When is your money no longer your money?
When you die, of course.
That was never more obvious than last week when I was reading The Illawarra Mercury newspaper and turned to page 3 to see an advertisement – one-third of the page – that screamed: “Have you been unfairly left out of a Will”.
I worked in newspapers my entire adult life. Advertisers pay a premium to be on page 3. In my day it cost twice as much to have an ad on page 3 as it did to have your ad appear back on say page 11 or 15.
Ads up the front of newspapers are designed to have an impact and make people act.
And this ad did get me thinking.
How many people contest Wills? How many people win when they contest a Will? And how much does it cost to contest a Will?
I believe Wills, in most circumstances, should not be contested.
Call me naïve, but it’s my money and if there’s any left when I die, I want it to be divided up and given to the people I think deserve it, not the people some magistrate who doesn’t know me at all thinks should get it.
His or her decision is simply swayed by whoever makes the best arguments in court.
Contesting a Will used to be something that only rich people did.
Now though, it is becoming more and more common amongst everyday Australians and legal firms are actively out there in cyberspace touting for business.
When my father died, he left everything to my mother as, in my humble opinion, he should have. My brother and I were contacted by a legal firm asking if we were interested in contesting the will. We said no thanks.
The approach came after I had put a Facebook post online paying tribute to my dad’s life. Talk about Big Brother watching all the time.
Some legal firms offer “no win, no fee” deals to embolden people to contest Wills. That doesn’t necessarily mean you won’t end up having to pay out a lot of money. If you lose you may well be saddled with paying the costs of other parties involved in the legal action.
According to a blog on the Australia Lawyers website, if you can resolve a case without going to court, the typical cost of contesting a will is somewhere between $7000 and $15,000.
If the case ends up going to court, costs can rise to anywhere between $25,000 and $120,000 and there is every likelihood that you will have to pay the fees up front.
That’s a lot of money, but thanks to generous superannuation schemes and the real estate boom, average inheritances are growing at two percentage points faster than inflation. This makes the decision to contest a Will more palatable when people weigh up the “risk versus reward” scenario.
According to the Grattan Institute, in 2019 the median estate value in Australia was somewhere around $500,000.
At the time, about 20 percent of estates were worth more than $1 million and seven percent were worth more than $2 million.
The Institute reported that in the case of estates without a surviving spouse, 75 per cent of all money bequeathed was left to children. Nieces, nephews and grandchildren accounted for about 20 percent of bequeathed money. The remaining five per cent went to friends and charities.
If you Google “Contest a Will” a slew of legal firms will pop up saying that they can get you the money that is “rightfully yours”.
One legal company I found boldly stated that it won 97 per cent of cases involving a disputed Will. No wonder people are lining up to challenge a Will.
But what is rightfully yours?
My mate was heading towards retirement and trying to work out his finances. His dad, in his 80s, was reasonably wealthy. His dad had four children, but my mate was the only one of them who had spoken to him constantly over the past 40 years because of a split following a nasty divorce.
My mate thought he would inherit the bulk of his father’s estate, which would certainly have had a dramatic influence on his own retirement.
He asked his dad about his Will and was shocked to discover that any remaining funds after his dad’s death would be divided up equally among the children. These were his dad’s words. “I have four children. I love each of them the same and each will be left the same amount”.
Is that fair? Does my mate have a right to more money than his siblings from his father’s estate? Is that something a magistrate should decide?
It is difficult to find out exactly how many Wills are contested each year. The best I could establish is that the trend for contesting Wills is rising driven mainly by the fact that people are generally successful when they challenge a Will.
According to University of Queensland research from 2015 three out of four cases of people challenging a Will end up going to court. In the other 25 per cent of cases that go to mediation, nine out of every 10 Wills are changed.
The fact that contested Wills are now making news headlines, and I don’t just mean in celebrity cases, means that we are all more aware that there is the option to challenge a Will if you don’t like its contents.
There’s no doubt that family structures are more complicated today than they were 50 years ago. This plays a large part in the ever-increasing number of people challenging Wills.
Modern families are often blended, with second and third marriages, complicating things even further.
This is why I think it is essential, as a starting point, to have a Will that clearly states your wishes in the first place. If your family life is complicated, make sure you explain why you have made certain decisions about your estate.
It might just help a magistrate come up with an informed decision that results in your wishes being carried out after you pass.