Family Provision Claims – 9 Important Questions to Consider

family provisions claims

Family provision claims are made when an eligible person challenges the validity of a Will from a deceased estate.  It is not unusual, particularly when a deceased estate is one of great wealth, for relatives to seek to contest the Will. After the Will reading, family members or spouses who felt that they were not adequately provided for in the deceased’s estate can make a claim to the Supreme Court of New South Wales or their relevant jurisdiction for a share or a larger share in the deceased estate.

In New South Wales, family provision claims are made under the Succession Amendment (Family Provision Act) 2008 and there is similar legislation across the other states and territories.

After your family provision claim application is submitted, the courts will rule upon the validity of your claim against the Deceased Estate based upon a close investigation of any obligations or responsibilities that the deceased person owed you along with what, if any, contribution you made to the deceased’s estate. Courts typically also look at the claimant’s current and historical financial circumstances.

Family provision claims are commonly referred to as Part IV claims, Testator Family Maintenance (TFM) claims or Contesting a Will.

New Zealand introduced inheritance legislation in 1900: Testator’s Family Maintenance Act 1900 and similar legislation was drafted in the Australian States and Territories as well as other Western countries around the world as they copied the New Zealand model.

Because of Federalism, each State and Territory in Australia has separate (but similar) legislation governing the disposal of deceased estates and around family provision claims. If you are considering lodging a family provision claim, it is essential that you research the relevant legislation and processes for your jurisdiction. This is particularly the case in terms of time limits (see below) and you should always seek independent legal advice before embarking on any court action or Statement of Claim initiating applications.

Last Will and Testament
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How to challenge a Will in Australia?

You can challenge a Will in Australia if you believe that this document was not the last Will and Testament of the Deceased Estate. You can claim that the deceased person or testator did not have sufficient ‘testamentary capacity‘ at the time the Will was signed. This would require psychological evidence that the testator was in some way cognitively impaired when the Will was drafted, that is, the deceased person wasn’t in their ‘right mind’ when preparing their last Will and Testament.

You can claim that the testator did not have knowledge or approval of the Will.

You can also claim that the Will was a forgery or was executed under undue influence of maleovolent parties or the document itself is completely fraudulent.

You can also find bureaucratic loopholes if you can prove that the Will was not executed (signed) in accordance with the relevant Succession Act in your jurisdiction.  In New South Wales, this can be found in Part 2.1 of the Succession Act 2006 (NSW).

Finally, if you can prove that the Testator (Deceased person) at some time revoked this Will, you may have a case to take to the courts.

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1.  Who can make a Family Provisions claim?

Generally speaking, an “eligible person” for the purposes of the legislation includes the following:

  • Surviving husband or wife of the deceased person;
  • A person who was living in a de facto relationship with the deceased person;
  • A child of a deceased person, including an adopted child;
  • A former divorced husband or wife of the deceased;
  • A person who was:
    • Wholly or partly dependent on the deceased person; or
    • A member of the household of the deceased person.
  • A person who was having a personal relationship with the deceased person.

Generally speaking, inheritance disputes arise when individuals or groups of people feel unfairly done by following a reading of the Will.

Since 1 March 2009, the Succession Amendment (Family Provision Act) 2008 came into being and it also repealed the Family Provision Act 1982 and it was designed to ensure that adequate provision is provided to the family members of a deceased person and certain other persons from the deceased person’s estate.

Guiding principles

Section 41(1) of the Queensland Succession Act, 1981 neatly sums up the intention of the succession legislation which operates across all Australian juridictions:

If any person (the deceased person) dies whether testate or intestate and in terms of the will or as a result of the intestacy adequate provision is not made from the estate for the proper maintenance and support of the deceased person’s spouse, child or dependant, the court may, in its discretion, on application by or on behalf of the said spouse, child or dependant, order that such provision as the court thinks fit shall be made out of the estate of the deceased person for such spouse, child or dependant

2. What are the most important processes you need to follow?

These will vary across each State and Territory. Importantly, you need to know not only what paperwork to submit but also what is the governing legislation for the jurisidictions of the Deceased Person and you, which may be different. You will need to know which court to lodge your family provision claim.

