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A multimillion-dollar “early inheritance” that a father gave the youngest of his three children triggered a costly court fight in Sydney between the trio of siblings.
The case is the latest in a series of court battles involving adult children seeking a larger inheritance than was left to them in a parent’s will.
A brother and sister took their younger brother to court over the multimillion-dollar “early inheritance” he received from their father.Credit: Marija Ercegovac
The family patriarch died in 2021, aged 66, and left legacies of $600,000 each to his elder son and daughter, to be paid in equal instalments over five years.
Before his death, the father transferred his major assets to his youngest son: farming properties that the NSW Supreme Court heard had a combined market value of more than $23 million as at March 2024.
However, the son was also saddled with millions of dollars in debt associated with the farming business.
A father’s ‘gift’
Months before his father’s death, the youngest son agreed to pay $1.2 million for the land over five years. As a “gift” or “early inheritance” that recognised his work on the farm, the son did not have to pay the rest of a previously agreed $13 million purchase price.
NSW Supreme Court Justice James Hmelnitsky said in a decision this month that the elder siblings were “excellent” school students who went on to complete tertiary education and have non-farming careers.
The younger son was a “terrible student” whose devotion to farming “was doubtful when he was a very young man”, the decision said. However, Hmelnitsky said the son had been “fully committed to the task of farming the land” for many years.
The elder son and daughter were unhappy with their share of the family assets and took court action against their brother and an executor of their father’s estate.
A ‘paltry’ sum
One strand of their case was an application for family provision orders, which allows current or former dependants of a deceased, among others, to seek a larger slice of the inheritance pie if inadequate provision was made for them in a will. The court makes such orders on a needs basis.
“They submit that their legacies of $600,000 each are [comparatively] paltry,” the judge said.
Their younger brother argued they had “not made out a case for unmet financial needs”, Hmelnitsky said, and giving them more would “likely jeopardise his ability to keep the farm intact”. This was contrary to their father’s wishes.
The youngest son is required to fund his siblings’ legacies by paying into the estate the $1.2 million he agreed to pay for the land.
“The fact that [he] is struggling to make sufficient profit to fund the ... legacies shows that any further provision may require the sale of land,” Hmelnitsky said.
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Ultimately, the judge found that adequate provision had been made for the elder son, but not for the daughter. He considered she should receive a further $300,000, but deferred making a final order pending further submissions.
Hmelnitsky said the elder siblings had “been leading entirely separate lives” from their father for many years before his death, and neither had been financially dependent on him since they were students.
The father had a “sincere and abiding interest in ensuring that the farm was not split up”, the judge said.
What the law says
Ines Kallweit, an accredited specialist in wills and estates law and a principal at law firm KHQ Lawyers, said the decision confirmed that a will-maker is free to leave their estate to whoever they wish.
“This means that a parent does not have to treat children equally or be ‘fair’ to them, although treating children equally is the first step to avoid family disputes,” Kallweit said.
“However, [the will-maker’s] freedom is limited by their moral duty to make adequate provision for the proper maintenance and support of certain close family members. This is usually the spouse and children, but it can be other people depending on the relevant legislation in each state and territory.”
Kallweit said that “this principle goes back to the Charles Dickens days when widows and children ended up in the poor house because an estate was left to the oldest male relative”.
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“At some point, society formed the view that if there are sufficient assets in an estate to provide for the spouse and children, then the support should first come from the estate before the family relies on the public purse.”
It was often difficult in cases involving large farms for a will-maker “to ‘be fair’ to all children without splitting up the farm and making it unviable”, she said.
A will-maker might regard a child who had “been working on the farm for years ... as the natural beneficiary of the farming properties”.
“If there are insufficient assets in the estate to satisfy the other children, and the will-maker has not planned ahead, conflict is usually inevitable,” Kallweit said.
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