When a $3 million inheritance just isn’t enough
A bitter court battle over a $3 million inheritance shows the problems that can arise when a trust is not properly set up. The case is still unfolding in an appeal in the West Australian Supreme Court, but wills expert Joshua Crowther at Stacks Law Firm says there is a lot to learn from it.
The saga began when a Perth mining billionaire discovered he had an extra daughter – the product of a fling with his then mistress. His will split his huge estate among the two daughters and son he had with his wife. The son received an unknown amount, the two sisters each received around $400 million.
Even though the billionaire was not close to his fourth offspring, he looked after her in his will. The teenager was twenty years younger than his three children, and lived with her mother in rental accommodation. He set aside $3 million for her in a trust fund. When the billionaire died, the girl was 19 and inherited the money through a trust.
Mr Crowther, who has reviewed the decision by the court, said the problem was that conditions imposed in the trust were quite oppressive. The teenager got no money in her pocket, but received some interest payments from the trust that could only go towards her education. This would last until she was 23. When she turned 30 she would get the $3 million inheritance.
“The trust imposed tough conditions – the billionaire was trying to rule from the grave,” Mr Crowther said. “Trusts need to be drawn up carefully as they can be challenged in courts. They need to be seen as fair and workable, and not overrule a recipient’s basic legal rights.”
A condition of the trust was that if the teenager were convicted of any criminal offence, including minor offences such as possession of marijuana, she would be excluded from the trust. If she joined an “unacceptable religion” which in the billionaire’s mind included Buddhism, or even hung out with people who did, she wouldn’t get the inheritance.
The teenager contested the terms of the will. The court found the trust conditions were oppressive and ordered a more appropriate provision. The court also decided $3 million wasn’t a fair share of her father’s estate. The court upped her inheritance to $25 million. It’s a huge amount, but still only 2.5 per cent of her billionaire father’s fortune. The court said it wasn’t about fairness, as if all four children shared equally in the estate the teenager would have got $250 million.
The two sisters are appealing the court decision.
For more information, please see Can you put conditions in a will? Laws around conditional gifts and bequests in NSW.