Dear Everyone,
Who Can Make a Family Provision Claim and what is the concept of an “eligible person”
In my first newsletter I discussed how Family Provision legislation arose and the rationale behind why the legislature introduced such legislation.
The first question in a family provision claim is not whether the deceased’s will is fair, it is whether the person seeking provision, is legally entitled to bring the application. Chapter 3 of the Succession Act 2006 (NSW) identifies the categories of persons who may apply.
Section 57 presently identifies six principal categories of eligible persons:
- The first category is the person who was the spouse of the deceased at the date of death. This includes a person who was legally married to the deceased or in a de facto relationship;
- The second are the children of the deceased, including adopted children;
- The third are former spouses;
- The fifth are dependant grandchildren and dependant members of the household;
- The final category is a person with whom the deceased was living in a close personal relationship at the time of death. The Act defines a close personal relationship as a relationship between two adults, other than marriage or a de facto relationship, in which they live together and one or each provides the other with domestic support and personal care for no reward.
Once eligibility is established the Court then must be satisfied that adequate provision has not been made for the proper maintenance, education or advancement in life of the eligible person. For some categories of eligible persons, the applicant must also establish that there are circumstances which warrant the making of the application.
The Court considers matters such as:
- the applicant’s financial resources;
- present and future financial needs;
- earning capacity;
- age;
- health and disability;
- the applicant’s relationship with the deceased;
- contributions made to the deceased or the estate;
- provision previously made by the deceased;
- the needs of other beneficiaries;
- the size and nature of the estate;
- the deceased’s obligations and responsibilities;
- the circumstances of other eligible persons; and
- other relevant circumstances.
The statutory list is extensive and is not necessarily exhaustive.
A family provision claim is not simply a means of correcting an unequal distribution. Suppose a deceased person leaves two adult children. One child owns several properties, has substantial income and has no significant financial need. Whilst the other child rents a modest home, has limited income and significant financial commitments. The fact that both are children of the deceased does not mean that they must receive equal provision. The Court examines the circumstances of each person.
The Court must consider the size and nature of the estate. A claim against an estate worth $10 million presents a very different situation from a claim against an estate worth $300,000. There may also be competing claims.
For example, an estate may have to provide for:
- a surviving spouse;
- minor children;
- an adult child;
- a dependent disabled beneficiary; and
- another person who was financially dependent upon the deceased.
The Court must determine the appropriate balance between those competing interests.
A family provision application generally must be made within 12 months after the date of death. Under special circumstances the legislation allows the Court has power to permit a late application in appropriate circumstances. This is a critical practical consideration. A person who believes that they may have a claim should obtain legal advice promptly rather than waiting for the estate administration to be completed.
Importantly, an application can be made whether or not a grant of probate or administration has already been obtained.
When I assist my clients in preparing a will, I consider and advise my clients the following matters:
- who may be an eligible person;
- whether any person is financially dependent upon the will-maker;
- whether there are estranged children;
- previous marriages and relationships;
- significant lifetime gifts;
- ownership of assets jointly;
- superannuation;
- trusts and companies;
- insurance;
- family businesses; and
- transactions undertaken before death.
The objective is not merely to produce a legally valid will. The objective is to reduce the risk that the estate will become the subject of expensive litigation.
In my next newsletter, I will examine the central legal test, the meaning of “adequate provision”, the Court’s discretionary jurisdiction, the competing claims of beneficiaries and applicants, and the importance of the deceased’s obligations and responsibilities.
I have assisted many clients with drafting wills with the family provision legislation in mind to minimise as much as possible any family provision claim being filed. Our expertise includes undertaking probate and administration and addressing family provision in the Supreme Court. If you or anyone you know requires assistance in either drafting a will or a family provision matter, please do not hesitate in contacting me.
Wishing you a wonderful day,
Jeffrey Choy
JCL Legal
0419 233 670