Recent Trends: Crisp Orders

We aim to deliver Just, Redemptive Outcomes®

Applicants in family provision claims need to satisfy certain requirements in order to obtain an order for provision from a deceased estate.

In some family provision claims cases, the nature of the assets or the small size of the estate make it difficult for the Court to balance “adequate provision” with the interests of other beneficiaries.

This is not a new problem in wills and estates law and a number of different approaches may be considered in order to make adequate provision for an applicant whilst also endeavouring to uphold the important principles of freedom of testation, and to ensure beneficiaries are not unfairly prejudiced.

Brief Case Example

Consider the following scenario:

Deceased’s assets:

  • House worth $800,000.00
  • Bank accounts worth $200,000.00

The deceased dies leaving a de facto spouse of 20 years and his 2 adult biological children. The deceased’s last will leaves the whole estate to his 2 children and makes no provision for the de facto spouse.

The de facto spouse has lived in the house with the deceased for the last 20 years. She has nowhere else to go and no assets of her own to support herself. The de facto spouse has no children of her own. It is likely the de facto spouse will need to move into a retirement village in the near future.

Societal attitudes generally support the idea that a person owes their spouse a primary moral obligation to make adequate provision for them after their death.

In the case example above, adequate provision has not been made for the de facto spouse and a family provision claim is likely to be made.

Faced with the scenario above, the Court may consider ordering provision for the de facto spouse from the estate, but not in such a way that the children are ultimately deprived of their entire inheritance. Making provision in the estate available to the de facto spouse to meet her immediate needs, however, does not necessarily mean the de facto spouse would need an absolute interest in the estate property.

To meet the needs of the de facto spouse, and to still preserve an inheritance for the children, the Court may consider making a Crisp Order.

What is a Crisp Order?

A Crisp order, named after the decision in Crisp v Burns Philp Trustee Company Ltd (Supreme Court (NSW), Holland J, 18 December 1979) (an unreported NSW case) usually takes the form of an Order from the Court that grants an applicant a portable life interest in particular items of estate property.

Ipp JA in Milillo v Konnecke [2009] NSWCA 109 at [48] said:

A Crisp order may entitle a plaintiff, from time to time, to require the executor of a will to sell a home devised by a will or otherwise owned by the estate, and to use the proceeds for purposes that may include purchasing another home for the plaintiff’s use and occupation, or providing accommodation for the plaintiff in a retirement village or a similar institution, or in like accommodation providing hospitalisation and nursing care. The flexibility provided by such an order underlies the notion that a Crisp order confers a “portable life interest.

A Crisp Order allows the applicant to use the value of specific estate assets to secure appropriate accommodation and to meet their ongoing maintenance needs.

Using the case example above, a Crisp Order may mean the de facto spouse is able to stay in the house for as long as she needs, and then if required, she may use the value in the house to fund an accommodation bond at a retirement village.

Upon the death of the de facto spouse, the balance of the funds used by the de facto spouse may then be distributed to the children as was the testator’s original wish.

A Crisp Order tends to be most relevant in cases involving older spouses[1] and take the form of setting aside a sum of money to be used to purchase a home for the widow or widower, but if the applicant requests, that home can be substituted for other more suitable accommodation over time, in particular, to purchase a home or right of residence in an aged care or nursing home facility for a lump sum or periodic payment whether or not the cost or any part of it is recoverable on the applicant’s death. Generally, whatever is left would pass to remaindermen (i.e. a person who inherits or is entitled to inherit property upon the termination of the estate of the former owner).

It is also worth noting the following in relation to the terms of a Crisp Order:

  1. the trustee’s obligation to use the trust fund to acquire a substitute property or to acquire a right to have aged care accommodation provided arises on request by the widow;
  2. in relation to the purchase of aged care accommodation rights, the obligation to use the trust fund for that purpose and request exists whether or not the cost of such purchase or any part thereof will be recoverable on the beneficiary’s death; and
  3. Holland J specifically anticipates that there may be doubts, difficulties or disputes as to the administration of the trust, in respect of which the trustee may need to apply to the Court for advice or direction.

The flexibility Crisp Orders offer the Court and parties seeking to negotiate or settle disputed wills matters are worth considering, although as with all legal matters, there can be traps.

[1] Thomas v Pickering [2011] NSWSC 572; Johnson v Wright [2012] NSWSC 879 & Kowalski v Kowalski & Ors [2012] QCA 234.

Find out more about Crisp Orders, contact our Family Provision lawyers Now

Our Family Provisions lawyers are able to advise and assist, whether you are seeking to make a claim for provision, or defend against one. Contact us today on (07) 3252 0011 about a fixed fee price for an initial consultation with one of our Family Provision Lawyers.