Will-making in the context of blended families can entail complicated balancing acts as will-makers attempt to address the needs and expectations of children born to an earlier spouse or partner as well as the needs and expectations of a subsequent spouse or partner.
Add a trust into the mix and asset and estate planning that might have been presumed to be finalised may not be as bullet proof as first thought.
Documentary evidence of the will-maker’s reasons can assist.
Interestingly, the very legislation that is so often used in an attempt to “trust bust” can also assist.
This is because a spouse or partner has the option of (amongst other things):
- seeking to overturn a transfer to a trust and to disregard the will as it relates to him or her, in favour of a division of property under the Property (Relationships) Act 1976 (the Act); or
- accepting the provisions of the will and the prior transfers to a trust or trusts.
A recent decision of the High Court has confirmed that it is not possible to elect option B under the Act (accept what you get under the will) and then later seek to apply under s. 44 of the Act to have a disposition to a trust overturned. Section 44 gives the court a discretion to overturn dispositions to a trust that have the effect of defeating a spouse or partner’s property rights.
As succinctly noted by the court:
“[s 44] is not a provision that can be used to swell the estate from which a surviving spouse will receive an inheritance.”
Where trusts are increasingly under fire, it is important to appreciated that sensible structuring that attempts to balance competing needs can be effective and can be upheld by the court.