You have worked hard your whole life to acquire your wealth. When making your Will and Last Testament you hope that your wishes of where your assets are to be distributed are fulfilled.
Unfortunately this is not always the case.
In New South Wales if you have failed to adequately provide for an eligible person, they can bring a claim on your estate for ‘adequate provision’ (known as a Family Provisions Claim pursuant to Chapter 3 of the Succession Act).
Who can make a claim on my estate?
Eligible persons are defined in Section 57 of the Succession Act and include the following:
- a person who was the wife or husband of the deceased person at the time of the deceased person’s death,
- a person with whom the deceased person was living in a de facto relationship at the time of the deceased person’s death,
- a child of the deceased person
- a former wife or husband of the deceased person,
- a person:
- who was, at any particular time, wholly or partly dependent on the deceased person, and
- who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,
- a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.
What factors do the Court consider?
The court will first determine whether the applicant is an eligible person within those defined in Section 57. The court will then assess whether adequate provision has been made, by looking at a number of factors including, but not limited to:
- The relationship between the applicant and the deceased person, including nature and duration;
- Nature and extent of any obligations or responsibilities owed by the deceased person to the applicant;
- The nature and extent of the deceased persons estate including and assets and liabilities of the estate;
- The financial resources and financial needs (both present and future) of the applicant;
- If the applicant is living with another person, the financial circumstance of the other person;
- Any physical, intellectual or mental disability the applicant may have;
- The age of the applicant;
- And a range of other considerations pursuant to Section 60 of the Succession Act.
A Family Provision Claim must be lodged within 12 months of the date of the death of the deceased. The court will only accept applications outside this period in circumstances they deem as exceptional.
How do we minimise the risk of claims being made?
To minimise the risk of a claim being brought on your estate, there are a number of steps that can be taken to ensure that your wishes are more likely to be met and not challenged on your death.
Firstly, it is important to ensure that you have a comprehensive estate plan. This includes the consideration of a range of factors that may be overlooked including:
- The nature of your assets
- The ages of your beneficiaries
- Taxation implications
Secondly, you should explain your reasons to your beneficiaries to reduce the likelihood of them suing your estate. Giving reasons surrounding why you have decided to distribute your estate in a particular way helps reduce the risk of a claim being made. Although, at times, this may be difficult to bring up, it helps beneficiaries to accept the reasons while you are alive.
A Real Life Case Study
In the recent case of McIntyre v O’Regan a Court upheld a deceased’s wishes where the applicant, the deceased’s children, challenged the ‘adequateness’ of provision made for them in their Mother’s will. In this case the two children were left $250,000.00 each from an estate with a value of approximately $1.1 million. Justice Stevenson gave weight to the fact that the deceased had explained how she was going to distribute her estate while she was alive.
In New South Wales it is particularly important to consider the way assets are dealt with prior to death due to a concept known as ‘notional estate’. It involves the ability of the Court to ‘clawback’ assets that have already been distributed prior to death or assets that may not usually form part of your estate, such as superannuation funds.
There are many considerations when preparing and arranging your affairs. This is just a brief outline of some of the issues that arise. We can help ease the burden by providing you with tailored advice to help ensure that your wishes are met and upheld. Alternatively, we can assist you if you believe you have been treated unfairly in a will.
This article contains comments of a general nature only and are provided to give an overview of a particular topic. Although we attempt to ensure the content is correct it may not take into account any recent or subsequent developments in the law. The article is not intended to be relied upon and is not to be substituted by specific professional advice. No responsibility can be accepted by Gamble Law and Estate Planning for relying on any information contained in this article.