Considering Family Provision Claims in Estate Planning

When parties commence living in a  relationship an obligation to make provision for that partner begins. At the commencement of the relationship the obligation is slight however it becomes more onerous as the relationship develops. There is generally a presumption of advancement for de-jure spouses. If a client has instructed you to include a life interest in their Will. On it’s own, especially if the relationship continues for some time, a life estate may be regarded by the court as inadequate to meet a spouse or de-facto spouse’s future needs.

A de-Jure or a de-facto spouse, has standing to seek additional provision from a person’s estate. To minimise the impact of a potential claim, a defensive asset structure ought to be considered. Asset re-structuring may minimise the impact of a potential claim. For example, the assets may be transferred into the names of the expectant beneficiaries as joint tenants. In doing so they would pass by the law of survivorship to the surviving joint tenants and not be treated as an asset of the estate. They may be transferred into other legal entities; such as inter vivos trusts or companies, which the expectant beneficiaries can or will control. Taking quick action in respect of transferring or dealing with estate assets means that those transfers may not be treated as relevant property transactions, and fall outside of Part 3.3 of the Succession Act’s (NSW) notional estate provisions. The client ought to be advised to check the impacts on her entitlements to social security benefits when considering transferring assets to third parties.

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