Forster v Forster

In the case of Forster v Forster, the deceased, having entered into a mutual wills agreement with his wife Annabel, passed away. The dispute arose when the deceased's step-son, James, sought an order requiring Annabel to account for her assets during her lifetime to her children and step-children. The central issue was whether Annabel held the property subject to the mutual wills agreement as a constructive trustee for the benefit of her children and step-children during her lifetime, and whether the court should compel her to disclose her financial position annually under section 8 of the Trusts Act 1973 (Qld).

The court considered the nature of the mutual wills agreement, which permitted Annabel to enjoy the estate absolutely during her lifetime but imposed certain limits on how she could dispose of it, including prohibiting substantial gifts to her own children. The court examined the legal authorities, which established that a mutual wills agreement does not create a constructive trust during the lifetime of the surviving spouse unless there is fraud or anticipated fraud. The court held that since there was no allegation of fraud or anticipated breach by Annabel, she held the property absolutely, subject to a floating obligation to deal with it in accordance with the mutual wills agreement. This obligation would crystalise into a trust upon her death, binding her personal legal representatives to distribute the estate according to the agreement.

Consequently, the court refused the application. The matter of costs was left to be heard separately.