What is Testamentary Freedom?
Testamentary freedom is the long-standing common law principle that a person has complete discretion to dispose of their property through their will in whichever manner they choose. Chief Justice Cockburn in the decision of Banks v Goodfellow (1870) LR 5 QB 549 stated that “The law of every civilised people concedes to the owner of property the right of determining by his last will, either in whole or in part, to whom the effects which he leaves behind him shall pass”.
Exceptions to Testamentary Freedom
However, the principle of testamentary freedom is not absolute and there are certain circumstances where the law or a Court can restrict or limit an individual’s right to give away their property. These are the areas that most often arise when considering a deceased’s will during Contested Estate and Inheritance Claims proceedings.
Irrespective of how a testator wishes to dispose of their property, any estate expenses, debts and taxes must be paid first before any payment to the beneficiaries can be made. If there is insufficient cash in the estate then property may have to be sold to meet the deceased’s debts.
From the proceeds of the deceased’s estate, debts must be paid in the following order:
- Funeral expenses;
- Testamentary expenses (which includes the legal costs of the estate);
- Any statutory obligations (such as rates and taxes); and then
- Any other outstanding debts.
Inheritance Family Provision
In South Australia the Inheritance (Family Provision) Act 1972 (SA) qualifies the right of testamentary freedom by granting power to the Court to make orders which have the effect of overriding and altering the provisions of a will in circumstances where certain family members of the deceased person have not been adequately provided for. For more information about family inheritance claims see our article “Left out of a Will”.
A Court may declare a will (or certain clauses within it) void in circumstances where they are uncertain, impossible to satisfy or contrary to public policy. Although relatively rare, in certain circumstances the Courts have declared gifts made under a will to be void. Examples of clauses held to be void as contrary to public policy include gifts contingent upon conditions which:
- Limited a parent’s right to raise a child in a particular faith or religion (Re Cuming; Nichols v Public Trustee (South Australia)  HCA 32);
- Imposed constraints on the education or upbringing of children (Re Sandbrook  2 Ch 471)
- Restricted a beneficiary’s entitlement to issue inheritance family provision proceedings (Lieberman v Morris (1944) 69 CLR 69);
- Placed a restraint upon marriage (Re Thomson  SASR 278); and
- Required a beneficiary to use the testator’s surname (Littras v Littras  2 VR 283)
An individual can by contract restrict their testamentary freedom. For example a testator may enter into a binding contract whereby they agree to leave property under their will in a particular manner or not to revoke their will. The most common of these types of contracts is a ‘mutual wills’ agreement whereby 2 people (normally spouses) agree to make their wills in a certain way on the basis that neither will change their will. By its very nature a will is revocable, however where a testator breaches a contract not to revoke their will, then a right of action for damages or equitable relief may arise.
A person may only give away their property under a will if they have testamentary capacity at the time the will was made. This means that a Court must be satisfied they were of sound mind, memory and understanding to make a will.
If an individual lacks testamentary capacity then their will, and any gifts made under it will be invalid. Accordingly, the estate will be distributed in accordance with an earlier valid will (if there was one) or in accordance with the intestacy provisions of the Administration and Probate Act, 1919.