Family provision orders and overseas assets

It is well known that an eligible person can seek an order for provision from a deceased estate in New South Wales.  Less well known is that Court orders for provision can reach across state borders and even overseas.

According to the Australian Bureau of Statistics, nearly 28% of Australians were born overseas.  It is further believed that approximately 1 million Australians are presently living overseas, some of whom intend to return to live at an undetermined time, some with no intention to return whatsoever.

Therefore, it is inevitable that people will accumulate assets both here and abroad.  This can create more problems if a person’s estate is subject to family provision litigation as the outcome may be determined by the:

• deceased’s domicile at his or her date of death; and
• law affecting the transfer of assets in each separate jurisdiction.

Domicile of the deceased

Assuming that a person meets the eligibility criteria under the Succession Act 2006 (NSW) and has established that they have need for provision from the deceased’s estate, will the Supreme Court have recourse to assets outside of New South Wales?

The first issue to be determined is whether the deceased was domiciled in New South Wales at the date of death.  In most cases, domicile is determined by:

• origin – the place where the person was born; or
• choice – where the person voluntarily made his or her habitual residence.

New South Wales Court’s power to make orders

If the deceased was not domiciled in New South Wales then the Court will only have authority to make a family provision order if the deceased owned property in New South Wales.

Section 64 of the Succession Act theoretically permits the Court to make orders over property located outside of New South Wales, which belongs to the estate of a person who was never domiciled in New South Wales.  However, the Court has put a limit on the legislation’s reach by stating that there must be a connection with New South Wales for the Court to make a family provision order.

Therefore, for the Succession Act to apply, the link with New South Wales must be that the deceased was either:

• domiciled in New South Wales at his or her date of death; or
• owned property located in New South Wales.

The Court will decline to make an order if there is no connection with New South Wales.

Application of the law

The Court has applied the law in the following way:

Taylor v Farrugia (2009) NSWSC 801

The deceased died domiciled in Malta, leaving assets in both Malta and New South Wales.  The Court held that it only had jurisdiction over the assets in New South Wales, but took the Maltese assets into account when making orders for provision.

Chen v Lu (2014) NSWSC 1053

The deceased died domiciled in New South Wales, leaving cash, shares and properties in New South Wales and properties in China.  The Court said the Chinese properties fell within its jurisdiction but declined to make any orders affecting them, instead opting to make orders over only the New South Wales assets whilst taking the Chinese properties into account when making orders for provision.  The Court also noted that the Chinese properties could be indirectly taken into account when considering what order to make regarding costs.

In the Estate of the late Anthony Marras (2014) NSWSC 915

The deceased died in Italy but was domiciled in New South Wales, leaving assets in New South Wales and an apartment in Italy.  The Court said the Italian apartment fell within its jurisdiction but for separate reasons declined to make an order affecting it.

In declining to make orders affecting the overseas assets of a person domiciled in New South Wales, it could be inferred that the Court acknowledges there could be a practical problem in enforcing its orders overseas.  Even if New South Wales law asserts the Court’s authority to make orders affecting overseas property, land registries overseas may not recognise the orders in favour of a successful claimant.

Conclusion

If a person is domiciled in New South Wales or owns assets in New South Wales, then they should consider the implications for their estate inside or outside of New South Wales if a claim for provision is made against the estate.  Owning assets outside of New South Wales (including interstate) will not necessarily put the assets beyond the reach of the Succession Act in the event of a family provision claim.

Leaving aside the jurisdiction issue, the Court can always take overseas assets into account by adjusting the orders it makes affecting property in New South Wales.  Specialist advice should be sought to reduce the risk of a successful claim against a multijurisdictional estate.

This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.

Author: Philip Davis, Senior Associate