will claims Archives | Edmonds Judd

Disinheriting your children

February 26, 2025

Estate, Kids, Property, Relationships, Trusts

Can it be done?

In New Zealand, people making wills have a great deal of freedom to dispose of their assets as they wish. If, however, a will-maker entirely excludes some close family members from their will, those people will often have claims against the will-maker’s estate.

In the recent case of what is known as the Alphabet case,^[1] an abusive father tried to use a trust to disinherit his children on his death.

Family Protection Act 1955

The Family Protection Act 1955 is designed to protect family members who have been excluded from a will or left without adequate provision. It allows certain groups of people (including spouses, partners and children) to claim against an estate for further provision.

The court follows a two-step approach when evaluating claims under the Act. First, it must decide whether the will-maker owed a duty to the claimant and, if so, whether that duty has been breached. Second, the court must consider what is required to remedy the breach.

The court takes a conservative approach in making awards for further provision. It will do no more than the minimum that it believes is necessary to address any breach of duty. There is no presumption of equal sharing between children, and the court will not rewrite a will based on its own perception of fairness. There is no formula, however, for assessing what is required to remedy a breach; each case depends on its own facts.

Important factors will include the size of the estate, the claimant’s personal circumstances and other competing claims (such as from siblings or a parent/stepparent). In many cases, however, a financially stable adult child might expect to receive 10–15% of a parent’s estate. That could increase if a child is in poor circumstances or has suffered abuse at the hands of their parent.

Making a successful claim

When a successful claim is made under the Act, the award will be paid from the deceased’s estate. That necessarily means that claims are limited by the size of the estate. If a will-maker has gifted or transferred assets to a trust during their lifetime, or to other people, their estate may have little or nothing left in it. This has the effect of preventing estate claims because there is no estate available.

In the Alphabet case, an abusive father transferred his assets into a trust. His children wanted to bring claims against his estate, but there was nothing in it. They argued that they should effectively be able to unwind the transfer of assets to the trust, so that those assets went back into their father’s estate, and they could bring claims under the Act. This case went all the way to the Supreme Court.

Alphabet case

In the Alphabet case, the deceased father was referred to as Robert, and his children as Alice, Barry and Cliff. Alice, Barry and Cliff experienced egregious abuse at Robert’s hands and, understandably, did not have a relationship with him.

Robert took deliberate action during his lifetime to transfer most of his assets to a trust. None of his children were beneficiaries of that trust.

Alice, Barry and Cliff argued that Robert owed them fiduciary duties as a parent, and that he breached those duties when he abused them. They argued that the abuse created an ongoing fiduciary obligation which Robert breached when he transferred his assets into a trust. They argued that the transfer of assets could (and should) be unwound on this basis, and Robert’s assets returned to his estate; this would allow them to make claims under the Act.

Fiduciary duties are duties to put someone else’s interests before your own. They usually arise in relationships of particular trust and confidence. The Supreme Court acknowledged the existence of fiduciary duties between a parent and a minor child, but it found that these duties ended when the parent’s caregiving responsibilities ceased. It did not agree that there remained a fiduciary duty owing later on which would prevent Robert transferring his assets to a trust.

The court noted that the Act does not contain any mechanism to ‘claw back’ assets which have been put in a trust or transferred to another person in order to avoid estate claims. It noted that this might be the subject of future law reform but it was not existing law.

Robert’s three children therefore failed in their attempt to bring assets back into Robert’s estate, on which they could then have made Family Protection Act claims.

Law Commission

The Law Commission recently prepared a comprehensive review of succession law. It proposed that some form of anti-avoidance, or ‘claw back’ provision, be included in any law reform efforts that would address situations such as the Alphabet case.

While the government has considered the Law Commission’s report, it has not yet taken any steps to progress law reform efforts. For the time being, this means trusts may continue to be used in order to prevent some potential estate claims, particularly those brought by children.

^[1] A, B and C v D and E Limited as Trustees of the Z Trust [2024] NZSC 161

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Copyright, NZ LAW Limited, 2022. Editor: Adrienne Olsen. E-mail: [email protected]. Ph: 029 286 3650

The plight of stepchildren

August 22, 2024

Estate, Kids, Relationships

Non-traditional family structures can result in unfair estate outcomes

When a parent dies and leaves their child or children out of their will, those children are entitled to bring a claim against their parent’s estate under the Family Protection Act 1955 (FPA). While a financially stable adult child may not have a claim to a large proportion of their parent’s estate, they will usually still have a claim for ‘recognition.’

