Whilst a person may leave their assets to whomever they want upon their death (known as the ‘freedom of testation’), this freedom is subject to an obligation to provide for certain ‘eligible persons’.
If such eligible persons believe that a loved one’s estate doesn’t provide for them adequately, they may be able to formally challenge the Will and obtain greater provision from the estate.
This is called a “family provision claim” or historically, a “testator’s family maintenance claim”. In Victoria, you may also hear the term “Part IV claim” used, which is a reference to the part of the relevant legislation (the Administration and Probate Act 1958 (Vic)) which deals with these type of claims.
A claim can be made in either the County Court or the Supreme Court of Victoria.
Under Victorian law, a family provision claim can only be made against the assets in the deceased person’s “estate”; that is, assets in their personal name at the date of their death (or assets that subsequently form part of the estate). Accordingly, assets that were owned by the deceased person jointly with another person, or held in a company or family trust, are generally not available to satisfy a claim. Similarly, a superannuation death benefit will only be available to satisfy a claim if it is paid to the estate by the trustee of the relevant super fund.
Where the deceased person died on or after 1 January 2015, the availability to bring a family provision claim is restricted to “eligible persons”. Most commonly, this type of claim is brought by a close family member of the deceased, such as a spouse, partner or child.
Other people who can potentially bring a claim (depending on the specific circumstances) include:
- A person who is a member of the deceased’s household at the time of their death, or who had been and was likely to have again been a member of the household in the near future;
- A registered caring partner;
- A former spouse or partner, as long as that person was eligible to bring family law proceedings at the date of the deceased’s death;
- The spouse or domestic partner of a child of the deceased, as long as that child dies within a year of the deceased; and
- Someone who believed, for a substantial period during the deceased’s life, that the deceased was their parent and was treated by the deceased as their natural child.
However, if the deceased died before 1 January 2015, a family provision claim can be made by anyone to whom the deceased owed a moral responsibility.
A claim should be made within 6 months from the date of the grant of probate (if the deceased left a will) or letters of administration (if the deceased did not leave a will). In certain circumstances, the Court may also allow a claim to be made after this 6 month period has elapsed, as long as the estate has not yet been distributed.
In order to make a claim, an eligible person will need to establish:
- Firstly, that the deceased person had a moral obligation to provide for them; and
- Secondly, that the provision they receive under the Will (or intestacy provisions, if applicable) is not adequate for their proper maintenance and support.
In weighing up the merits of a claim and deciding whether to award any provision to the claimant, the Court must consider the terms of the Will, the reasons as to why the deceased made the Will as they did, and any other evidence about the deceased’s intentions in relation to providing for the claimant.
The Court may also consider a number of other factors, including:
- The size and nature of the estate;
- The claimant’s financial situation and relationship with the deceased;
- The age, health and any disability of the claimant or any beneficiary; and
- The competing needs of the named beneficiaries (that is, if the Court were to decide in favour of the claimant, what effect would this have on the deceased’s intended beneficiaries?).
Importantly, the Court is not empowered to simply disregard the Will and provide for what is considered to be a ‘fair’ outcome in the circumstances; the ‘freedom of testation’ remains the starting point when assessing a claim. Further, the amount of any provision made by the Court must not provide for an amount greater than is necessary for the eligible person’s proper maintenance and support.
For these reasons, in order to be successful in a claim, the eligible person must be able to demonstrate a degree of relative financial need.
Defending a Claim
Typically, the executor of the estate will be the named defendant to a family provision claim. However, in circumstances where the claimant is also the executor, the defendant will be the major beneficiary of the estate.
The defendant needs to defend the claim and seek to uphold the terms of the deceased’s will. However, in doing so, they need to consider compromising the claim where such a settlement would be in the interests of the estate, when regard is had to the merits of the claim and the costs and delay of continuing to defend it.
Whilst the defendant must act in the best interests of the estate, it is often advisable for the beneficiaries of the estate to obtain independent legal advice as to how the claim may impact on their entitlement to the estate, and the steps they can take to assist the defence of the claim.
How we can help
If you or your client are considering making or defending a family provision claim, or have an entitlement to an estate subject to a claim, it’s important to seek legal advice as soon as possible in order to understand the merits of the claim, how it will impact the beneficiaries and the options available.
Moores is here to help. Over the coming months, we will be releasing a series of articles focussed on family provision claims including the different categories of claimants and addressing some common misconceptions about these claims.
Please contact us for more detailed and tailored help.
Subscribe to our email updates and receive our articles directly in your inbox.