A family provision claim occurs when an ‘eligible person’ challenges your Will for further provision from your estate.
If the person is an eligible person, they are entitled to make a claim for provision out of your estate. In most circumstances, you cannot stop an eligible person from making a family provision claim. There are exceptions such as in New South Wales, where the Supreme Court can approve an agreement (before or after your death) where a person gives away (releases) their right to make a family provision claim. It is only in very limited circumstances that the Court will later revoke such a release.
If the claim is not settled the Court will decide what, if any, provision is made for the claimant. The Court considers a list of factors before making its decision. It can make no provision for the person, through to significant provision.
There are steps you can take which may reduce the risk of someone making a claim, or reduce the amount they receive, such as:
1. Preparing a well drafted Will which considers the factors the Court would look at in a family provision claim.
2. Owning assets as joint tenants.
3. Transferring assets during your life.
4. Purchasing assets in another entity such as a family trust.
5. Creating an equitable interest.
6. Ensuring your superannuation death benefit and life insurance are paid correctly.
7. Obtaining a Court order prior to your death which releases a person’s right to make a claim against your estate (in New South Wales).
You must be mindful of the notional estate provisions if you live in, or have assets in, New South Wales. The notional estate provisions allow the Court to convert relevant non-estate assets to estate assets. These provisions allow the Court to “claw back” property if a “relevant property transaction” occurs within a defined time. If the Court makes the notional estate order, that property will then be available for distribution.