Australia:
Can a daughter make a family provision claim against the estate of her long-dead father, to be paid for out of the estate of her recently deceased stepmother? Which case won?
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The Facts
Father dies leaving small legacy to daughters and balance of
estate to second wife
The deceased and his first wife had two children.
The deceased's first wife died in 1985, and in 1997 he
married his second wife, S.
There were no children of this marriage, which ended when the
deceased died in July 2003.
The deceased's estate was estimated at almost $2,000,000,
with the main asset being the matrimonial home.
The deceased left each of his daughters a legacy of $25,000 in
his will. He left the residue of his estate to his second wife,
S.
The will named S's brother as executor.
At the time of his death, neither of the deceased's children
sought to challenge the will.
Second wife sells matrimonial home
In March 2011, S sold the matrimonial home and purchased a home
unit in its place.
Second wife dies leaving small legacy to stepdaughters and
balance of estate to siblings
S died in November 2016, 13 years after the deceased's
death.
At the time of her death, S's estate was valued at about
$1.9 million, and included the home unit she had purchased with the
proceeds from the sale of the matrimonial home.
S's will named her brother as executor and left a legacy of
$100,000 to each of her two stepdaughters. She left the balance of
her estate to her siblings and their children.
Executor sells home unit that replaced matrimonial home
Acting in his capacity as executor of S's estate, her
brother sold the home unit and put the sale proceeds into an
investment account.
Daughter belatedly applies for family provision order out of
her father's estate
The deceased's younger daughter felt that the legacy of
$100,000 from her stepmother was insufficient, given that much of
the estate was acquired by reason of her stepmother's marriage
to her father.
However, the daughter was not eligible under the relevant
legislation to make a claim against her stepmother's
estate.
She therefore applied to the Supreme Court for a family
provision order against her father's estate. This was
notwithstanding that he had died some 14 years earlier and his
estate had been fully distributed shortly after his death.
For the daughter's claim to succeed, she required the court
to grant her an extension of time for the making of the
application.
She also required that the court designate property in her
stepmother's estate as the notional estate of her father, so
that provision could be made out of that property.
Supreme Court rules in favour of daughter and executor
appeals
The Supreme Court found in favour of the daughter. The court
granted the extension of time, designating $740,000 of S's
estate as the notional estate of the father, and provisioning
$250,000 for the daughter out of this notional estate. This was
payable in addition to the $100,000 left to the daughter in S's
will.
S's brother, as the executor of both the father's and
S's estates, appealed the ruling to the NSW Court of
Appeal.
case a - The case for the daughter
case b - The case for the executor
The provision my father made for me in his will was inadequate,
and I have a right to claim against his estate for adequate
provision, even though he died many years ago.
I have a recurrent history of ill-health with severe depression
and hypertension. At 57 years I am not well placed to resume my
business career. I do not own a home and my superannuation
entitlement of $400,000 is not enough to provide for my old
age.
The executor says that I should have made a claim at the time
of my father's death. However, I justifiably delayed out of
respect for my father and stepmother. My father and I had a close
and loving relationship and I understood how important it was to
him to provide for my stepmother in his will. This is particularly
so given that she was 27 years younger than him and likely to
survive him by a substantial period. I respected my father's
concern for my stepmother's wellbeing and so didn't
challenge his will while she was alive.
I also delayed due to a desire to maintain a good ongoing
relationship with my stepmother. She consistently assured me over
the years that my father's personal effects and property
belonged to me, saying things like "when I pass away
everything will come to you and [your sister]". I trusted her
and I had no wish to put her through unnecessary litigation.
When my stepmother died without honouring her word, I acted
promptly to bring proceedings to ensure that my father's wealth
rightly goes to his children.
Although the property in my father's estate was fully
distributed shortly after his death, legislation gives the court
power to designate a notional estate over property held by a person
"as a result of a distribution from the estate of the deceased
person". In this instance, S's executor holds the proceeds
of sale from S's home unit "as a result of the
distribution" of the matrimonial home from my father's
estate. But for that distribution, there would be no proceeds of
sale for the executor to hold.
The court should deny the appeal and uphold the lower
court's ruling.
The daughter cannot legally bring a family provision claim
against my sister's estate since she is not eligible under the
relevant legislation to do so. Why then should the court allow her
to do so "through the back door" by seeking to designate
my sister's estate as belonging to the daughter's long dead
father?
Any application against the father's estate for further
provision should have been made within the prescribed time limit.
The daughter should not now be rewarded with an extension for her
delay, particularly given that there would be a severe impact on
other beneficiaries if further provision is made. After such a long
period of delay these beneficiaries would have reasonably presumed
their entitlement was not subject to litigation.
In any event, to get an extension of time, the legislation
requires the daughter to show "sufficient cause" why the
application was not made within the required time period after her
father's death. A delay of 14 years is unreasonably lengthy and
not one in which "sufficient cause" can be
justified.
Nor is it sufficient cause that she delayed to preserve her
relationship with my sister or in reliance on any assurances my
sister may have made. Though my sister may have indicated that she
would make some provision for the daughter, she never said anything
that guaranteed entitlement to any property. Further, she met any
moral obligation she might have had to the daughter by leaving her
a legacy of $100,000.
The daughter is of the opinion that her father's wealth
should revert to his children. However, her father was very clear
that this wasn't his intention. He even wrote a statement at
the time he made his will explaining that he was not leaving more
to his daughters because they were gainfully employed at the time,
both were in good health and financially comfortable.
Further, although the court has power to designate a notional
estate over property held by a person as a result of a distribution
from the estate of the deceased person, that power does not apply
here. I do not hold any property as a result of any distribution
from the estate of the daughter's father. My sister sold the
matrimonial home that she inherited from him and purchased another
property with the proceeds of sale. This subsequent property was
then sold and I hold the proceeds of sale as executor. The daughter
is wrongly attempting to claim that this subsequent property
belonged to the estate of her father despite him never having owned
it.
The court should grant my appeal, thereby protecting my
sister's estate.
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.
