A recent decision of the New South Wales Court of Appeal highlights the importance of using the correct language in a Will as well as the importance of Executors acting ‘reasonably’ in disputed estate litigation.
In Warton v Yeo  NSWCA 115, the late Mr Justin Callaghan left a Will appointing Mr Yeo as the Executor. By his Will, the deceased left a quarter of his estate to his sister, Mrs Ailsa Lamond, and if she died before him, her share was to pass ‘to such one of her children as shall survive me and if more than one in equal shares’.
Mrs Lamond died before the deceased. A dispute arose between the Executor and the deceased’s family about the meaning of the word ‘children’ in the Will. Mrs Lamond had only one biological child, but she had four stepchildren whom she had brought up as her own children.
The deceased was close to his sister and was aware of her family circumstances. The question for the Court was whether he intended to leave that share to one child, or five. Two of Mrs Lamond’s stepchildren filed a claim against the Executor and asked the Court to rule on the meaning of the word ‘children’ in the Will. Mrs Lamond’s natural child agreed to abide by the decision of the Court.
The Executor had prepared the Will and took an active role in the Court proceedings, arguing that the deceased had clearly meant that part of his estate pass to Mrs Lamond’s biological child.
The Judge at the first Court hearing agreed with the Executor and found that the word ‘children’ included only Mrs Lamond’s biological child.
The stepchildren appealed. The Court of Appeal found that the deceased, knowing his sister’s family, had intended to benefit Mrs Lamond’s biological child and the step-children by including the word ‘children’ in the Will.
The second issue in this case was the action of the Executor in actively defending the claim by the step-children. The Court found that the Executor had acted unreasonably in incurring costs.
In most disputes the whole of an Executor’s costs will be paid out of the estate. The Court rejected the Executor’s application for indemnity costs.
The two critical lessons to be learned from this case – make sure your Will fits your circumstances and your family’s circumstances.
A warning to Executors – an Executor who acts unreasonably is not guaranteed to have their costs paid from the estate.