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Claims Against an Estate

Published in November 2021

When planning your estate and its succession by preparing a will there are many thing to consider in addition to the people close to you. You might also consider whether you have already promised anything from your estate to any friends, family or acquaintances; and if you may have any obligations to any close family members that you haven’t provided for.

In circumstances where potential beneficiaries believe they should have been provided for, it may be possible to bring a claim against your estate, or the other beneficiaries of your estate.

The most common types of claims are as follows:

Promises

A claim can be made if the deceased person made promises, during their lifetime, to any person providing services or work, in exchange and reliance on the promise to be provided for in the deceased’s will.

Once common scenario that arises within blended families is when a parent has children from a prior relationship, but makes an agreement with their new partner to leave everything to that partner provided that the partner then leaves funds to the parent’s children in the partners will.  If that partner then fails to provide for those children, the children can make claim against the partners estate. This is because the promise was made to provide for them by the partner and the partner’s estate received the funds from their parent’s estate on that basis.

Moral responsibility to provide for a close family member

Claims can be made by close family members of the deceased if the deceased did not fulfil their moral responsibility to provide for the claimant in their will.

If adequate provision is not made in the will for the “proper maintenance and support” of the claimant, the Court has the discretion to make an order that provisions of the will be adjusted so payments can be made to the claimant.

Important factors the Courts will look at include the size of the estate and any competing moral claims - and the financial position of each possible beneficiary and claimant.

There are a number of factors the Courts can weigh up when considering “moral duty” including the age and health of the claimant, the property and income of the claimant, whether the claimant has dependent as well as a range of other factors.

These types of claims may be settled by informal negotiations between the claimant and the estate (with the assistance of lawyers), by formal mediation or judicial settlement conference, or by written or oral submissions at a Family Court hearing.

Relationship property

A surviving spouse or partner may choose to either make a claim for half of the relationship property under the relevant legislation, or accept what has been left to them in the will.

Relationship property is any property shared by both partners during the relationship and should usually be divided equally between both partners on the end of the relationship. However what happens to the relationship property in the event of the death of one of the couple, depends on whether the relationship is a marriage/civil union, or de facto relationship.

Married or in a civil union - the survivor has the right to an equal share of relationship property or they can choose to take what has been left to them under the deceased’s will. If the couple has signed a relationship property agreement, then the survivor can choose either what they receive under the relationship property agreement, or what has been left to them under the deceased’s will.

De facto - for less than three years and did not contract out of the Property (Relationships) Act 1976, then the survivor can only claim the relationship property if there is a child of the relationship; or the survivor made substantial contributions to the relationship, and the court is satisfied that not making the order would result in serious injustice.

If the relationship meets the above criteria, the survivor can choose to take what has been left to them under the deceased’s will or get a share of relationship property under the PRA based on their contribution to the relationship -  so it may not necessarily be an equal share.

If the de facto relationship is less than three years it is deemed to be of a relationship of “short duration” andif it does not meet the criteria to claim under the Property Relationships Act 1976, the survivor will only be entitled to whatever has been left to them in the will.

Claim timing and distribution of an estate:

A claim on an estate must be made within 12 months of probate or letters of administration being granted.

After six months from the grant of probate or letters of administration, if the executor or administrator has not received any notice of claim, then the estate can be distributed to the beneficiaries listed in the Will or by the laws of intestacy.

If someone makes a claim within six months of probate or letters of administration being granted the assets cannot be distributed until the claim has been settled.  If a claim is made after six months, and the estate has been distributed, the executor or administrator will not be personally liable to meet that claim. The claim will need to be made directly against the beneficiary who received the assets.

This article is intended for information only, it is not legal advice and is not to be construed as such. If you wish to discuss this article or your estate planning requirements please contact Mason Lockhart  or Josh Muir for further information.



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