If you’re wondering whether you can exclude a child from your will in New Zealand, the short answer is usually no – you owe a legal obligation to provide certain family members, including your children, with adequate provision for their proper maintenance and support.
If your children believe they haven’t been adequately provided for, they have the right to make a claim against your estate. There are some circumstances, however, where you can exclude one or more of your children from your will. There are also certain strategies that you can implement to minimise the likelihood of an attempted claim by one or more of your children succeeding.
Can I exclude one or more of my children from my will?
In essence, you have the freedom to decide how to leave your assets under your will, but New Zealand’s legal system recognises the rights of specific family members, including children, to make claims against your estate under the Family Protection Act. This legislation is designed to prevent dependents from being left without proper maintenance and support upon your passing.
Understanding family provision claims
If your child believes that they have not been left a sufficient share of your estate, they have the right to make a claim under the Family Protection Act. The process involves them making an application to either the Family Court or the High Court. To succeed, they will need to prove that you failed to make adequate provision for their proper maintenance and support. In determining whether this threshold is met, the court will assess various factors, including the child’s financial need, the size of your estate, their relationship with you, and any provision already made for them, to determine if you fulfilled your moral duty.
Broadly, claims by children fall into two categories:
- The first type of claim is by an infant child or an adult child who cannot support him or herself financially. A child in this position is usually entitled to receive sufficient provision under the terms of your will to provide for their proper maintenance and support. The law does not provide much guidance on what this means. In practice it will depend on the extent of your estate and your obligations to others. For example, if you have a dependant spouse or partner, and a modest estate, then you are expected to provide principally for your spouse or partner, and your children should expect to receive less. However, if you have sufficient assets to provide for all those to whom you owe a moral duty, you will be expected to provide a reasonable, though modest, standard of living for each of your children, and if you fail to do so, they will have a strong claim against your estate.
- The second type of claim is by an adult child who is able to support him or herself financially. This is known as a familial recognition claim. It may surprise you to learn that even a child in this category is still usually entitled to receive some provision from your estate, though typically less than a child who has financial need. Although Courts have varied in the awards made to financially stable children, and in recent times have moved away from making percentage-based awards, it is generally accepted that adult children not in financial need are usually entitled to around 10% of their parent’s estate. However, as with claims by children in financial need, if you have a smaller estate and owe a strong moral duty to another person (for example, a dependent spouse or a disabled child), then you will be expected to provide for that person principally, and if there is not enough left in your estate to make provision for a financially stable child, then they should be expected to receive a nominal inheritance or to go without.
A successful exclusion case – O’Neil v O’Neil [2020] NZHC 2988
Larry O’Neil was an experienced solicitor. When he died, he was in his second marriage, with three adult children from his first marriage. He left a modest estate: the only asset of significance was a half share in the house that he owned together with his wife, Judith. The house was worth around $1,000,000, making Larry’s half share worth around $500,000.
Larry had previously made a will that allowed Judith the use of his half of the house while she was alive, with it to go to his children once Judith died. But his later wills left the half-share to Judith outright, with the children excluded entirely.
The High Court held that Larry was entitled to leave his entire estate to his wife and to exclude his children from his estate. The Court considered three factors to be decisive:
- The modesty of the estate – The estate’s size was a significant factor, with Larry’s half-share of the home being the only significant asset. If the estate had been larger, Larry may have been expected to provide something for his children.
- Larry’s primary duty to Judith – Larry’s pre-eminent moral duty was to Judith, based on their 17-year marriage and 37-year relationship. Judith served as Larry’s primary caregiver and contributed significantly to maintaining the home.
- Judith’s needs – Consideration was given to Judith’s financial interests, her inability to meet an award unless the home was sold, and the costliness of retirement homes.
Also of relevance was that two of the children had no financial need, and that the third child, although in a weaker financial position than his siblings, was not destitute, being a qualified professional with an income, living in a low cost of living country.
The judge acknowledged that the children were hurt by Larry’s decision, especially as they believed they would be provided for. The judge also recognised that each child had a long and loving relationship with their father. The judge considered the possibility of making a small recognition award to each of the children, but ultimately was not persuaded that Larry had breached his moral duty, and the children’s claim against his estate failed.
