The distribution of assets in a will can sometimes create tension between the desires of the deceased, as expressed in their will, and the need for fairness towards close family members, particularly children. The principle of fairness is enshrined in the Family Protection Act 1955, which mandates adequate provision for the proper maintenance and support of family members. When adequate provision is not made, the Court can intervene and alter the will upon application from an eligible family member.

A recent case, Talbot v Talbot [2016] NZHC 2382, sheds light on how the Courts navigate this tension and offers practical insights for will makers, their families, and advisors on ensuring their wishes are upheld. This case is especially pertinent for families with significant wealth tied up in a single asset, like a farm, home, or business, with the intention to pass that asset on to one child.

In the case, a farm was at the heart of the matter, with three children involved. The son was designated to inherit the farm, while the daughters pursued different paths. The son had worked on the farm for 25 years, the last fifteen in partnership with his parents. Upon their passing, the wills left the son the remaining half of the farm, forgiving much of the debt, while the daughters received equal shares of the rest of the estate. One daughter contested this arrangement, seeking a more equitable distribution.

Ultimately, the Court upheld the parents’ intentions, emphasizing several key factors:

1. Clarity and consistency of intentions communicated long before their deaths.
2. The substantial value of the daughters’ inheritance, even if unequal.
3. Efforts made by the parents to maximize off-farm assets for the daughters.
4. The absence of any real financial need for a greater share on the daughter’s part.

This case underscores the complexity of estate planning, often requiring careful consideration and planning well in advance. When wealth is concentrated in a single asset, leaving it to one child may lead to unequal treatment. Beginning the planning process early, communicating intentions, and diversifying assets over time are crucial steps. Seeking professional advice from lawyers, accountants, bankers, and investment advisors is also essential in navigating these complexities.

If you’re considering estate planning and want to ensure your wishes for the next generation are fulfilled, don’t hesitate to reach out to us for guidance tailored to your situation.