ESTATE PLANNING – Have your considered the Family Provision risks?

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  1. When planning the succession of your estate upon your passing away, it is important to consider the risk of possible Family Provision Claims which may arise, and may result in Family Provision Applications being brought to change your testamentary dispositions.
  1. Each State and Territory in Australia has its own legislation relating to Family Provision Applications, the general approach of the Courts Australia-wide is largely the same.
  1. It may therefore be necessary to look to the case law of other States and Territories in order to fully understand and apply the law to your family’s circumstances.
  1. A FPA must be generally made within six months of the date that a grant of probate of the Will is obtained.
  1. The classes of eligible persons to make a family provision application generally include a spouse, child, or grandchild of the deceased.
  1. Parents or siblings of the deceased may also able to make an application if they satisfy the Court that they cared for or contributed to the maintenance of the deceased person during their lifetime.
  1. The Court’s approach to deciding applications is a two-stage process.
  1. At the first stage, the Court examines all the circumstances of the case, including the need of the applicant and their moral claim to further provision, in an objective manner and makes a determination as to whether adequate and proper provision has, or has not, been made for the applicant. The case of Singer v Bergerhouse elaborates on the process involved at this stage:

‘The determination of the first stage… calls for an assessment of whether the provision (if any) made was inadequate for what, in all the circumstances, was the proper level of maintenance etc. appropriate for the applicant having regard, amongst other things, to the applicant’s financial position, the size and nature of the deceased’s estate, the totality of the relationship between the applicant and the deceased and other persons who have legitimate claims upon his or her bounty.’[1]

  1. For more information on this stage, see our article entitled, “Estate Planning – What is ‘Adequate’ and ‘Proper’ provision for family?”.
  1. Once it has been determined that an applicant has been left without adequate and proper maintenance and support, the second stage of this process begins – deciding what provision ought to be made. Commentators have had this to say on the determination of this stage:

‘There are no guidelines or mathematical formulae which can be used to assist in this task. Decisions made by other courts on roughly similar fact situations are of assistance… Of course, they cannot be expected to solve the problem of deciding what provision ought to be made in a given case. This will always be a matter for judicial discretion’.[2]

 

[1] Singer v Bergerhouse (1994) 181 CLR 201 at 290. Affirmed by the High Court in Vigolo v Bostin (2005) 221 CLR 191.

[2] John K De Groot & Bruce W Nickel (2007) Family Provision in Australia (Third Edition), Lexis Nexis Butterworths, Chatswood, p. 10.