How to exclude a child from your will – recommended steps
- Give away your property before you die – Property that you have given away during your lifetime does not form part of your estate and so cannot be the subject of a Family Protection Act claim. Just be aware that any property that you have not given away does form part of your estate, and the court is entitled to make up the difference using this property. So, for example, if you only manage to give away 80% of your estate, the remaining 20% may be given entirely to an excluded child.
- Transfer your property to a trust – Although it can be expensive to set up a trust (the cost is usually somewhere around $2,000 to $10,000), the costs of a claim against your estate will be much larger. Even if the claim against your estate is unsuccessful, the executors of your estate will still have to defend the claim, costing your estate tens of thousands of dollars or more in legal costs. The best investment you can make, particularly if you intend to exclude a child from your estate or if you know litigation is likely, is to set up a trust with an expert inheritance lawyer. It is critical to ensure that the trust is established properly, without any debt owing back to you personally, as this debt will form part of your estate and can be the subject of a Family Protection Act claim.
- Record your reasoning in your will – If the reason that you wish to leave a child out of your will is because they have already received significant provision from you during your lifetime, you should record this in your will and include evidence together with your will of the provision already made.
- Tips for dealing with an estranged child
- Put your side of the story on record – If an estranged child makes a claim against your estate, the court will look at the reason for the estrangement. If the estrangement was the decision of the child or resulted from improper conduct on their part, the court will regard your moral duty to them as reduced, and they will be entitled to less (or perhaps none) of your estate. However, if the estrangement came about because of some improper action that you took (for example, violence or abuse towards them or someone else), then your moral duty to that child is increased and they may have a sizable claim against your estate. For this reason, you should explain, either in your will or in a memorandum alongside it, the reason for the estrangement, so that your side of the story is on record in case a claim is made.
- Either make proper provision or exclude them entirely – You may be tempted to leave your estranged child a small sum in your will (say $5,000) as a gesture of goodwill. However, your executor will have to contact the estranged child to advise them of the gift. If the child would not otherwise have known of your death, this will alert them to it and to the fact that they have been all but excluded from your will, thereby possibly triggering a claim.
- Include a statement in your will – Unless your executor has received notice of an intended claim, they are usually entitled to distribute your estate after 6 months from the date of probate (read about probate here). If your estranged child is unlikely to learn of your passing, you should include a statement in your will that your estate is to be distributed promptly after 6 months from the date of probate and that the estranged child is not to be notified of your death until after this time.
- Put your side of the story on record – If an estranged child makes a claim against your estate, the court will look at the reason for the estrangement. If the estrangement was the decision of the child or resulted from improper conduct on their part, the court will regard your moral duty to them as reduced, and they will be entitled to less (or perhaps none) of your estate. However, if the estrangement came about because of some improper action that you took (for example, violence or abuse towards them or someone else), then your moral duty to that child is increased and they may have a sizable claim against your estate. For this reason, you should explain, either in your will or in a memorandum alongside it, the reason for the estrangement, so that your side of the story is on record in case a claim is made.
- Talk with your children about your intentions – If you are not estranged from your children, the best thing you can do is to talk openly with them about your intentions and give them an opportunity to raise any concerns while you are still alive. This serves two purposes. First, by allowing them to raise their concerns now, it gives you a chance to address their concerns, and possibly to make any changes to your will, while you are still alive. Secondly, if you are unable to address their concerns, it will alert you to the possibility of a claim being made against your estate, and it will give you a chance to make alternative arrangements (such as establishing a trust) while you still can.
Guide to family provision claims
The free guide to claims by family members provides detailed insights into crucial aspects such as:
- Eligibility criteria under the Family Protection Act
- Time limits for making a claim
- What must be proved for a claim to succeed
- The type of property that can be claimed against
- The process involved in making a claim
- Costs associated with making a claim
- Responsibility for legal costs
- Amounts granted if the claim succeeds
The importance of legal advice
If you intend to exclude a child from your estate, it is crucial that you get legal advice from an inheritance law expert. Getting it wrong will cost your estate tens of thousands of dollars in legal fees in defending a claim, and considerably more if the claim is successful. A few thousand dollars invested at the outset can prevent these issues from ever arising, ensuring your money goes to those who you intend to benefit and preventing them from having to endure years of litigation, with the associated uncertainty and heartache.
