Preparing what happens to your estate after death can be
complicated when there has been a family breakdown, particularly
circumstances that have resulted in estranged or disgruntled
relatives. In these situations, it is not uncommon for people to
deal with their property during their lifetime so that little of it
remains in their estate. There are several ways this can occur, for
example, disposing of property, moving property into superannuation
and trusts or holding property jointly with another person.
If you have assets in New South Wales and your goal is to
deplete your estate in this way so that on your death any challenge
to your Will under family provision legislation is thwarted, then
In all Australian states and territories except New South Wales,
family provision claims can usually only be satisfied out of
property that is in the deceased person's actual estate; that
is, property that held in the deceased's name on death or
property that comes into their estate (eg, superannuation or life
insurance). In NSW, 'notional estate' provisions mean that
in certain circumstances property that is not part of the deceased
person's 'actual' estate may be included to satisfy a
family provision claim.
Family Provision Orders
A Family Provisions Claim can be made by a family member that
believes the distribution of the deceased estate will result in
inadequate provision being made for the applicant's proper
maintenance, education and advancement in life. A claim must be
made by an eligible person within 12 months of the date of death
(unless the Court otherwise extends the limitation period).
The effect of the notional estate provisions is that the Court
can look beyond the assets that were held in the name of the
deceased at the time of their death and undo any 'relevant
property transaction' which lead to a change in ownership. This
means that aggrieved beneficiaries could have access to a much
larger 'piggy bank' than was intended.
A relevant property transaction occurs when the deceased has
done an act, or failed to do an act (for example, failing to sever
a joint tenancy) that has resulted in their property being held by
another person, or subject to a trust and the full valuable
consideration for the transaction was not given to the
The timing of the relevant property transaction is very
important for property to be declared as part of a person's
notional estate. The relevant transaction must have occurred:
within the 3 year period before the deceased's death (if
wholly or partly to take the asset out of the estate),
within 1 year of the date of death (if the deceased had a moral
obligation to provide for the eligible person), or
on or after the date of death.
People who wish to exercise more control over which of their
assets will be available for distribution when they die will need
to think ahead and plan carefully. It is important to receive good
legal and financial advice, when making your Will or entering into
any investments or transactions.
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.
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There are several requirements that must be completed by an executor before the distribution of assets to beneficiaries.
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