February 2009

New NSW Family Provision Law to commence on 1 March 2009

The New South Wales Succession Amendment (Family Provision) Act 2008 will commence operation on 1 March 2009.

The purposes of the Act include to repeal the Family Provision Act 1982 (the 1982 Act) and to amend the Succession Act 2006 to ensure that adequate provision is made for members of the family of a deceased person, and certain other persons, from the estate of a deceased person.

Important matters to note from the new law are as follows:

  • General Transitional Provisions include that the new law will apply in relation to the estate of a deceased person who dies after 1 March 2009.  The 1982 Act will continue to govern the determination of an application made before 1 March 2009, provided it is not affected by the operation of the new law.  The new law may allow the Court to reopen a matter determined under the 1982 Act where there was undisclosed property (see the later explanation of the undisclosed property provision).
  • Eligibility to Make a Claim is determined by reference to the definition of "eligible persons" in section 57.  A new category of eligible applicant has been introduced - being a person living in a close personal relationship with the deceased at the time of  the deceased person's death.  This applicant will only have their claim considered by the Court if they satisfy the Court of the additional jurisdictional hurdle that there are factors that warrant the claim.
  • Time Limit for Making a Claim will be reduced to 12 months from the death of the deceased person, unless the Court orders otherwise.  There is still provision for extending the time limit with Court approval.  However, there is no longer specific provision for reducing the time limit.
  • Notional Estate provisions remain but with some changes to terminology and the scope of such orders.  The "prescribed transaction" under the 1982 Act is now referred to as a "relevant property transaction".  The Court can now, pursuant to section 82, on its own motion make a notional estate order.  This overcomes previous  case law limitations on the Court's power to make such an order.  The main purpose  of the notional estate provisions is to ensure assets are brought back into the estate  that may have been transferred/distributed with the intention/effect of defeating or  limiting a family provision claim.
  • Reopening A Case Because of Undisclosed Property widens the circumstances   in which decided or settled claims (by Court order) can be reopened.  A decided   or settled claim can be reopened if there is significant undisclosed property that the Court was not aware of at the time the previous order was made that   would have prompted the Court not to have made the previous order.  Section 59(3)   sets out the circumstances in which a case can be reopened and section 59(3)(b) is   the undisclosed property provison.
  • Protection on Distribution rules have changed for legal representatives of estates (executors or administrators).  Section 93 will protect a legal representative who has "properly" made a distribution after six months from the date of death, provided the notice procedure has been followed and there is no notice of an application at the time of distribution.  Section 94(1) protects a legal representative  who distributes estate property to ensure the maintenance or education of an "eligible person" who was wholly or substantially dependent on the deceased immediately before the deceased's death.  Section 94 also protects a legal representative from distributions made if they have given the requisite notice, distributed no earlier than 12 months after the deceased's death and they have no written notice of an application.
  • Mediation is now compulsory before any Court hearing under section 98, unless there are special reasons for the Court not to order mediation (one special reason may be the risk of violence between the affected parties).
  • Legal Costs rules have changed.  Section 99 gives the Court power to order costs be paid in such manner as it thinks fit.  The section also enables regulations to be made to cap legal costs.  Section 102 enables Court rules to be made to deal with evidence and legal costs in "small estates" (defined to mean an estate whose value is under $750,000 or some other amount prescribed by the regulations).

The application of the new law leaves many questions unanswered about practice and procedure.  A future Court issued practice note dealing with procedure and costs will answer some questions.  Some issues include when is a distribution "properly" made - Another issue which is presently unclear is  whether  you value "small estates" at the date of death or at the date of the hearing.

As the practice and procedure and interpretation of the new law becomes clearer, Bartier Perry will continue to report on these changes.

Author: Gerard Basha