I recently read the Queensland Supreme Court decision of Micallef v Micallef; Arrowsmith v Micallef [2012] QSC 239 , in which the Court had to consider the effect of three step-children renouncing their interest in the estate.

Background

The facts of this case are as follows:

• Prior to his death, Mr Dumesny left a will providing a life interest to his wife (Lauretta) and upon her death “the rest residue and remainder” of his estate was to be divided equally between his two children (Chevonne and Matthew) and three step-children (Robert, Silvano and Adriano). Effectively, each child had a one-fifth interest in the estate.

• Mr Dumesny nominated Chevonne and Robert to be the joint executors of his estate.

• Mr Dumesny (the deceased) passed away on 19 September 2010 and Lauretta filed a family provision application for further provision from his estate.

• As a result, Silvano and Adriano signed renunciation forms and Robert signed an affidavit, stating that they wished their shares of the estate to go to their mother (the deceased’s wife).

• The family provision claim was settled and final orders were made by the court, ordering a release from all claims on the estate.

• Silvano and Adriano then sought directions so that Lauretta could receive three-fifths of the residuary estate as agreed and an order that Chevonne and Matthew receive a one-fifth share each.

• Chevonne disagreed with this and argued that Silvano and Adriano did not have sufficient standing to seek directions and that each “renunciation” was in fact a “disclaimer” by which the interests of Robert, Silvano and Adriano fell into the residue of the estate, and should be distributed to herself and Matthew.

The Issue to be Considered – Did the “Renunciation” constitute a “Disclaimer”?

What is a Renunciation? A renunciation is the formal rejection of a claim or entitlement to something. By signing the renunciation forms, Robert, Silvano and Adriano intended to waive their entitlement to their one-fifth share of the residuary estate, provided it passed to their mother (Lauretta).

What is a Disclaimer? On the other hand, a disclaimer is a term that describes an attempt by a person to renounce their legal right to benefit from an inheritance.  In this case, Chevonne argued that the forms signed by Robert, Silvano and Adriano were in fact “disclaimers”.  If the Court found the forms to be “disclaimers” instead of an effective renunciation,  Robert, Silvano and Adriano’s interests would pass to the residuary estate and benefit Chevonne and Matthew only.

The Court’s Decision

The Court decided that the renunciations were not disclaimers and Robert, Silvano and Adriano’s interests did not pass to the residuary estate to benefit Chevonne and Matthew.

The Judge ordered that Lauretta receive the family provision as settled and three-fifths of the residuary estate and that Chevonne and Matthew each receive one fifth of the residuary estate.

Seek Legal Advice

The matter is an important reminder to seek proper independent legal advice when considering renouncing your entitlement to an inheritance. It also shows the need to consult an experience estate planning solicitor when dealing with life interests and blended families.

If you require assistance with making a new Will or updating an existing Will, or if you are a beneficiary or executor of an estate, it is important to obtain experienced advice. Please do not hesitate to contact me if needed.