A Man’s Home May Be His Castle but Can His Widow’s Residential Property Inheritance Expectations Be Dashed?

When determining a contested Will, a Court has to consider many competing factors. In Cowap v Cowap, the Court had to weigh the moral obligation of a deceased husband to his wife after a long marriage compared to the obligation to make provision for his disabled and destitute adult son. The case illustrates that there are no inflexible rules in family provision claims with each case turning on its own merits with the long arm of ‘notional estate’ potentially playing a role.

 What were the key facts of Cowap v Cowap (2020) NSWCA 19?

Geoffrey Cowap died in December 2015, aged 85. His last Will, had been made in 2012 and left all of his estate to his wife of 57 years, Barbara Cowap. He had six children, including his son Nick.

At the time of his father’s death, Nick was in good health but a few months later suffered a number of serious heart attacks, which left him severely disabled and unable to take care of himself. He was unmarried but had a dependent daughter. His former de facto spouse lived with him as his carer. There was no dispute that his needs had changed significantly and his only income was a disability pension. He was by now 64 years of age and applied to the Court for provision from his father’s estate which, if granted, might necessitate the sale of the matrimonial home.

The 90 year old widow did not wish to move out of her home of over 50 years and resisted the claim. The principal asset involved was the matrimonial home near Canberra which was estimated to be worth $1.35 million. However, this property was owned in a joint tenancy so did not form part of the assessable estate. The estate consisted of a share portfolio and cash at bank.

The Court found that inadequate provision had been made for Nick given his health and financial circumstances. It was considered that, had the deceased been alive and seen the disabilities his son had suffered, he would have wanted to do something for his son while also looking after his wife.

The Court determined that a provision of $600000 should be ordered to allow Nick to acquire a home and some funds for transport and contingencies. The Court then had to decide to make provision for a notional estate order as the estate itself did not have sufficient funds to meet the $658000 needed, inclusive of the son’s legal fees. The only way the provision could be made to the invalid son Nick was if the matrimonial home were to be sold.

The Court designated the home as part of the deceased’s notional estate and made orders that the property be sold.

Mrs Cowap appealed but this was dismissed.

What were the legal key issues in Cowap v Cowap?

The illustrated case involved a number of key issues:

(i) Contesting an estate with a family provision claim

 The Court may make a family provision order when it is satisfied of the following:

•  the applicant is an eligible person
• at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the applicant had not been made by the deceased person;
• there are sufficient funds in the estate or notional estate to provide for the applicant after considering the needs of beneficiaries named in the Will.

The Court will take into account a variety of evidence and factors in making a decision. This can include the ages of the parties, the financial needs (both present and future) of the applicant, and any physical or mental disability of the applicant. 

(ii) Notional estates and the effect of a joint tenancy

If contesting a Will, it is important to be aware of the effect of owning residential property as a joint tenant. Property owned by spouses will usually be held, somewhat confusingly, to those who know themselves to be owners, as joint tenants. When one of the joint tenants dies the property will not form part of the deceased’s estate and will pass automatically to the survivor by way of the ‘survivorship principle’. The right of survivorship normally takes precedence over what is stated in the Will. In NSW, however, the deceased’s joint tenancy property can be treated by the Court as part of their ‘notional estate’.

(iii) The ‘notional estate’ concept

New South Wales uniquely allows for ‘notional estate’ in claims against an estate. An order can be made to reacquire assets distributed before the Will maker’s death. The intention behind the concept is to prevent someone from gifting away assets in order to avoid a family provision order. 

In addition, other assets can be classed as notional because they were effectively controlled by the deceased but were not eligible for inclusion in the estate. This can include superannuation death benefits and residential property owned as joint tenants.

What does it mean?

As required, before designating the matrimonial home as notional estate the Court considered the widow’s reasonable expectations in relation to her home. However, the son’s incapacity which arose after his father’s death established special circumstances which justified the Court designating the widow’s home as notional estate.

The case illustrates that when someone has suffered significant life changing changes to their health the essential argument is whether if the deceased had been aware of the changed circumstances would they have made provision to reflect this.

Age was a further consideration. The mother would be likely to leave the property before long given her advanced years. And while the Court would normally be reluctant to remove someone from their property for the benefit of a family provision claim, in this case the concern was mitigated by the fact that Mrs Cowap would still be able to afford a suitable home and have sufficient funds for her needs.

The case also demonstrates that each application for provision will be dealt with by the Court on its merits and particular facts. Regrettably, the case is one that might have been better settled by mediation rather than incur the substantial costs, both legal and emotional, and its negative impact on the family.

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