March 05 2012
A recent case
Under the Family Protection Act 1955 (FPA), parents have a moral duty to provide in their Wills for their children’s maintenance and support. Provision need not be direct; in some circumstances support can be made through a trust – as a recent family court decision¹ shows.
Mrs S died in 2009. She was survived only by her adopted son BS. Mrs S’s Will made some modest gifts, including a $5,000 legacy to BS. The balance of her estate passed to the BDS Inheritance Trust, which had been established in 2008. Mrs S’s niece and Public Trust were the trustees. Mrs S’s niece retired following Mrs S’s death, leaving Public Trust as the sole trustee. The trust’s sole beneficiary was BS during his lifetime. On BS’s death four named charities would share the balance of the trust.
BS applied under the FPA for more money, claiming his mother failed to provide for his proper maintenance and support.
Mrs S’s estate
The estate comprised of approximately $385,000 in cash. With Public Trust’s approval, BS received approximately $67,000 from the estate before the case was heard. This sum covered various medical, legal and other expenses incurred by BS since his mother’s death. At the hearing the balance of the estate was approximately $318,000.
BS claimed he had a hard upbringing and left school early with no qualifications. He was a sickness beneficiary in his 50s and was unlikely to return to work. He lived in a Housing New Zealand house and had no significant assets.
He had a number of criminal convictions and had spent time in prison. BS acknowledged he was an alcoholic; however he maintained he had been sober for many years, apart from a relapse in 2008.
BS claimed his mother had failed to provide adequately for him from her estate, because he didn’t have direct control over the funds. He didn’t want a third party controlling what he saw as his inheritance.
Mrs S’s reasons
Mrs S had signed a letter of wishes recording that the trust was for the long term benefit of BS. She envisaged the trust would buy BS a home to live in and pay the outgoings for that property. She asked the trustees to help BS in living reasonably comfortably. Mrs S also made it clear that the trust’s distribution date was not to be brought forward. It was to be wound up on BS’s death.
There was also evidence that Mrs S was concerned about BS’s ability, given his past history, to make decisions and handle funds responsibly.
What the law says, and the decision
Under the FPA parents have a moral duty to provide for their children from their estate. The test is whether adequate provision has been made for the proper maintenance and support of the person making the application. If a breach of this duty is found, the court can only order support from the estate as is necessary to remedy that breach of duty; otherwise the Will should stand. The court cannot rewrite a Will merely because it’s unfair.
The judge found that BS was adequately provided for under Mrs S’s Will, as he was the only beneficiary of the trust during his lifetime. BS had already received substantial amounts from the estate before the case was heard. There was no suggestion that Public Trust, as the independent trustee, would not take BS’s interests into consideration.
Provision by parents on their deaths for children through a trust can satisfy the moral duty imposed on them by the FPA. As with many legal matters, however, each case will turn on its particular circumstances.
¹ BDS v Public Trust as executor of the estate of MJS FC AK FAM 2010-090-001974 [17 November 2011]