25/02/2009

The Family Provision Act in NSW (shortly to be replaced by The Succession Act) effectively restricts who you can leave your estate to in your Will.

This comes as a big surprise to a lot of people but the legislation has been around for quite a long time.  It is the most common basis on which relatives challenge a Will.

The theory behind the legislation is that citizens should be obliged to look after their family members so that those relatives don’t become a drain on the State.  It is a way of ensuring that family wealth is distributed according to need.

But before you go to the barricades on the idea that your testamentary freedoms are being undermined, please note that the legislation is fairly limited in its scope.

Who can claim?

-  a spouse (including a de facto spouse)

-  a former spouse (yes, that’s right – your EX)

-  a person living in a ‘domestic relationship’ with the deceased (eg same sex partner, brother,
   sister, good friend)

-  a grandchild who was financially dependant on the deceased

-  any person who lived with the deceased at any time and was financially dependant on them.

In the superannuation context the Superannuation Complaints Tribunal’s interpretation of ‘financial dependence’ has been drawn very widely.  So a mother was held to be financially dependant on her son because he used to mow her lawn regularly. To date the courts in NSW have not interpreted the phrase that widely.

Is there any way to stop a person from making a Family Provision Act claim?  Yes.  The Act provides that a person can waive their entitlement to make a claim and that waiver will be valid if it is approved by the Court.  This is especially relevant in the context of divorce.

Most divorced couples would be horrified if their EX was to make a claim against their estate.  After all that is what the Property Settlement is all about.  But the Family Court-approved Property Settlement is not enough to waive a family provision claim.

 
So if you are in the unhappy but increasingly likely position of wrapping up your marriage, you may want to make it a term of any Property Settlement that you both waive any claim under the family provisions legislation.  That way your EX can’t make a claim on your estate.  The Court processes to achieve this are fairly straight-forward, although care and advice has to be taken in putting together the application to the Court and the supporting evidence.

If you would like more information, please contact Peter Townsend at Townsends Business & Corporate Lawyers on (02) 8296 6222.