Family Provision Claims: Update
In Australia, testamentary freedom (that is being able to give your property to whomever you want to when you die) is balanced by laws that allow the Courts to use their discretion and ensure that remaining family members are adequately provided for with from the proceeds of the deceased’s estate.
If you have been left out of a will or if you believe that you have been treated unfairly in a will, you may have a claim against the estate of the deceased. These types of claims are called Family Provision Claims.
In most Family Provision Claims, the Court exercises its discretion and essentially weighs three factors which are the size of the estate, the needs of the plaintiff and the interests of other parties having a legitimate claim on the estate of the deceased. The weight to be given to each of these factors varies. This is especially the case in large estates.
Family Provision Claims are not about fairness – they are about a Court deciding whether what someone received (if anything) under a Will or under intestacy is adequate and proper.
In a Family Provision Claim, the plaintiff must demonstrate that they are an eligible person who has been left without adequate provision for their proper maintenance, education and advancement in life.
Assuming you are an eligible person within the meaning of the Succession Act 2006 (NSW) and that you make an application to the Supreme Court of NSW (the Supreme Court is usually the appropriate jurisdiction) within a year from the date of the death of the deceased, the Court will then go about determining your Family Provision Claim by adopting a practical two-stage approach:
Stage 1: Has adequate provision been made for the claimant in the Will of the Deceased? If the answer to that is yes, well, that is the end of the matter. If adequate provision has not been made, then Stage 2 then follows.
Stage 2: What provision should then be made for the Plaintiff?
What is proper and adequate provision in the Family Provision Claims?
A common misconception is that if a Testator leaves someone (the beneficiary) something in a Will then the beneficiary will not be able to claim anything further from the deceased’s estate. This is not correct as the Court will consider various factors when making its decision including:
- the quantum or size of the estate and the composition of the assets making up the estate;
- what are the Plaintiff’s material and financial circumstances? Material includes matters such as health, age, employment, family relationships and other characteristics;
- what are the competing material or financial circumstances of any beneficiary or other claimants? and
- what was the nature of the relationship between the Plaintiff and the deceased, and are there other reasons why a provision should not be made?
Mead v Lemon and the subsequent Appeal
The decision of Supreme Court of Western Australia in the case Mead v Lemon (2015) captured the attention of not only the legal community, but the public as well. This was perhaps largely because the estate involved was “in excess of $1 billion” and the extraordinary list of needs claimed by Ms Mead, the estranged daughter of the late Michael Wright. The list of needs included a diamond encrusted bass guitar (valued at $250,000) and a rhinestone studded grand piano (valued at $1.2 million).
In this case, Master Sanderson held that the Will of the deceased did not make adequate provision for Ms Mead and ordered the estate to pay Ms Mead an amount of $25 million. This was based on Master Sanderson’s view that the Court had an unfettered discretion, given the size of the estate, to make provision to Ms Mead as it saw fit.
Master Sanderson noted in his Judgment that his award of $25 million “will set up [Ms Mead] and her children and perhaps their children for their lives” and that wise investment would ensure that “her relatives will never want for anything again” (emphasis added).
An Appeal was lodged against the abovementioned decision and, on 22 November 2017, the Court of Appeal determined that while Master Sanderson was correct in concluding that the Will did not make adequate provision for Ms Mead, the exercise of Master Sanderson’s discretion to order provision in the sum of $25 million was flawed in that section 6(1) of the Family Provision Act 1972 (WA) and a consistent stream of authority indicates that a Court must have regard to the Will of the testator and interfere only to the minimum extent necessary to make such adequate provision.
The Court of Appeal then re-exercised its discretion and ordered that Ms Mead receive an amount of $6,142,000.
How Can We Help You?
At DLS we provide advice to:
- Executors who may be defending a Family Provision Claim;
- Applicants who are seeking adequate provision from an Estate; and
- Beneficiaries who may be seeking to protect their position under a Will.