Losing a family member will be trying at the best of times, but when there is a dispute over the will things can quickly become quite messy. It is ideal to try to resolve estate disputes without going to Court as this will be cost-effective and provide more certainty around the outcomes.
In this article, we take a look at the types of estate disputes, what the mediation process looks like and why it is the preferred approach to resolving will disputes.
Types of disputes
The most common estate disputes our firm typically deals with are family provision claims. This is where somebody has been left out of a will or they have been included but believe they have not had sufficient provision made for them.
The second type of dispute is where there are disagreements between executors. There might be more than one executor who has a difference of opinion regarding something such as the sale of a property. Disputes between the executor and the beneficiaries can also arise. When beneficiaries are feeling aggrieved by the way the administration of the estate is going they may seek to remove the executor from their position.
The other estate dispute we come across is where one of the beneficiaries, or somebody that has an interest in the estate, may dispute the capacity of the person who made the will. So the question comes up, ‘should this be the last will that is admitted to probate or not?’ A will will be invalid if the will-maker lacked the cognitive capacity to make the will. This will give rise to considering whether the will maker had an earlier will which should apply or whether the will maker died without a will. Disputes of this kind often arise where the will maker changes their will in a significant way late in the piece.
Within these three broad categories there are a myriad of other disputes which arise in this area of the law. Some of these include disputes regarding the assets and liabilities which should be included in the estate; construction and rectification of the terms of the will; issues regarding wills which have not been made in accordance with the formal requirements of the Wills Act; and in New South Wales issues arising out of transactions dealing with the deceased’s assets prior to death (“notional estate”).
The process of dispute resolution
Anyone experiencing any of the above will want to try to resolve the dispute without the added expense of going to Court. The starting point in any estate dispute process may involve negotiations. So for example, someone may write a letter saying they have been aggrieved and left out of the will and they believe they should get something. That goes to the executor of the estate, or the lawyers representing the executor, and the lawyer will help to determine if there is a case to be made and what a fair outcome would be. This can all be negotiated without mediation.
The next level up from this would be a settlement conference. So rather than having a mediator in place, the parties get together, have a conference with the lawyers and they work out a deal.
The next step, if required, is mediation, which is the most regular dispute resolution process that we get involved with as lawyers. There are two forms of mediation. One is a private mediation where the parties select their own mediator and select their own timeframe. The other is what’s referred to as a Court-annexed mediation where the mediator is appointed by the Court.
Commencing Court proceedings in family provision claims
Since there are limited time frames in which you can make a family provision claim, even if the parties are looking to resolve a dispute outside of Court, they will often apply to the Court to kick off the process so they ensure they are within the required timeframes to pursue a claim through the Court.
In New South Wales, you have twelve months from the date of death of a party to bring a claim under the Succession Act. In the ACT, it is six months from the date that there is a grant of probate of the will. This might sound like a long time, but when people are arranging a funeral and going through the grieving process the time can go by quite fast. So people often start Court proceedings to protect their rights.
What happens when initiating an application is that evidence from the claimant will show who they are and why they are eligible to make a claim. They provide evidence as to why the provision made for them under the will is inadequate and outline their financial position and their needs. These documents are filed and the Court sets a date for a directions hearing.
At this point, the estate represented by the executor will also file affidavits about what is in the estate, detail what the financial position of the estate is, and include details of other persons that might have an interest in the estate. The executor can also respond to the affidavit that has been filed by the person making the application.
Mediation and how it works
Following the filing of initial affidavits the Court will usually send the parties to mediation to see if the matter can be resolved before going any further. Approximately 80% of family provision claims and other disputes that we deal with, are resolved at mediation. If settlement is not reached on the day of the mediation, then it is not uncommon to come to a resolution shortly thereafter.
It is important the participants recognise that mediation as a process is a very different process than a Court hearing. This is because at mediation, the outcome is in the hands of the participants. With the assistance of their lawyers and the mediator, they get to work out a solution for themselves and that solution does not have to be what the Court would ultimately do. When you do not come to an agreement and leave the Court to decide, neither party may get what they hoped for. Mediation therefore is an attractive option as when you come to an agreement you have certainty of outcome.
How to prepare for mediation
The key to any successful mediation is preparation and investing in the process. The more time and effort you invest in the mediation process, the greater the likelihood that you are going to get a successful outcome.
Firstly, it is important to identify the issues that are driving the dispute.Until the particular issues are identified it will not be possible to properly prepare for the mediation. The issue may involve the financial position of the claimant; or the relationship between the claimant and the deceased; the assets and liabilities of the estate; or other matters. The identification of the issues will determine the information which will need to be gathered in preparation for the mediation.
You want to make sure you have all of the factual information on hand, so, for example, if there are questions about the value of something, make sure you have valuations organised before you arrive for the mediation. You do not want to get to mediation and find out that you cannot agree on the value of a house, for example.
So when it comes to information gathering, the first thing to have prepared and (if possible agreed) is the size of the estate. What are the assets; what are the liabilities; and what is available to be distributed. It will also be important to make sure that all of the relevant parties are represented at the mediation. For example, if there are multiple beneficiaries, such as a number of children, then all should be represented as the outcome of the mediation could impact them.
Finally, you will want to address and pre-empt any questions that may come up, such as understanding any capital gains tax implications or any outstanding tax liabilities. If you do not know the answer to these questions, you may not know the precise size of the estate and this may be a barrier to resolution.
Representation of beneficiaries
Generally, the executors role is to represent the interests of the other beneficiaries, but not always, because there might be differences between the other beneficiaries. So quite often we will have not only the executor at the mediation but also beneficiaries who may be separately represented by other lawyers, depending on the circumstance of the case.
As an example, in a mediation I was involved in recently representing the executor, two of the beneficiaries who were siblings of the claimant, chose not to come to the mediation. Prior to the mediation, I had spoken to them and I learned of their position – what they were agreeable to, or not agreeable to, and their position in relation to the settlement being proposed. There was another beneficiary, one of the other siblings, who took a different view to them and he was separately represented by a lawyer at the mediation.
There is no certainty of the outcome when you go to Court to resolve any dispute. This particularly so in a family provision claim. Different judges have different perspectives on what is adequate provision under a will. In an area of law which is largely discretionary, you can never be certain about what the outcome will be. Looking to resolve estate disputes outside of Court will in the majority of cases be more cost-effective and will provide certainty of outcome.
The DDCS wills and estate planning team are highly experienced and specialise in helping people navigate Estate issues like these. To discuss your circumstances, phone our team on (02) 62127600 or fill in the contact us form and our team will be in touch.