AFL Commission, is embroiled in a dispute with his brother and stepfather over his mother’s estate. Newbold, who unexpectedly resigned as Hawthorn president earlier this month, and his brother Richard, are battling to prevent his stepfather from securing a larger portion of his mother’s $500,000 estate. She left no will when she died. The skirmish has yet to play out in Victoria’s Supreme Court.
Cunich, head of Slater and Gordon’s wealth protection and estate and planning division, says a “hell of a lot more deceased estates” are worth challenging. “Ordinary working people who in the past would have died with not much are now dying with estates worth millions because of the family home,” he says.
Families splinter due to disputes that parents could have avoided if they had discussed the contents of their wills. He doesn’t sugar-coat advice to clients bent on devaluing one child’s share to favour another. “I bluntly ask them if they want to be remembered by the hand grenade they’re about to drop on their family.
“I tell them the hand grenade will go off and cause a hell of lot of damage and it won’t mean anything to them because they’ll be dead. A destroyed family is going to be their only legacy.”
Often parents think only about the financial settlement they are leaving their kids rather than the emotional minefield, Collins says.
“It’s so sad and it becomes generational. Brothers and sisters stop talking to each other, so their kids don’t engage or socialise and the family just fractures. All because of some perceived slight.”
There are no national estate laws and each state Supreme Court has to approve the distribution of assets through the granting of probate. If no will exists, the court issues Letters of Administration that enable division of the estate.
“Eligible” persons are defined under different statutes in each state. In Victoria, challenges to wills under the family provision, generally referred to as “Part IV” of the legislation, increased by 73 per cent between 2004-05 and last June. In NSW, disputes generally referred to as “Family Provision Disputes”, increased by 52 per cent in the past seven years.
Fifteen years ago, the probate division of the Victorian Supreme Court didn’t exist but it is now one of the busiest jurisdictions in the country. Marilyn Warren, Chief Justice of Victoria, puts growth down to a mix of “social factors” that include higher divorce rates, changing families and the brutal fact that wealth is increasing.
Victoria’s runaway statistics are partly driven by legislation that did not limit disgruntled parties. A person simply had to prove the will-maker had a moral obligation to make adequate support.
NSW legislation is much tighter, reducing claimants to spouses, children, stepchildren and a specified category of others who can prove financial dependence.
The previous Victorian legislation was long-criticised for its lack of restrictions on claimants. It was mostly open slather by people other than spouses or children who sought to argue they had been a substantial part of the will-maker’s life. These outliers included grandchildren, nieces and nephews, foster kids, step-kids and long-time carers.
But the breadth of the Part IV categories, despite long-running criticisms of it, hit home in 2014 when former Victorian president of the National Party and Kennett government minister William Baxter found himself in a dispute with his younger brother over their father’s estate. Donald Baxter, an internationally renowned AIDS campaigner and Order of Australia recipient, challenged the $50,000 left to him after the death of their father.
The family’s dirty laundry was aired in the Victorian Supreme Court and Donald was eventually awarded $350,000.
It was the timing that raised eyebrows across the legal community. William Baxter and then Liberal Attorney General, Robert Clarke, were known to be friends. It was no secret in the corridors of power that William Baxter was infuriated that his younger son dared make a claim on his father’s estate. At the same time, Clarke was redrafting the law to restrict who can challenge a will.
His first draft, with the severe exclusions, did not make it through the state’s upper house, but the final draft did and came into force last year. It restricts anybody other than the children, spouse and former spouse of a will-maker from challenging a will, unless they can prove they were wholly dependent on the will-maker. Clarke refused to confirm if he had discussions with Baxter, only saying “I’m afraid I do not have any information currently available to me that enables me to respond to your inquiries about this.”
Newton believes Victoria’s new laws are too restrictive and that they hinder meritorious claims by decent people. A sad case involved a boy who was sexually abused by his grandfather, who left everything to his wife. When she died, the grandmother excluded the grandson because of his abuse complaint to police.
“He was seriously damaged by the abuse and then damaged again by what the grandma said in the will,” Newton says. “He probably would not be able to make a claim now because a grandchild has to establish that he was dependent on the grandparent before he can claim.”
