Claim for Provision – Testator’s Family Maintenance Claims

Family maintenance responsibilities do not cease with the death of a responsible person. In Victoria, the Administration of Probate Act 1958(as amended) deals with these claims. The courts may order that provision be made out of an estate of a deceased for the proper maintenance and support of a person, of whom a deceased had responsibility to make provision (whether a deceased made a Will or not.

The courts have discretionary power to make a Provision Order provided that the Court is of the opinion that the distribution of the estate of the deceased did not make adequate provision for the proper maintenance and support of an applicant.

The Courts in determining:
(a) whether or not the deceased had responsibility to make provision for a person; and
(b) whether or not the distribution of the estate of the deceased person as effected by:-
i. the deceased’s will; or
ii. the operation of the intestacy division; or
iii. both the will and the operation of the intestacy provisions make adequate provision for the proper maintenance and support of the person; and
(c) the amount of provision (if any) which the Court may order for the person; and
(d) any other matter related to an application;

must have regard to:-
(e) any family or other relationship between the deceased person and the applicant, including the nature of the relationship and, where relevant, the length of the relationship;
(f) any obligations or responsibilities of the deceased person to the applicant, any other applicant and the beneficiaries of the estate;
(g) the size and nature of the estate of the deceased person and any charges and liabilities to which the estate is subject;
(h) the financial resources (including earning capacity) and the financial needs of the applicant, of any other applicant and of any beneficiary of the estate at the time of the hearing and for the foreseeable future;
(i) any physical, mental or intellectual disability of any applicant or any beneficiary of the estate;
(j) the age of the applicant;
(k) any contribution (not for adequate consideration) of the applicant to building up the estate or to the welfare of the deceased or the family of the deceased;
(l) any benefits previously given by the deceased person to any applicant or to any beneficiary;
(m) whether the applicant was being maintained by the deceased person before that person’s death either wholly or partly and, where the Court considers it relevant, the extent to which and the basis upon which the deceased had assumed that responsibility;
(n) the liability of any other person to maintain the applicant;
(o) the character and conduct of the applicant or any other person; and
(p) any other matter the Court considers relevant.

The Wills Act 1997(as amended) enables anyone over the age of 18 to make a Will as he or she wishes (Freedom of Testation). Nevertheless, as we will see, a Will may be challenged.

 Applicants

Underpinning this legislation, is that any applicant must show that the deceased had a responsibility to make provisionor further provision for that person. No class of person is excluded but financial considerations must be taken into account in making a claim of this nature as an applicant will not only be liable for his/her own costs but also, the estate costs if the applicant’s claim is dismissed.

Time

The Act provides that no application shall be heard by the Court unless the application is made within six (6) months after the date of grant of probate of the Will or of letters of administration.

Despite that, time for making an application may be extended for a further period by the Court after hearing such of the parties affected, as the Court thinks necessary.

If a legal person or representative has done everything legally required to transfer the estate assets to beneficiaries, the Court will not exercise its discretion to extend time fora provision claim. The reason for this is that once assets have gone, there are no assets against which a provision claim can be made. Over time, the Courts have examined what “final distribution” means and Pearce Webster Dugdales can advise you further in this regard.

Assets

With provision claims, the assets available to a Court in making an Order for Provision will include only assets individually owned by the deceased at the date of his/her death.

Therefore, the following assets are not part of a deceased estate:-

  • Superannuation;
  • Assets held in a discretionary trust;
  • Jointly owned assets between a deceased and another(the surviving joint owner becomes entitled to the whole of that asset on the passing of the first joint owner);
  • Proceeds of insurance policies where there is a nominated beneficiary;
  • Specific assets owned by a private Company (although the value of shares held by a deceased in that Company would be an asset of the estate).

Pearce Webster Dugdales can advise you as to whether there may be some alternate claim open to seek provision in relation to these other assets.

Mediation

In this provision jurisdiction, compulsory mediation exists in this process and will usually be held after an applicant’s affidavits and responding affidavits have been filed and served on opposing parties.

Mediation process can be used to expedite disputes with a view to a cost-effective outcome.

Dismissal or Strike-Out Applications

Executors/Administrators of an estate, being the nominal defendants of provision applications, have the opportunity to apply to the Court for a Summary Judgment where it is believed that an applicant’s claim did not disclose a cause of action or where a claim did not have merit.

Costs

In provision claims, in most cases the costs for both applicant and legal personal representative will be met by the estate, particularly if a settlement can be achieved at settlement.

If a provision claim goes to final hearing, and although a determination in relation to costs is discretionary, one would expect the unsuccessful party to bear the costs of the proceeding.

Small estates
– the Courts are very concerned where provision claims are made in small estates causing the costs to waste estate assets to a level that an applicant may not receive any benefit.

Distribution made of an Estate by a legal personal representative without a grant or distribution before the expiration of 6 months from date of grant
– an Executor/Administrator who distributes an estate in these circumstances can be held personally liable by a successful applicant for provision.
– to make it clear, a legal personal representative having obtained a grant, waited 6 months from date of grant and then distributed the estate, is then protected, and a claim for provision cannot be made against amounts distributed.

“Pearce Webster Dugdales are experienced in this area and are qualified to provide advice to you.”