Where parents believe that their children may not be responsible
enough to manage their inheritance or are worried about the impact
of outside influences, it is common to include special provisions
in the parents' Wills in order to try and safeguard their
children's inheritance. In the New South Wales decision of
Jones v Krawczyk, Mrs Krawczyk tried to do just that.
She set up several testamentary trusts under her Will. Her
daughter, Zofia, was a 'primary beneficiary' of three of
them. Mrs Krawczyk's Will made the 'primary
beneficiary' (being Zofia) the trustee and controller of these
trusts; except that while Zofia remained married to her current
husband, she could not be a trustee.
This had the effect of denying Zofia the ability to control the
three trusts. While Zofia was married to her current husband, she
was entitled to receive distributions from the trust but was not
guaranteed to receive anything at all.
Zofia contested the terms of the Will. She requested an order
from the court that the condition preventing her from controlling
the trusts while she remained married to her husband was invalid
because it was against public policy.
Zofia's application failed and the court decided that this
particular provision was valid.
In this case, the judge said that he assumed Ms Krawczyk was
trying to protect Zofia and may have suspected that if Zofia had
control of the property in the trust, her husband might persuade
her to deal with it in a way which was not in her best
The judge also discussed the general principles surrounding
special protection conditions in Wills and situations where they
can be invalid. Where special protections conditions are invalid,
beneficiaries may receive full control of trust property with no
protection or safeguards whatsoever.
If Zofia had been successful in this case, she would have
received full control of all the assets in the trusts, and the
protection set up by Ms Krawczyk would have failed.
This case shows the importance of proper estate planning and
establishing valid protections for the inheritances to your
children. If these types of conditions are not property drafted and
are successfully challenged, the assets that you pass on can be
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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If you are doing a Will, or you are the executor of a deceased estate, consider what taxes and duties could be payable.
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