The Appeal on Iron Ore Magnate Billionaire Michael Wright’s Estate: Does Olivia Mead get to buy the diamond studded bass guitar?
Does your Will meet all the legal requirements?
Have you adequately provided for your loved ones?
Have you ensured proper support and education for your children?
A recent case from the Supreme Court of WA brings into focus the importance of making sure your Will meets all legal requirements, particularly in regards to providing adequately for your children.
In February 2015, Olivia Mead made a claim to the Supreme Court which saw her $3 million inheritance escalate dramatically to $25 million. In the initial decision by Master Sanderson, he decided that Mead’s father (Michael Wright) had not made “adequate provision” for her in his Will. The case made headlines again recently as the appeal has been allowed and Master Sanderson’s orders have been set aside. Mead’s $25 million inheritance will now be only $6.1 million.
The original decision was made pursuant to section 6(1) of the Family Provision Act 1972 (WA) which says Wills must make adequate provision for the “proper maintenance, support, education or advancement in life” of those mentioned in section 7. Such people include the deceased’s:
- spouse or de facto partner;
- former spouse or de facto partner(s) who, at the time of the death, was receiving or was entitled to receive maintenance from the deceased;
These sections have commonly been referred to in case law as the deceased’s ‘moral duty’.
Michael Wright’s will provided for his beneficiaries as follows:
- His son to receive a home unit and a total of $15,000,000.
- His wife to receive a total of $10,000,000.
- His two daughters to be the primary beneficiaries and receive the residue of the estate (which is estimated at close to $1 billion).
- Mead: $20,000 cash and a commercial property valued at $720,000 with annual payments “up to a maximum of $3 million”.
In deciphering section 6(1) of the Family Provision Act a Court must go through two stages. The first is to determine whether the Will made adequate provision for the claimant. This decision is discretionary and each case must be determined on its own facts.
If the Court decides that adequate provision was not made, they must move to stage two – determining the amount that the claimant should receive. The court has the power to order an amount that it sees fit in the circumstances, however, it cannot award more than what is ‘adequate’.
The Court of Appeal found that although Master Sanderson was correct in concluding that Michael Wright did not make adequate provisions for Olivia Mead, the decision to award her $25 million was ‘flawed’.
Master Sanderson described Olivia Mead, (at the time of Wright’s death) as a “19-year-old woman who faced all the uncertainties and possibilities of a young adult in today’s world.” He said her future was uncertain and it was therefore impossible to ascertain where she will be in 50 or 60 years, which in turn makes it difficult to determine what amount is ‘adequate’ in the circumstances.
The Court of Appeal explained that there cannot be a universal rule as to what an adequate provision for a parent to an adult child should be, and that each case must be determined on its individual circumstances, taking into account the following:
- sacrifices made and services given by the claimant for the benefit of the deceased;
- contributions made by the claimant to the building up of the deceased’s estate; and
- the conduct of the claimant towards the deceased and the deceased towards the claimant.
In regard to the final point, Master Sanderson said that “it would be a mistake to suggest the deceased and [his daughters] constituted one big happy family”.
In conclusion, the Supreme Court of Appeal held that, in their “respectful opinion” Master Sanderson erred in the “construction of section 6 in a critical and fundamental way”. Although Michael Wright did not adequately provide for Olivia Mead in his Will, $25 million was deemed an excessive amount to award her. The amount given to Michael Wright’s other children is not relevant in determining an appropriate amount for Olivia Mead, and therefore the Court settled on $6.1 million.
If you need assistance with writing or amending a Will, or if you think you have not been adequately provided for in a deceased person’s Will, please contact Lynn and Brown Lawyers for assistance.
About the authors:
This article has been co-authored by Chelsea McNeill and Steven Brown at Lynn & Brown Lawyers. Chelsea is in her third year of studying Law at Murdoch University. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.