The same is not true for children claiming against the estate of a stepparent.

Stepchildren are only entitled to bring a claim against the estate of a stepparent in very limited circumstances – usually when they are financially dependent on their stepparent at the date of their death.

This can become a real problem when a parent dies, leaving everything to their spouse or partner, who is trusted to make provision in their own will for their stepchildren, but fails to do so. Stepchildren are often left without a remedy, and this is an increasing source of perceived unfairness in a society where non-traditional family structures are becoming common.^[1]

How does the law respond?

When someone inherits all their partner’s property, but ultimately fails to provide for their partner’s children in their own will, those stepchildren typically must look for alternative ways to bring a claim against the estate of their stepparent, outside of the FPA. Commonly this includes two possible actions:

Making a mutual wills claim

Where the parent and stepparent originally had wills which left everything to each other, and then after the death of the second, made provision for each of their families, it might be argued that the wills were intended to be binding and that the stepparent was not intended to be able to change their will later on to leave out their stepchildren. If successful, a mutual wills claim would bind the stepparent’s estate to make the promised provision for their stepchildren.

The difficulty is often found in showing that there was an agreement between the parent and stepparent that the wills would not be changed. This may have been assumed, but it is rarely spoken about or expressed in writing. It can also be difficult when the stepparent clearly did not feel that they were bound by such an agreement.

Testamentary promise claims

Claims are sometimes brought under the Law Reform (Testamentary Promises) Act 1949. As the name suggests, these claims require some sort of promise to have been made. The stepchild will need to show that:

They rendered services to their stepparent
Their stepparent promised to reward them for those services in their will
The promise was motivated by the services, and
The stepparent failed to keep their promise in their will.

Difficulties often arise in showing ‘qualifying services.’ Normal things that one might do for a close family member, such as helping in their older age, will not usually qualify. While some stepchildren have successfully argued that they abstained from making a claim against their parent’s estate, and that was a service to their stepparent, many children don’t ever seriously think about making such a claim, so it is hard to make that out as a ‘service.’

Promises are often vague, and New Zealanders do not always like to talk about money.

Even where there are services, and a promise to reward, in many cases the promise is found to have been motivated by the close relationship rather than the services themselves.

It can be very hard to make a successful testamentary promises claim.

Case example

In a 2015 case,^[2] a child failed in several claims against his stepfather’s estate. The High Court said:

“While I have sympathy for the position Paul finds himself in, his personal claims against the estate appear to me to fall within the rock of the [Family Protection Act 1955] and the hard place of the [Law Reform (Testamentary Promises) Act 1949].”

There are also a variety of claims available to stepchildren such as a constructive trust, estoppel or unjust enrichment. These generally make similar arguments, but often fail for the same reasons as in the Blumenthal case.

Stepchildren often miss out because they wanted to do the right thing when their parent died, and they made the unfortunate decision to trust their stepparent to do the right thing later.

Will this change?

The Law Commission identified the plight of stepchildren in its 2021 Succession Review Issues Paper, but it did not propose any new avenue for stepchildren to bring claims against the estate of a stepparent, simply because they have ‘missed out’ on their parent’s estate.^[3]

Further, the law reform project has stalled, leaving things in a rather unsatisfactory position for stepchildren who are more and more commonly in this situation.

This situation for stepchildren highlights the continued importance of having proper estate planning arrangements in place – particularly for blended families. There can be a significant financial and emotional cost when these things are not discussed and addressed while both parents and stepparents are alive and capable.

^[1] The Law Commission noted in 2021 that only 7% of children lived from birth to age 15 in households containing only nuclear family members: Te Aka Matua o te Ture | Law Commission Review of Succession Law: Rights to a person’s property on death (April 2021, Wellington, NZIPC 46) at [1.15].

^[2] Blumenthal v Stewart [2015] NZHC 3187, affirmed on appeal.

^[3] Te Aka Matua o te Ture | Law Commission Review of Succession Law: Rights to a person’s property on death (April 2021, Wellington, NZIPC 46) at [4.70].