If when making your Will you provided for individuals because you thought you had too, now may be the time, in light of the following changes, to consider whether your Will should be reviewed and if necessary amended.
Such changes, which will take effect from 1 January 2015, apply to estates of those who die on or after that date and will significantly limit the categories of people who can challenge a Will.
An individual can challenge the distribution of a deceased estate under Part 4 of the Administration and Probate Act 1958 (Vic) (the Act) by way of a ‘Testator’s Family Maintenance Claim’ (FMC).
Current Law
The Court can currently only make a ‘Family Provision Order’ (FPO) (the outcome of a FMC) for the proper maintenance and support of a person for whom the deceased had a responsibility to make provision (s 91(1) of the Act) having regard to a range of factors such as the nature and length of the relationship between the claimant and the deceased, the claimant’s age, conduct and character. FMCs can thus be instigated by anyone, from friendly generous neighbors to long-lost cousins.
This approach has long been considered uncertain and conducive for opportunistic or non-genuine claims. In many cases, FMC’s diminish the value of estates significantly where costs and legal fees are awarded against claimants. Judges meanwhile are cautious about interfering with an individual’s wishes in respect of the distribution of their estate.
New Laws
On 21 October 2014, the Justice Legislation Amendment (Succession and Surrogacy) Bill 2014 was passed and inserts a number of new provisions into the Act concerning Part 4 FMCs, with the following effect:
- A FMC can only be made by an ‘eligible person’ (EP) which is defined as:
(a) a spouse/domestic partner of the deceased at the time of their death;
(b) a child, step or adopted child of the deceased who at the time of death of the deceased is:
i. under 18 years of age;
ii. a full time student aged between 18 and 25; or
iii. under a disability.
(c) a former or domestic partner of the deceased, who at the time of the deceased’s death would have been able to take proceedings under the Family Law Act 1975 but cannot due to the deceased’s death;
(d) a child or stepchild of the deceased (or one who was treated as such) other than one under 18 years old, a full time student between the ages of 18 and 25, or under a disability;
(e) a registered caring partner; grandchild; spouse or domestic partner of a child of the deceased if the child of the deceased dies within one year of the deceased’s death; or a member of the household of which the deceased was also a member, provided the Court is satisfied that they are wholly or partly dependent on the deceased for their proper maintenance and support.
- The Court must, in making a FPO, be satisfied that at the time of the deceased’s death that:
(a) the deceased had a moral duty to provide for the EP’s proper maintenance and support; and
(b) the deceased’s Will (if any) and/or the rules of intestacy (if they apply) failed to make adequate provision for the EP’s proper maintenance and support.
- In determining the amount of provision to be made by a FPO, the Court must have regard to:
(a) the degree to which the deceased, at the time of their death, had a moral duty to provide for the EP;
(b) the degree to which the distribution of the deceased’s Estate fails to make adequate provision for the proper maintenance and support of the EP;
(c) in respect of an EP referred to in 1(d) above, the degree to which the EP is not capable, by reasonable means, of providing adequately for the EP’s proper maintenance and support;
(d) in respect of an EP specified in 1(e) above, the degree to which the EP was wholly or partly dependent on the deceased for the EPs proper maintenance and support at the time of death.
- The amount of provision made in a FPO must be:
(a) limited by reference to the amount necessary for the proper maintenance and support of the EP; and
(b) for EP’s falling within 1(e) above; proportionate to the degree of dependency at the time of the deceased’s death.
- In making a FPO, the Court:
(a) must have regard to the deceased’s Will, any evidence of the reasons for making the dispositions in the Will and any other evidence of the deceased’s intentions in relation to providing for the applicant;
(b) may, rather than must, have regard to the criteria currently outlined in s91(4)(e)-(p) such as the nature and length of the relationship between the parties, the size and nature of the estate, the character, conduct age and financial resources of the eligible person and benefits previously given to the eligible person.
(c) may have regard to the effect an order would have on the amounts received by other eligible persons.
Example of eligibility to bring a FMC.
C is D (the deceased’s) cousin. D is 85 and in poor health. C lives nearby and has for about 2 years, contributed to D’s day-to-day care i.e. drives her to medical appointments, helps prepare her meals. D leaves her entire estate to her daughter, who resides overseas.
C wants to make a FMC.
Under the Act
Pre 1 Jan 2015: C could argue that D had a responsibility to make provision for C and that D’s Will did not make adequate provision for C’s proper maintenance and support. C could substantiate her FMC with evidence of her low earning capacity, financial need and that but for her generosity towards D, D would have required external help and support (which would have diminished her estate).
Under the New Law
Post 1 January 2015: C would not be an ‘eligible person’ within the meaning of the Act unless C was a ‘registered caring partner’ of D.
If you do need any advice or assistance with revising your Will or from 1 January 2015 would like to make a FMC, then please do not hesitate to contact Nicholas Brand on 03 9614 7707.
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