New NSW Family Provision Law one step closer

Family provision law in New South Wales will soon change as part of the overall push for consistent succession laws throughout Australia. The Succession Amendment (Family Provision) Bill 2008 ("the Bill") was introduced into the NSW Parliament on 26 June 2008.

The stated objects of the Bill are to:

• amend the NSW Succession Act 2006 to include the law relating to family provision in the Act;
• provide for regulations to be made to control legal costs in family provision matters;
• provide for regulations to be made to control advertising by legal practitioners in relation to family provision claims;
• repeal the NSW Family Provision Act 1982;
• make provisions to deal with the transition from the old law to the new law; and
• to make consequential amendments to other legislation when the Bill becomes law.

Important matters to note from the Bill at this stage include:

• A change to the class of "eligible persons" under current NSW law who may apply to the Court for a family provision order in respect of a deceased person. Proposed section 57 specifies the persons who may apply. Those living in a domestic relationship with the deceased will no longer have automatic entitlement to eligibility to make a claim. The Bill replaces "domestic relationship" in the current Act with de facto relationship". The Bill also creates a new category of applicant eligible for a family provision order - being a person in a close personal relationship with the deceased. This applicant will have to overcome the same jurisdictional hurdles imposed on former spouses and other dependents before being entitled to have their application considered by the Court.
• The time limit for making a family provision claim will be reduced to 12 months from the death of the deceased person, unless the Court otherwise orders (proposed section 58). At present, NSW law allows for a period of 18 months from the death of the deceased person. There is provision for extending the time limit with Court approval. However, there is no longer specific provision for reducing the time limit.
• The preservation of the notional estate concept under current NSW law. Proposed sections 74 to 90 deal with notional estate orders. The main purpose of the notional estate provisions is to ensure assets are brought back into the estate that may have been distributed either before or after the death of the deceased with the intention of defeating family provision claims. The notional estate provisions ensure those assets are available to meet family provision orders made by the Court.
• The circumstances in which decided or settled claims (by Court order) can be reopened have been widened. The Court may make a further order for provision in favour of an eligible person if it is satisfied that there has been a substantial detrimental change in the eligible person's circumstances. The Bill now also gives a specific recognition to a right that probably exists under the present law ? that is to reopen a decided or settled claim if there is significant undisclosed property that the Court was not aware of at the time the previous order was made that would have prompted the Court not to have made the previous order. Whilst innocent and unintentional undisclosed property situations may be rare, it will be prudent for executors and administrators to document their due diligence searches and enquiries for estate assets to prevent possible claims against them. Proposed section 59(3)(b) is the undisclosed property provision.
• The rules dealing with the protection of legal representatives of estates (executors or administrators) have changed. Proposed section 94 sets out the rules. Legal personal representatives will be protected from liability if they distribute estate assets to provide for the necessary maintenance or education of an eligible person who was wholly or substantially dependant on the deceased immediately before his or her death. Also, legal representatives will not be liable for claims if they publish their notice of intended distribution and they distribute no earlier than 12 months after the deceased's death and they have no prior written notice of a claim.
• Proposed section 98 has the stated object of encouraging the settlement of family provision disputes. Matters must be referred to mediation before any Court hearing, unless there are special reasons for the Court not to order mediation (one special reason may be the risk of violence between the affected parties).
• Proposed section 99 gives the Court power to order costs in family provision proceedings in such manner as it thinks fit. The section also enables regulations to be made to cap legal costs (see the discussion in the Bartier Wills and Estates Bulletin of September 2007). It appears different cost considerations will apply in small estates. The proposed definition of small estates is estates where the value is less then $750,000 or such other amount as may be prescribed by the regulations. Interesting questions arise as to the accuracy of date of death values to determine if the estate is less than $750,000. At present, estimates will suffice for probate purposes. In light of this proposed change, do actual values need to be obtained? Also, what if an estate is under $750,000 at the date of death but more than $750,000 at the date of the hearing? It is hoped the regulations may clarify this issue.

Bartier Perry will continue to monitor and report on the progress of this important proposed change to NSW family provision law.

Author: Gerard Basha