What is a family provision claim?
Our legal system has long recognised a person’s freedom to make a will and dispose of property in any way the person sees fit. This is known as ‘testamentary freedom’. This freedom, however, is subject to the court’s ability to make an order for provision out of an estate in favour of an eligible person, if the court considers adequate provision was not made for that person.
Testamentary freedom in New South Wales was first constrained by the introduction of the Testator’s Family Maintenance and Guardianship of Infants Act in 1916. This Act allowed the court to make an order in favour of a spouse or child if the deceased did not make adequate provision in the will.
In the 1980s the scope of this legislation was expanded by the Family Provision Act and the term “family provision claim” was introduced. The Family Provision Act broadened the class of persons who were eligible to make a claim.
Claims are now made under Chapter 3 of the Succession Act, but the term “family provision claim” continues to be used.
Its important to note that family provision claims can be made against an estate where the deceased person has left a Will, but also where the deceased person has died without a Will (that is, where they have died intestate).
It is also important to note that the law relating to wills and estates is different in each state and territory of Australia. The information provided here is in relation to the law in New South Wales. If the estate has assets in other states or territories, or the deceased person resided in another state or territory, then different laws may apply.
Who can make a family provision claim?
In order to make a claim you must be an “eligible person”. Eligible persons include:
- A husband or wife of the deceased at the time of death
- A de facto spouse of the deceased at the time of death
- A child of the deceased
- A child of a de facto or domestic relationship to which the deceased was a party at the time of death
- A former husband or wife of the deceased
- A grandchild who was at any time wholly or partially dependent upon the deceased
- A person who was at any time wholly or partially dependent upon the deceased and was at any time a member of the same household as the deceased
- A person who was in a close personal relationship with the deceased at the time of death.
A “close personal relationship” is defined in the legislation as a relationship “(other than a marriage or a de facto relationship) between two adult persons, whether or not related by family, who are living together, one or each of whom provides the other with domestic support and personal care”.
What does the court take into consideration?
The fact that someone is an “eligible person” does not automatically mean they will be successful in their family provision claim. The court, first of all, decides whether adequate provision was made for the eligible person. If not, it then decides whether an order for provision (or further provision) should be made and, if so, what provision would be adequate in the circumstances.
There are a wide range of factors that the Court takes into consideration when determining a family provision claim. Some of the factors are:
- The nature and size of the estate
- The financial circumstances of the claimant as well as his or her spouse
- The financial circumstances of all the beneficiaries as well as their spouses
- The relationship between the claimant and the deceased
- The age of the claimant
- Any physical, mental or intellectual disability of the claimant or of any beneficiary
- The obligations or responsibilities owed by the deceased to the claimant
- Any contributions by the claimant to the acquisition, conservation or improvement of the deceased’s estate
- Any contributions to the personal welfare of the deceased by the claimant
- Any provision already made by the deceased to claimant during the deceased’s lifetime
- The character and conduct of the claimant
- Evidence of testamentary intentions of the deceased, including any statements made by the deceased person
It is important to keep in mind that a claim can be made by a person even if they are already a beneficiary of the estate. As lawyers we are often asked whether leaving someone a small amount in a Will prevents that person from making a claim. The answer is no. The test is whether the amount is adequate taking into account all the circumstances, including the size of the estate.
It is also important to keep in mind that there is no rule that equal provision should be made for all children of a deceased person. If a claim is made by one or more of the children of the deceased, the Court will not simply divide the estate equally. Rather, it will consider the matter taking into account all of the relevant factors, including those listed above.
In some circumstances, a claimant may be awarded provision from assets which do not fall into the deceased’s actual estate. This may occur, for example, where the Court decides the claimant should receive provision (or further provision), the assets within the estate are insufficient to make that provision but the deceased had a relevant interest in assets which fall outside of the estate. If the Court decides to award provision from assets that fall outside the estate, the assets are declared “notional estate”. Some examples of assets which could be declared notional estate are:
- Proceeds of the deceased’s superannuation death benefit or life assurance policy which fall outside of the estate
- Assets the deceased gave away or sold for less than market value within 3 years of the death
- A loan that the deceased forgave within 3 years of the death
- An interest the deceased had in an asset owned as a joint tenant with another person (such as real estate)
A family provision claim must be lodged with the Court within 12 months from the date of the deceased’s death. It may be possible to obtain an extension of the time limit if sufficient reason can be shown for not lodging the claim on time.
Although the time limit to lodge the claim in Court is 12 months from the date of death, it is important to obtain legal advice promptly after the death rather than wait until the time limit is approaching. If you decide to proceed with a claim, the Executor/Administrator of the estate should be notified of your intentions as soon as possible and preferably before they have had the opportunity to distribute the estate.
What is the Court process when a claim is made?
Family provision claims are lodged in the Supreme Court of NSW by filing a Summons and supporting affidavit. These documents are then served on the Executor/Administrator of the estate who will then be required to file certain procedural affidavits and further affidavits responding to the claim.
Once the parties have filed and served their evidence the matter will be referred to mediation. Mediation is a process where the parties and their legal representatives come together and attempt to resolve the matter by negotiation, and it is a compulsory step in the proceedings. A mediator (usually a Registrar of the Supreme Court of NSW) presides over the mediation and assists the parties to reach a settlement. The mediator cannot impose a settlement on the parties. Any settlement reached at mediation has to be by agreement of the parties.
If the parties reach an agreement at mediation, then often the Registrar can make orders finalising the claim on the day. There are many advantages to resolving a matter at mediation rather than proceeding to a final hearing. Firstly, the legal costs are usually significantly less. It also saves the additional time and stress for the parties of going to a Court hearing before a Judge. The vast majority of family provision claims settle at or before mediation.
If the matter is one that cannot be resolved at mediation, then the Court will allocate a final hearing date where a Judge will decide the case. Sometimes the Judge delivers his or her decision on the day of the hearing, but other times, there will be a delay before the decision is conveyed to the parties.
Above is a general overview of the procedure. In some cases there are other procedural steps along the way that must be attended to.
What about legal costs?
The amount of legal costs will depend on a range of factors including whether (and how quickly) the matter can be resolved, or whether it proceeds to a full hearing.
In many cases where we act for claimants, we act on a ‘conditional’ or ‘no-win no-fee’ basis. This means that our legal fees are only paid if the claimant is successful and the fees are generally paid from money received from the estate. There may be some out of pocket costs that need to be paid along the way, for example, there is a filing fee to the paid to the Supreme Court of NSW when the proceedings are commenced. However, applications can be made to the Court to have the filing fee waived or postponed if the financial circumstanes of the claimant mean they would not be in a position to pay the fee.
As with most litigation in NSW, there is a concept that the unsuccessful party normally pays the legal fees. That means if the claimant is successful in being awarded provision (or further provision) from the estate, then the claimant’s legal costs will usually be paid from the estate. On the other hand, if the claimant is unsuccessful, they could be ordered to pay the legal costs of the estate in defending the claim. For that reason, if you are considering making a claim, it is important to get specialist advice as to the merits of your claim and the potential risks. When we act for you, we continually monitor your claim and advise you as the matter progresses.
Information contained in this article is of a general nature and is applicable to the current law in New South Wales. It is not intended to address the circumstances of any particular individual or entity.
Advice should be sought from our experienced Estate Planning Team (on 02 4929 3995 or firstname.lastname@example.org) if there is doubt as to the applicability of this information to individual circumstances. We would be happy to discuss your individual circumstances with you.