A Sydney court case over a will including multimillion-dollar properties in the harbourside suburb of Balmain has shone a spotlight on the rise in lawsuits filed by family members seeking a greater share of a deceased’s estate.
In a decision this year, NSW Supreme Court Justice James Hmelnitsky said a widow in her 70s should receive a larger slice of her late husband’s assets after he died in 2022 aged 87.
The Balmain properties at the centre of the NSW Supreme Court case are worth an estimated $6.8 million.Credit: Jamie Brown, Steven Siewert
The estate included three Balmain properties estimated to be worth $6.8 million: houses in Llewellyn Street ($2.5 million) and Little Darling Street ($1.8 million), and a mixed commercial and residential property in nearby Montague Street ($2.5 million).
The couple had lived at a semi-rural property at Razorback near Camden, estimated to be worth about $2.5 million. The entire estate was valued at more than $9 million.
The deceased’s wife of 40 years filed proceedings last year against the executor of his estate under NSW succession laws that allow spouses and children, among others, to seek a “family provision order” if inadequate provision has been made for them in a will.
The judge said it was “broadly accepted” by the couple’s three children and a son from his first marriage, who were also beneficiaries, that the deceased had made “insufficient provision” for his widow by leaving her about 18 per cent ($1.7 million) of the distributable estate.
The will directed that three of the deceased’s children – his son and the couple’s two daughters – should each inherit one of the Balmain properties, accounting for individual shares of between 19 and 27 per cent.
The couple’s son was to receive one-third of the Razorback property, equivalent to 9 per cent of the estate, with the remaining two-thirds to be given to the widow.
‘Just and equitable’
The judge concluded the widow should receive a $2.7 million share of the estate. He found the most “just and equitable” outcome would be for the son from the deceased’s first marriage to bear most of the burden of the additional provision.
That son had been left the Montague Street property in the will, but Hmelnitsky raised the prospect that he could swap that for the two-thirds interest in the Razorback property.
Two of the three Balmain properties are located in Llewellyn and Montague streets.Credit: Steven Siewert
The judge said this option “does the least violence to the overall scheme of the will”, which did not contemplate the Balmain properties being sold. The widow and the couple’s two daughters had “particular sentimental reasons” for wanting to keep those properties in the family, he said.
The only way the estate could be administered without selling the Balmain properties was “if some or all of the beneficiaries are willing to put the estate in funds to make further provision for [the widow] … and to help meet administration costs”, he said. One daughter told the court she would be willing to borrow up to $500,000 to pay to the estate.
The judge has yet to make final orders.
Rise in cases
The number of family provision cases filed in the NSW Supreme Court has increased steadily over the past 20 years, from 655 in 2005 to 968 last year. More than 1000 cases were filed in 2016, before the figures dropped slightly. Some cases settle before trial.
‘Explosion of Sydney property prices’
Michael Tiyce, principal of Sydney law firm Tiyce & Lawyers, said the judgment “shows the human face of these cases” and it was a “great example” of a judge considering the complex needs of families in arriving at a decision.
Family provision orders helped “ameliorate what can be harsh decisions made” in a will, Tiyce said, but the court would give effect to the wishes of the deceased to the fullest extent possible.
Tiyce said a “convergence” of factors had helped drive the boom in family provision claims, including “the absolute explosion of Sydney property prices” and generational wealth transfers as older Baby Boomers died.
“There’s actually more money for people to be having fights about,” he said. But Tiyce warned lawyers needed to be cognisant of the cost to the estate of running the cases, and potential adverse cost consequences for clients if they lost in court.
Tiyce said a good lawyer drafting a client’s will would ask whether they had made proper provision for their family, including children, grandchildren and de facto partners.
ALL IN THE FAMILY
- Under the NSW Succession Act, family members and others including former spouses of a deceased person may apply to the Supreme Court for a family provision order seeking a larger share of the deceased’s estate.
- The court must be satisfied that “adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made”.
- The judge may consider the size of the estate, the financial resources and needs of the applicant, any competing claims, and the relationship between the applicant and the deceased.
- In a decision this month, the court made a family provision order in favour of an adult son who had been estranged from his deceased father.
Lawyers might also help clients prepare what was known as a “Section 100 statement”, Tiyce said, which “essentially acts as evidence from the grave”. It might set out, for example, that no provision was made for a child in a person’s will because they had already bought them a home.
An executor may need to use that document in court in the future.
“They’re really, really useful documents when people are drafting wills,” Tiyce said.
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