Blended families (put simply, a family where children and step-children are involved) are commonplace these days.

Also commonplace are estate disputes involving blended families. With the intermingling of assets between parents and the complex family dynamics with step-children, often no amount of 'estate planning' will avoid an estate dispute.

To be clear, many people in that situation have a valid and justifiable claim. Others simply misunderstand the law.

The importance of fully understanding your rights in these types of disputes is paramount, as demonstrated in the recent Supreme Court case of Forster v Forster [2022] QSC 30.

The case involved a child attempting to enforce what he considered his rights under a 'mutual will agreement'.

Mutual Will Agreement

Briefly, a husband and wife each had children of their own from separate relationships.

The couple agreed to each make Wills so that:

  • when the first spouse died, the deceased's estate would pass to the surviving spouse; and
  • when the surviving spouse died, the entire estate would pass to all of children and step-children in equal shares.

A fairly straight-forward and pragmatic agreement.

The 'Dispute'

The husband died first and all of his estate went to the wife, in accordance with the Mutual Will Agreement.

One of the husband's children (James) had a very poor relationship with the wife.

Although James was set to benefit from the wife's estate on her passing (along with the other children and step-children) as per the Mutual Will Agreement, James wanted his money "now".

James attempted to persuade (if not force) the wife to mediation. When that did not work, James was determined to force the wife to provide full disclosure of her financial position and provide "ongoing disclosure". The wife refused but (repeatedly) promised to abide by the Mutual Will Agreement.

James did not trust the wife and suspected that she had or would breach that agreement.

So, James commenced proceedings against the step-mother seeking orders that she be required to disclose her financial position to James every year until she died. James argued that, due to the Mutual Will Agreement, the step-mother held property she inherited (and her own property) on constructive trust for him and so the Court had the power to make the orders he sought under section 8 of the Trusts Act 1973 (Qld).

Put simply, James failed in every aspect of his application.

After a careful and thorough analysis of the cases relied on by James, the Judge held as follows:

  • The wife did not hold any property on trust for James during her lifetime.
  • The wife was entitled to full enjoyment of the estate she inherited and had a floating obligation to deal with that property as per the Mutual Will Agreement.
  • The wife would have no obligation to disclose her financial position to James during her lifetime (if there was a constructive trust) because there was no fraud.

The Judge was particularly critical of James noting that he failed to directly address the key issues, demonstrated a misapprehension of certain laws, appeared to have misplaced confidence in the strength of his case and suggested that he should have examined in greater detail his own cases that he relied on.

James was ordered to pay the wife's legal costs. (Some might say he was fortunate not to have been ordered to pay the wife's costs on the 'indemnity basis' which would have meant he'd need to pay a lot more towards her costs.)

Lesson

Mutual Will Agreements create a contractual agreement between two people but that does not automatically create any 'constructive trust' in favour of an anticipated beneficiary.

A person bound by a Mutual Will Agreement must comply with any promises made but that not automatically give rise to an obligation to disclose their financial position to an anticipated beneficiary.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.