31/10/2012

It may come as a surprise that your former spouse or a spouse from whom you have separated may make a claim on your deceased estate even though you have left your estate to your children or someone else in your Will.

In a recent Supreme Court decision, the Court ordered $125,000 of the deceased’s estate be given to the deceased’s wife from whom he had separated 6 years earlier, even though she was not named in the Will as a beneficiary.

In NSW the Succession Act 2006 allows an “eligible person” to make a claim on a deceased estate where they have not been provided with “adequate provision for the proper maintenance, education or advancement in life of the person”.

In the case of Fillingham v Harrison & Carrette, an application was made by the deceased’s fourth wife from whom he had not divorced but had separated 6 years before the deceased passed away.

The background of the case includes:

• The deceased was married 4 times during his life and had two children to his second and third wives respectively.
• The applicant married the deceased in 1998 and separated in 2004 (no children from that marriage).
• During their marriage the applicant and the deceased worked in the deceased’s business.
• The deceased made his last Will in 2007 appointing his second and third wives as his executors and leaving his entire estate to his two children.
• The applicant moved to Barbados in 2008 and remained there until 2010.
• The deceased signed a divorce application in April 2010 but did not file it.
• The deceased died in November 2010.
  

The Court held that:

“As the plaintiff was still married to the deceased at the date of his death, she is an eligible person.”

It was argued by the representatives of the estate that at the time of the separation in 2006 the couple came to an informal property settlement with some assets being given to the wife to the value $15,000.  The consequence was that the deceased no longer owed a moral duty to the separated spouse having regard to the informal property settlement.

The Court disagreed with that submission and held in favour of the wife that a moral duty continued and that in any property settlement in divorce the wife would have expected to get in excess of $50,000.

The Court having found that the wife was entitled to some part of the deceased estate had to determine the financial position of the two children named in the will and the applicant to determine the “adequate provision” that should be made to all 3 persons.

The Court held that:

“The plaintiff did contribute to building up some of the estate of the deceased.  She worked in his business although they were both paid a modest wage from the business.
 ……

Given there was no provision for the plaintiff the first stage has been satisfied.  The second stage or alternatively an overall consideration of the discretionary factors leads me to the view that some provision should be made for the plaintiff.

The estate is not a large one and in my view an appropriate legacy for the plaintiff is the sum of $125,000 …. and adjustments between the beneficiaries will be a matter for the executors.”

The effect of the order is that the applicant was to receive $125,000 out of the estate which had a net value of less than $500,000 which meant the gifts to the two children were reduced by that same amount.

The decision in this case serves as a reminder that once a marriage has broken down or divorce has occurred it is important that the former spouses give consideration to the waiver of any rights each party may have against the other’s deceased estate.

For NSW residents TOWNSENDS BUSINESS & CORPORATE LAWYERS can help you arrange the Court approval necessary to avoid any such claim.  Contact us for details of the fixed fee service we offer.

If you have any questions in relation to this article, please contact us on (02) 8296 6222.