Defending a claim in a deceased estate

An executor is the person appointed to manage the administration of an estate when a
Will-maker (testator) dies. Similarly, an administrator will be appointed by the Court if the
testator dies intestate (without making a Will).
As the official Legal Personal Representative (LPR), an executor or administrator has an
important role in representing the interests of the estate. He or she must oversee the
estate’s proper administration and, where the deceased left a Will, ensure its provisions
are upheld.
Executors and administrators will deal with estate lawyers, accountants, financial
advisors, estate agents, creditors and beneficiaries.
Occasionally, an LPR will face a contest to the fairness of the provisions of a Will or
distribution on intestacy. This is known as a family provision claim under the Succession
Act 2006 (NSW) and generally involves emotion and conflict, additional costs and
inconvenience.
This article explains the processes involved in a family provision claim and the LPR’s
obligations in answering a claim against the estate.
It does not consider a challenge to the validity of a Will, for example, that the Will is void
for lack of formality (not correctly signed / witnessed), lack of mental capacity, duress or
fraud.
Family provision claims
An eligible person may make a claim against the estate of a deceased person if he or
she believes they have been unfairly treated under the Will or the proposed distribution
is unfair. An eligible person includes:

  • the spouse or de facto partner of the deceased at the time of his or her death;
  • a former spouse of the deceased person;
  • a child of the deceased person;
  • a person who was wholly or partly dependant on the deceased and who is the
    deceased’s grandchild or was a member of the deceased’s household at the time
    of his or her death;
  • a person who was living in a close personal relationship with the deceased at the
    time of his or her death.
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    The claim must be made with the Court no later than 12 months from the date of the
    deceased’s death unless extenuating circumstances exist.
    Once eligibility is established, it must be shown that the deceased person failed to leave
    the applicant with adequate provision for his or her proper maintenance, education and
    advancement in life. If this can be shown, the Court must then determine what provision,
    or further provision, if any, should be made for the applicant from the deceased’s estate.
    The Court will consider a range of factors including the financial position of the applicant,
    the circumstances, financial position and needs of other beneficiaries, the size of the
    estate and the relationship between the deceased person and the applicant.
    A moral duty and obligation for the deceased to provide for the applicant in light of
    generally-accepted community standards will also be relevant.
    The role of the Legal Personal Representative
    In responding to a family provision claim, the LPR will have a primary duty to uphold the
    provisions of the Will (or distribution on intestacy) and preserve the estate assets.
    In doing so however, the LPR should consider resolving a meritorious claim that is likely
    to succeed in Court proceedings. If this is the case, the LPR should aim to negotiate a
    settlement and avoid costly litigation that may deplete estate assets, noting that the legal
    costs of a successful claim are usually borne by the estate.
    Some claims will be morally justified by persons who may not have been adequately
    provided for, or a Will may not accurately reflect what the testator may have intended
    had he or she been aware of the full circumstances of the claimant.
    A decision regarding the likely success of a claim, based on the LPR’s personal
    knowledge of the deceased and his or her family should be made with the guidance of a
    lawyer. The needier a claimant is, the more likely he or she is to succeed in a claim.
    A range of possible outcomes can be discussed enabling the LPR to make an informed
    decision as to whether to negotiate a settlement, pay the claim or defend it in Court.
    Defending the claim
    If a claim proceeds to Court the LPR must provide all evidence relevant to the claim
    made, as well as any genuine evidence required by a beneficiary to be put to the Court.
    To avoid exposure to personal liability, the LPR should not distribute any part of the
    estate unless extenuating circumstances apply. In this case, the LPR should obtain
    urgent legal advice.
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    On becoming aware of the claim, the LPR must provide other potential claimants with
    notice, allowing those persons an opportunity to also make a claim which can be heard
    in one set of proceedings.
    The LPR will file an affidavit setting out the nature and value of assets and liabilities and
    the net amount for distribution after allowing for liabilities and estate expenses. Details
    must also be provided of potential notional property (see below), any person or entity
    holding property as trustee for the estate, eligible persons or persons beneficially entitled
    to distribution from the estate, and those who have received notice of the claim.
    As the matter progresses, a further affidavit responding to the applicant’s claim and the
    matters raised in his or her affidavit evidence will also be required.
    The claim can be settled at any stage prior to the Court hearing. Mediation is generally
    ordered by the Court which can assist in resolving the dispute without further legal cost,
    or at least narrowing the issues in dispute. Most cases are resolved at mediation and
    terms of settlement prepared to document the agreement reached.
    Notional estate
    A Court may order property that does not evidently form part of an estate to be brought
    back and included in the estate assets. Notional property includes property that was
    disposed of by the deceased or an executor in circumstances where full value was not
    given for the transfer, or where the deceased omitted to do something that would
    otherwise cause the property to be included in the estate assets.
    Time limits apply and the court will only declare an asset as notional estate if certain
    criteria are met and, should an order for provision be made, the estate assets would be
    insufficient to satisfy that order.
    Reducing the potential for family provision claims
    It is important to be aware of the circumstances that may lead to a family provision
    claim. Following are some steps that can be taken to help reduce the likelihood of a
    claim against your estate.
  • Ensure your Will is properly drafted, formalised and regularly reviewed to take
    account of changing personal and financial circumstances.
  • Consider those that may be eligible to make a claim on your estate and whether
    they have been adequately provided for in the Will.
  • If you wish to leave an otherwise eligible claimant out of your Will, ensure that
    your reasons for doing so are legitimate and made known to your personal legal
    representative or documented with your Will.
  • Discuss your estate plans with an experienced lawyer and seek guidance on how
    to minimise the risk of a family provision claim.
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    If you are the executor or administrator of an estate facing a potential family provision
    claim you should obtain legal advice immediately.
    If you or someone you know wants more information or needs help or advice, please
    contact us on 02 9191 9293 or email mail@rnlegal.org
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