You need to know what it’s likely to cost you, and by this, I don’t just mean your court fees but also income foregone if you have to take significant time off work to manage this matter; costs to engage appropriate legal representation, and potential penalties if your claim is ultimately rejected by the courts and you have to pay the costs of the other party.

Lodging a family provision claim makes you the Applicant in the court hearing. You submit your case to your relevant jurisdiction, and the other party or other interested persons opposing your claim to a part of the Deceased’s Estate will be listed as Defendants and the matter will be listed in court. You will file a Statement of Claim which outlines the reasons you believe you should have received a share or a greater share of the deceased persons’s estate.

The law governing family provision claims in each state and territory are set out below:

There are two stages to your family provision claim. You lodge a claim with the court alleging that you, the eligible person, have not been adequately provided for in the Deceased person’s last Will. If the court agrees that you have not adequately provided for, the next step is for the court to act as the ‘wise and just’ testator on behalf of the Deceased Estate.

A grant of probate

In Australia, a grant of Probate is administered separately in each jurisdiction under different legislation:

However, for the purpose of making a family provision claim you only really focus upon the laws of succession and wills set out above. Legislation around Probate is useful to be aware of in the event that the Deceased passed away without leaving a Will or when checking relevant case law surrounding the outcomes of Family Provision claims.

Time limits apply?

Generally speaking, you have only 12 months from the date of death to make a claim upon a Deceased Estate. In the ACT, you have six months within the date of the Grant of Probate.

In New South Wales, under the terms of the Succession Amendment (Family Provision Act) 2008, you don’t need to get a grant of Probate or Letters of Administration before filing your claim.

Time limits will vary across jurisdiction so if you are planning on challenging a Will you will need to have comprehensive information on all the processes and filing requirements across each state and territory.

Changes to the legislation across all jurisdictions removed the express powers of executors or administrators to seek to have the period of time shortened making it more likely that you can file your family provision claim in a reasonable period of time.

There are instances where the courts will grant an extension of time if the claimant is filing outside of the 12 month period and this is discussed under point 5 below.

4. How much will it cost to run a Family Provision Claims case to hearing?

This varies considerably from a few hundred dollars to potentially around 50 thousand dollars depending upon the complexity of your matter.

Always remember, get independent and good quality legal advice. Prepare a list of questions you want addressed by your legal representative well before you engage any law firm or sign costs agreements. Show these questions to the law firms you are ‘interviewing’ – as your first appointment is often free – so use that time to thoroughly vet your legal professionals.

Estate matters are complex and you will be attracting daily court hearing fees which can be substantial.  If you fail to prove your case, you can also be hit with the costs of the other party.

You should undertake a detailed cost-benefit analysis about your family provision claim including the cost of doing nothing. Don’t let your decision to litigate be driven by emotion or resentment towards family members. Instead you have to place yourself in the position of the court and consider whether you are truly legally entitled to a share or a greater share in the deceased’s estate and whether you can convince the courts of this.

Family Provision Claims
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If your family provision claim succeeds, the costs of the proceedings are often paid out of the deceased estate but the courts have the discretion to order costs to claimants if they feel this is warranted. The various succession acts also have regulations in them identifying the maximum costs for legal services to be paid out of the deceased estate.

5. What are the prospects of success in contesting a deceased estate?

There are no guaranteed prospects of success when making a family provision claim.

In Australia, about 50% of Wills are contested usually by family members unhappy with the distribution of their parents’ estates. The boom in family provision claims across Australia recently has been of significant benefit to legal professionals and many firms are offering ‘no win/no fee’ options to draw in additional claimants.

University of Queensland research showing that three-quarters of family provision claimants are successful in their claims is further encouraging potential claimants to also consider proceeding with a claim.

