What happens when parents deliberately give away their wealth to avoid a future family fight — then try to take it back years later?

In the recent case of McLennan by his tutor Kennedy v McLennan [2026] NSWCA 102, the Supreme Court of Appeal considered this very question and a very clear message was delivered – estate planning decisions made during a person’s lifetime are not easily undone.

John and Karen McLennan held a number of commercial properties through family trusts, self-managed superannuation fund (valued at over $7 million) and some property held directly.  They had 2 adult children, Ruskin and Susannah.  During their lifetime, the parents were concerned that Susannah might make a family provision claim and they wanted to ensure that Ruskin received most of the family estate.

To achieve their goal, the parents transferred their shares in the trustee companies to Ruskin and resigned as directors.  The family discretionary trust was amended and Ruskin was named as the sole appointor. The family home was transferred to Ruskin as an outright gift.

After Karen died, John’s relationship with Ruskin broke down and he launched proceedings claiming that the inter vivos transactions were unconscionable and should be set aside.

The Court held that there was no evidence that Ruskin had pressured his parents. The change in property and control of the trusts had effect as was intended – the documents did what the parents wanted them to achieve.  There were no special circumstances of disadvantage which existed which could justify a finding of unconscionability. Unfortunately for the parents in this case, the later change in mind by the father was not sufficient to unwind the transactions. 

On the upside, the case confirms that there is nothing inherently wrong in restructuring assets during a person’s lifetime to reduce the risks of a family provision claim. To preserve against the risk of change of mind, however, the parent’s objectives may have been better served by nominating joint appointors or considering successive change in control provisions which enlivened on certain trigger events rather than relinquishing control entirely.

This case illustrates the complexities involved when parents restructure their wealth with the intention of preventing familial disputes. It reinforces the importance of careful planning and foresight in asset distribution, as the inability to reverse such decisions can lead to unintended consequences. Ultimately, a comprehensive evaluation of one’s financial arrangements and aspirations is crucial for ensuring that the family’s best interests are upheld.

We have a team of experts who can advise you on how to ensure that the succession of your family trust meets your estate planning goals. If you would like to discuss, please contact our office on (02) 4288 0150.