Another ugly trait estate lawyers see is early inheritance syndrome. They referee a growing number of cases, where impatient offspring bully ageing parents to liquidate assets, or transfer assets before they die so they, the children, can benefit earlier from the distribution of wealth they perceive as rightfully theirs.
“You would not believe what these siblings do to each other and their parents to get their hands on their money,” Newtown says.
“It’s hideous. There seems to be an element of the population who think that when it comes to money that there are no rules. There’s all this bullying and manipulation to get mum to leave so and so out, or transfer the house before she dies.”
Collins says financial abuse of the elderly is so common he has now taken to asking potential clients seeking counsel if their parent is even dead yet. “There are a lot of bullies in families. They bully people all their lives and even after they’re dead,” he says
Last Wednesday, federal ­Attorney-General George Brandis announced a formal inquiry into elder abuse, which affects as many as one elderly Australian in 10. Newton describes a case where a mother had a small farm unexpectedly valued at an exorbitant price. She was unwell and about a year before she died, one of her three sons persuaded her to transfer the property entirely to him, excluding his two bothers. The other brothers don’t find out about it until the mother died. “He got a hiding in court,” he says.
Disputes over wills and estates between the rich and famous are endlessly fascinating for the insights they offer into the grubbier side of human instincts. Last year, the long-term mistress of deceased Visy mogul Richard Pratt, Shari-lea Hitchcock, secretly settled her bitter multimillion-dollar court battle for a larger slice of her billionaire lover’s estate.
Pratt died in 2009 of prostate cancer and left most of his personal estate to his love-child with Hitchcock, Paula. Hitchcock waged a drawn-out battle against Pratt’s family. After the NSW ­Supreme Court rejected her direct claim for more than $60 million of Pratt’s property, she was forced to chase a slice of her daughter’s inheritance.
The larger the honey-pot, then the more bees can be expected to swarm. Pratt’s other former lover, Sydney escort Madison Ashton, also made a claim on the estate. That action also lost.
Another heated dispute involved the secret daughter of West Australian billionaire mining heir Michael Wright, who had split his $800 million fortune between his three children on his death. That was before the previously-unknown fourth child, Olivia Mead, stepped forward. In an ensuing court tussle with her older half siblings, Mead, who lived with her mother in a working-class suburb and drove a 1994 Toyota Corolla, was awarded $25 million.
Even the judiciary is not immune. Melbourne judge John Smallwood contested the will of his late mother in 2008, alleging his two sisters induced her to cut him out of her $1 million estate. That battle was played out in public and Smallwood’s sister, well-known Melbourne barrister Mary-Lyn Smallwood, told a court she would have been “stunned” if her brother had been made a beneficiary.
But it’s not only families getting drawn into will disputes. The legal regulators in Victoria and NSW say complaints about the lawyers who specialise in will and estate matters are growing. NSW Legal Services Commissioner John ­McKenzie says most of the complaints he receives relate to solicitors handling the wills of people whose faculties are questionable.
“We are seeing an increase in both the number of complaints against solicitors for their role in administering estates and acting for testators where there may be an issue as to the capacity of the testator”, he says.
“The best way I could put it is the percentage of such complaints out of our total is rising approximately 2 to 2.5 per cent a year for the last couple of years. So it’s not massive but it’s noticeable. It’s the only area (of complaints) that’s growing.”
He wants to put solicitors on notice that the trend is increasing and will be squarely on his radar in the future. “We’re seeing an increase in the number of allegations that lawyers have assisted their clients to make wills when they should have known better than to do so, because of the alleged incapacity of the person making the will. We want to have a good and thorough and level-headed analysis of the statistics.”
Victorian Legal Services Commissioner Michael McGarvie says complaints against solicitors over will and estate matters is the highest growing area by volume.
Kim Pearce still laments the bitterness that tore at her family from the moment her aunt’s will became the subject of a dispute. Her aunt’s dying wishes were never fulfilled and she regrets that she couldn’t keep her promises. “But when her dogs died, I had them cremated and scattered the ashes over her grave,” she says.
“I hope that went a little way to make up for it.”

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