When Love Isn't Enough: Estate Planning Lessons from Re Miglic for Blended Families

Blended family estate planning presents a challenge in managing the complex intersection of love, law, and legacy, especially when both partners have children from previous relationships. Lawyers often recommend mutual will agreements to prevent wills being changed following the death of a partner to ensure that the deceased partner's children from another relationship do not miss out when their stepparent passes away.

However, the recent Victorian Supreme Court decision in Re Miglic [2024] VSC 20 offers a sobering reminder that even the closest blended families can become embroiled in devastating estate disputes. This case involves a Toorak property valued at $11.5 million and decades-old verbal agreements, with a dispute over the source of the wealth from a surviving partner.

The Human Story Behind the Legal Drama

At its heart, Re Miglic tells a story many blended families will recognise. Kurt Milglic  was married to Kate Miglic, and from that relationship were two daughters, Lisa and Andrea. The couple separated in 1993 when the children were young. Kurt re-partnered and married Marilyn Cotterell, who had no children, nor were any children born from the union between Kurt and Kate.

For decades, the family operated under what they believed was a clear understanding about inheritance. Kurt and Marilyn made wills in 1993 that left everything to each other, with the understanding that after both died, the assets would ultimately go to Lisa and Andrea. The family even held meetings to discuss these arrangements, and multiple witnesses testified about conversations confirming the agreement. However, no such agreement was formally documented.

 Kurt died in 2007 after some years of dementia, and Marilyn inherited his entire estate pursuant to his 1993 will. This

Yet when Marilyn died in 2020, her final will told a different story, dividing her substantial estate five ways between the stepdaughters and her nephew and nieces.

The Mutual Wills Trap: When Verbal Agreements Become Legal Nightmares

The central legal issue in Re Miglic was whether Kurt and Marilyn had entered into a binding "mutual wills agreement" - a legal concept that prevents the surviving partner from changing their will without consent. The fact that a couple make wills in corresponding form that ultimately leave their estates to the same beneficiaries is not, of itself, sufficient reason to conclude an associated intention that neither is able to make a new will in the absence of the other's consent.

Mutual wills are often made between husband and wife, particularly in second or later marriages where there are children from earlier relationships. The object of mutual wills in the contemporary context is typically to give the survivor reasonably unrestrained enjoyment of the property, but to preserve assets for the children of the prior relationship.

What compounded issues in the case were that Marilyn’s brother argued that $4.25 million of Marilyn’s wealth, derived from their mother Gertrude’s estate, should be held on constructive trust for Marilyn’s nephew and nieces ( referred to as the “Cottrell assets”).

Justice Gorton ultimately found that such a mutual will agreement did exist, noting that the making of such a commitment by Marilyn would not be incongruous with ordinary human behaviour given the nature of the relationship between Marilyn and Lisa and Andrea, the fact that Marilyn had no children of her own, and that Kurt altered his testamentary arrangements to leave nothing to his children and everything to Marilyn absolutely.

However, the court rejected the brother’s claim for $4.25 million and declared that only $60,000 of Marilyn’s estate should be held on trust for the nephew and nieces as part of the Cotterell assets.

The Practical Challenges Revealed

The case exposes several critical vulnerabilities in blended family estate planning:

1. The Danger of Informal Arrangements

Both parties to an oral agreement are deceased, the agreement was not recorded in writing and must be proved by hearsay evidence of prior representations made up to 30 years ago. The court had to rely on witness testimony about conversations from decades past, highlighting the inherent problems with informal arrangements.

2. The Complexity of Family Dynamics

Complex family and other relationships, such as blended families, create additional challenges in estate planning. The case involved not just the immediate blended family but also extended family members who felt entitled to inherit, creating competing claims and loyalties.

3. The Evolution of Relationships Over Time

After Kurt's death in 2007, Marilyn executed new wills in 2011, 2014 and 2018, which progressively increased the share of her estate that was to be left to her nephew Stephen, and nieces Victoria and Louise and reduced the share that was to be left to Lisa and Andrea. This demonstrates how relationships and intentions can change over time, particularly after the death of the unifying family member.

Lessons for Modern Blended Families

1. Document Everything Clearly

The most obvious lesson from Re Miglic is the absolute necessity of proper documentation. Had Kurt and Marilyn's agreement been recorded in writing at the time, years of litigation and family devastation could have been avoided.

2. Consider Professional Estate Planning Tools

While some legal practitioners often draft mutual wills, others avoid advising clients to use such wills for fear of their uncertain legal effect. Modern blended families should explore alternatives such as:

• Binding Financial Agreements under family law

• Discretionary trusts with clear succession plans

• Life interests with remainder provisions

• Superannuation binding death benefit nominations

3. Regular Reviews Are Essential

Marilyn made subsequent wills in 2001, 2005, 2011, 2014 and 2018, showing how circumstances and intentions can change. Regular family meetings and will reviews can help ensure everyone remains aligned with the estate plan.

4. Address the Emotional Reality

The case reveals the deep emotional connections formed in blended families. Marilyn and Andrea knew each other and were part of each other's lives from when Andrea was four years old until Andrea was an adult with her children and Marilyn needed looking after by her. Estate planning must acknowledge these genuine bonds while providing legal certainty. The Re Miglic case illustrates how even well-intentioned families with strong relationships can find themselves in protracted legal battles.

The case also highlights the evolving nature of Australian families. With increasing rates of remarriage and blended families, traditional estate planning approaches may not adequately address modern family structures and their unique challenges.

Moving Forward

The tragedy of Re Miglic is not just the legal costs or the time spent in court - it's the destruction of family relationships that took decades to build. The very real human dimension of what was happening must be considered. Their long-term stepmother had just died, arrangements had to be made for Marilyn's funeral, and Lisa and Andrea would have wanted to avoid immediate conflict with their cousins.

Families light re-Miglic often fail to seek legal advice and to document their arrangements. However, Accountants and financial planners who regularly interact with their clients can provide valuable assistance in navigating the complexities of blended family relationships. Inherit Australia’s estate planning software is designed to help advisers navigate these complex issues and to connect them with an estate planning legal professional to avoid the cost and heartache that comes with post-death litigation.

Chris Hill, Head of Legal, Inherit Australia