When Words Matter: Verbal Promises and Your Estate Plan
In the case of Kramer v Stone [2024] HCA 48, the High Court of Australia reaffirmed the enforceability of a testamentary inheritance promise under the doctrine of proprietary estoppel by encouragement.
This decision highlights the importance of aligning unwritten verbal promises and oral assurances with formal testamentary documents, including Wills.
The High Court Ruling involved the family of former ABC Chairman and Australia’s first female English professor of Sydney University, ‘Dame Leonie Kramer’. The dispute referred to a 100-acre parcel of land that was verbally promised to Mr Stone, the then property manager of the family farm.
Upon the death of Dame Kramer in 2016, the parcel was bequeathed to her daughter Hilary, much to the disappointment of Mr Stone.
Mr Stone contested the Will, claiming that Dame Kramer and her late husband had promised him the property free of all incumbrances. With no written agreement in place, the High Court was asked whether an oral promise could be enforced..
The High Court upheld Mr Stone’s evidence, finding it credible and that the promise was made to compensate for what would have been a modest, and arguably inadequate income.
The High Court asserted that it would be unconscionable inequitable for the estate not to honour the original promise.
This decision highlights the following:
A court will examine the relationship between all parties and whether the promise was relied upon to the detriment of the person receiving the promise and whether it would be inequitable for the state to ignore it.
You will be held to account if you make a promise to a person and that person relies upon that promise to his or her potential detriment. Even a verbal promise that is undocumented will be held to account which may have devastating financial affects concerning a particular estate.
The need to fully and properly document agreements and promises made. It is important to consult a legal professional specialist in Estate Planning to avoid these types of costly pitfalls.
All agreements need to be transparent and discussed between family members so that all members of the family are made aware of what will occur upon your passing. All agreements and relevant testamentary gifts need to be clearly articulated in an up-to-date Will and your Will needs to be reviewed and updated on a regular basis.
Contact us at Kenney Legal where we can guide and assist you in your particular estate plan and let us make sure you avoid costly potential mistakes and pitfalls.
Rick Allwell is an Associate Lawyer at Kenney Legal with a strong interest in succession law and estate planning. He is dedicated to helping clients protect their legacy and plan for the future with clarity and confidence.
Please note, this article is general in nature and does not take into account your personal situation or circumstances. For further information please contact Kenney Legal at info@kenneylegal.com.au or contact us via our social media networks.