Case Study 1
John and Mary were a business couple in their 60s who had worked hard all their lives to afford a nice family home and investments. Their only child, Ethan, was a concern to them. Aged 35, he had been in and out of rehab for drug and mental health issues. He had had a number of de facto relationships. Ethan was unable to hold a job for long and led a transient lifestyle. The one bright note was that Ethan had a son, Jacob, aged 3, from a previous relationship. Jacob’s mother had had issues and, for a time, Jacob had been taken out of her care, however, she had managed to turn her life around and was now doing a good job as a mother.
As good parents, John and Mary wanted to provide for their son but they were concerned that any money given to him would be wasted.
If John and Mary left money to their son under their wills, it is likely that there would be nothing to stop him spending the money as quickly as he wanted on drugs and unsuitable girlfriends. It wouldn’t take much for those girlfriends to have a claim to the inherited money.
If John and Mary left their money by will to an inheritance trust, or something similar, as a way to protect the money from Ethan, Ethan would be able to take a Family Protection Act claim to seek to overturn the will and have the money given to him outright.
John and Mary decided to set up a trust during their lifetimes. They transferred the home and their investments into the trust. Through careful wording of the trust deed they were able to ensure that Ethan’s reasonable needs would be provided for, but that he would have no ability to waste money or to use it to buy drugs. His girlfriends would have no claim on the money either. Because nothing was left via John and Mary’s wills there was nothing for a Family Protection Act claim to be made against. John and Mary were able to securely provide for Jacob - and more fully for Ethan if his situation improved.