If a deceased person's estate is challenged in New South Wales, the court can have access to assets that do not ordinarily form part of a deceased estate to make an award to the person challenging the estate.
This is known as the 'notional estate' principle, which operates to include (among other things) any property belonging to the deceased that changed ownership in the three years before their death. It was specifically developed in New South Wales to prevent people hindering estate challenges by transferring property to other people or entities before they die.
The New South Wales Supreme Court decision of Davidson v Sampson provides an example of an estate that fell subject to this principle.
The case concerned the estate of Ms Boorne. Shortly before she died, Ms Boorne purchased a $2 million property with her second husband. She contributed 75% of the purchase price for the property and her second husband contributed the other 25%. However, they registered the property solely in the name of the second husband, because Ms Boorne was concerned that her former husband and their son might make a claim against her estate, and she wanted to ensure that her second husband was able to keep the property after she died.
After Ms Boorne died, her son did make a claim against her estate. The court held that 75% of the value of the property formed part of Ms Boorne's 'notional estate' and was available to make provision for her son. The court made orders that the property be sold and 60% of the sales proceeds be paid to Ms Boorne's son.
In this instance, Ms Boorne's attempt to protect the property for her second husband unfortunately failed because of the 'notional estate' principles.
Winner – EOWA Employer of Choice for Women Citation 2009,
2010, 2011 and 2012
Winner – ALB Gold Employer of Choice 2011 and 2012
Finalist – ALB Australasian Law Awards 2008, 2010, 2011 and
2012 (Best Brisbane Firm)
Winner – BRW Client Choice Awards 2009 and 2010 - Best
Australian Law Firm (revenue less than $50m)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.