Reasons for courts to grant an exemption could include that the claimant was unaware that the deceased person had died. Being unaware or not receiving notification of a death is potentially more likely in cases of severe family estrangement even where the descendants still have a valid claim to a person’s estate.

6. When should you agree to an Offer of Settlement in a Family Provisions Claim?

If after filing a family provisions claim, the other parties come back to you with a counter-offer, how should you proceed.

First, you need to consider does the offer satisfy all the requirements of fairness from your point of view. Second, if you reject the offer would you be faced with a lengthy, expensive and/or possibly unwinnable case or the potential for you to be awarded costs of the action which is likely in any event because you initiated the claim.

Is your case strong enough to justify proceeding to hearing and can you sell your claim to the Judge.  Should you proceed with your claim and reject the settlement offer if this could result in permanently damaged family relationships.

These are all questions you need to consider in conjunction with your legal advisor and estate planning specialists. You can also do some of your own research of relevant case law pertaining to these types of claims.

7. What are the tax implications of my claim being successful?

The tax consequences of having a family provisions claim being successful are covered in a separate blog article.

Family Provision Claims

In general, however, you need to assume that the Australian Taxation Office will be taking at least 30% of your inheritance.

Because any potential estate can be automatically considered a trust for taxation purposes, the tax on any potential inheritance can be considerable. Taxes are assessed at the individual marginal tax rates in Australia, excluding the Medicare levy. Make no mistake though, this is still significant.

These tax rates can also hang around for another three tax years (after death of Deceased Person) if the account has not been successfully administered and then closed down. So, when you are getting legal advice about whether to proceed with a Family Provisions claim you should concurrently consult a financial estate planner or tax specialist to guide your decision further.

Australian federal taxation legislation applies to any payout you may receive from a Will or Estate. In this sense, the executor or administrator will have filed a final tax return for the Deceased.

8. So, when is Probate granted – before or after my Family Provision Claim is heard?

Both. There is no requirement for a grant of probate or letters of administration to be filed before making a Family Provision claim.

Executors of a Deceased Estate generally have six months after the date of death to apply for a Grant of Probate. You can only get a Grant of Probate if the Deceased person has left a viable will.

The executor will file an online Notice of Intended application for Probate (on the relevant Supreme Court registry for that jurisdiction) which allows creditors and any potential challenges of the deceased estate to send their claims.

9. Can I lodge a family provision claim in the event that the deceased died intestate (without any will)

Yes, you can.

When someone dies without leaving a Will or dies ‘intestate’, in the past it was assumed that the State would acquire any property of the deceased person. Current rules set out in the Succession Amendment (Intestacy) Act 2009 (NSW) outlines a list of who can potentially be entitled to a share in a deceased person’s estate.

The new rules mean that there is an emphasis firstly on the spouse of the deceased person, and the legislation also considers multiple spouses (former husbands and wives). The new rules also don’t distinguish between siblings who are full descendants or step children. First cousins can also apply for a share of the estate.

The societal changes since the 1970s and end of the ‘no fault’ divorce and increase in blended families has moved the courts to expand the categories of people who are considered eligible persons.

A final word

Once you have made the decision to proceed with your family provisions claim and you have done all the required research including a cost-benefit analysis of lodging or not lodging a claim, you need to find the very best legal and taxation estate planners to guide you. You need to be prepared for a potentially lengthy court process, up to two years, depending on the complexity of the estate and the claims.

You should also consider how your Family Provisions claim will be met by other family members or other ‘eligible persons’ and how important those relationships are to you.  You need to consider whether the existing Will accurately reflected the wishes of the Deceased and whether your family provisions claim raises any potential ethical concerns for you or others. You need to remember that the Deceased is permitted to be ‘capricious and improvident’ (Bird v Luckie (1850) 8 Hare 301, 306; 68 ER 375, 378 (Lord Knight Bruce V-C) in the making of his or her will even if this displeases the potential recipients of the estate.  This evaluation is important and may shape the way that the court will treats your claim.

 

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