Good Morning, Everyone
Family Provision legislation in New South Wales.
I have had many requests to explain the principle of family provision legislation in New South Wales. Due to these many requests, I have drafted a series of four newsletters.
It is a fundamental principle of succession law that a person should ordinarily be able to decide what happens to their property after death. That principle is often described as testamentary freedom. A person may make a will leaving their property to a spouse, children, other relatives, friends, charities or, subject to the law, to anyone they choose. However, testamentary freedom has never been absolute and for more than a century, New South Wales law has recognised that there are circumstances in which a deceased person’s moral or familial obligations should prevail over an unrestricted testamentary disposition.
The modern law is now principally contained in Chapter 3 of the Succession Act 2006 (“the Act”). The Act expressly provides for orders designed to ensure that adequate provision is made for certain members of the deceased person’s family and other persons identified by the legislation. Historically, the law placed considerable emphasis upon the deceased person’s freedom to dispose of property by will. That could produce harsh results. For example, a person might die leaving:
- a surviving spouse with inadequate financial resources;
- young or dependent children;
- an adult child with a disability;
- a child who had devoted years to caring for the deceased;
- a former spouse with continuing financial needs;
- a dependent grandchild; or
- another person who had become dependent upon the deceased.
The deceased might nevertheless leave most or all of the estate to another person. The law eventually recognised that a deceased person’s legal ownership of property during life did not necessarily answer the question of what constituted a fair and appropriate distribution after death. The family provision jurisdiction was developed to address that problem.
Testator’s Family Maintenance and Guardianship of Infants Act 1916
The first major legislative development in New South Wales was the Testator’s Family Maintenance and Guardianship of Infants Act 1916. The original legislation was relatively narrow. The 1916 legislation initially applied to deceased persons leaving a valid will and was principally directed towards widows and children of deceased men. The legislation was subsequently expanded. Among the important developments were:
- extension to certain estates where the deceased did not leave a valid will (intestate);
- extension of eligibility to all children whether they were adopted or born outside of a marriage; and
- progressive expansion of the categories of people who could seek provision.
The law was therefore gradually moving away from the concept that only a traditional widow or child of a deceased testator could obtain relief.
Family Provision Act 1982
A major change occurred with the enactment of the Family Provision Act 1982. The 1982 legislation introduced the much broader concept of an “eligible person”. This was an important conceptual development. The question was no longer simply whether the deceased had failed to provide for a particular category of family member.
Instead, the legislation permitted the Court to examine the circumstances of the particular applicant and the deceased’s relationship with that person. The 1982 legislation also introduced or developed the jurisdiction concerning property which was not necessarily part of the deceased’s estate in the ordinary sense. This became the foundation of what is now known as the notional estate jurisdiction.
Succession Act 2006
The Succession Act 2006 was enacted to restate and reform succession law in New South Wales. Chapter 3 deals specifically with family provision. The legislation defines a family provision order as an order concerning the estate or notional estate of a deceased person to provide for the maintenance, education or advancement in life of an eligible person. The modern jurisdiction therefore involves two related but distinct concepts:
First: Was the claimant an eligible person?
Second: If so, has adequate provision been made for that person’s proper maintenance, education or advancement in life?
Those questions are only the beginning of the Court’s analysis.
Testamentary freedom versus family responsibility
The modern law attempts to reconcile two competing principles.
Principle 1-Testamentary freedom in that a person should ordinarily be entitled to determine how their property is distributed after death.
Principle 2- Family responsibility and a deceased person may have had responsibilities towards particular people which should not simply disappear upon death.
The Court therefore does not approach every family provision case as though the deceased was required to divide the estate equally amongst family members. Nor is there an automatic entitlement for every child to receive an inheritance. The legislation instead asks whether adequate provision has been made for the proper maintenance, education or advancement in life of an eligible person. That distinction is fundamental.
Family provision is not an “inheritance entitlement”
One of the most common misconceptions is that being a child, spouse or other eligible person automatically gives a person an entitlement to a particular percentage of an estate. It does not. The legislation creates a discretionary jurisdiction. The Court must consider the particular circumstances of the deceased, the applicant, the estate and other persons who may have competing claims. Accordingly, two children of the same deceased person may receive very different outcomes. One may have substantial assets and income and receive nothing whilst another may be financially disadvantaged, have a disability, have made substantial contributions to the deceased, or have other compelling circumstances for the court to determine that they are to receive some provision not provided in the decease’s will.
Why this remains important today
Modern families are considerably more complicated than the traditional family structures that existed when the original legislation was enacted. A modern estate may involve:
- a first marriage and children of that marriage;
- a second marriage;
- children of different relationships;
- de facto relationships;
- former spouses;
- stepchildren;
- estranged children;
- dependent grandchildren;
- family businesses;
- companies and trusts;
- superannuation;
- jointly owned property;
- substantial lifetime gifts; and
- property transferred before death.
The family provision jurisdiction has therefore become an important part of modern estate planning and succession litigation.
The central lesson
The existence of a carefully drafted will does not necessarily prevent a family provision claim. A will determines what the deceased intended. A family provision application asks whether the law requires that disposition to be modified because adequate provision has not been made for an eligible person.
The Court’s task is therefore not simply to determine what the deceased wanted. It is to determine what provision, if any, should properly be made in the circumstances recognised by the legislation.
In our next newsletter I will examine the statutory definition of an eligible person, including spouses, de facto partners, children, former spouses, dependent grandchildren, members of the deceased’s household and persons in close personal relationships.
We 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
jeffrey@jcllegal.com.au
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Legal Disclaimer: This guide is for informational purposes only and does not constitute legal advice.
