Fairer and clearer wills and intestacy law

New laws brought into Parliament this week will set fairer and clearer rules relating to wills and the disposition of property after death.

The changes arise from the recommendations of the Victorian Law Reform Commission (VLRC) in its Succession Laws Report.

The changes are intended to ensure that succession laws operate justly, fairly and in accordance with community expectations.

Attorney-General, Robert Clark said the changes to succession laws would help ensure families were not caught up in unnecessary and costly disputes about wills and inheritance.

“If the law relating to wills and the administration of estates is not clear, it can quickly become a source of stress and conflict for families at a time of great sorrow and distress. It can also result in a significant proportion of a deceased’s estate being consumed by legal fees and administrative costs,” Mr Clark said.

The Bill:

• repeals the special costs rules for family maintenance claims that currently mean the legal costs of the claims are usually paid out of the estate; instead, the ordinary rules on legal costs will apply, meaning that an unsuccessful party will usually be liable to pay the legal costs;
• simplifies and updates the rules in relation to payment of debts;
• amends the definition of ‘small estates’ – which has not been adjusted since 1995 – to apply to estates worth $100,000 plus indexation;
• recognises the informal administration of estates in certain cases, to facilitate simple property transactions without a formal grant of representation in appropriate cases; and
• simplifies the application process for the making of a statutory will.

The Bill also allows a person to relinquish their rights to make a future claim for family maintenance on a deceased estate, which is expected to be of particular benefit when property is difficult to distribute, such as farms, and families want to agree on succession arrangements while the testator is still alive.

“Families will be better placed to make arrangements for the division of property before the property-owner’s death, and to avoid disruption to property and business through subsequent claims on the deceased’s estate,” Mr Clark said.

As recommended by the VLRC, the Bill also tightens family maintenance provisions, which allow a person to make a claim against an estate on the grounds that the deceased’s will or the rules of intestacy do not provide adequate maintenance or support for them.

These provisions have been widely criticised for allowing a wide range of claimants to seek a maintenance order and for the lack of clarity about which claims might be successful, creating uncertainty for testators as to whether the wishes they set out in their will about the disposition of their assets after their death will be respected.

Under the changes, family members including a spouse or domestic partner at the time of death, a child or stepchild who is under 18 and a former spouse or domestic partner who has not had their rights determined under the Family Law Act (Cth) will be automatically eligible to make a claim.

Other specified applicants including adult children, adult stepchildren, grandchildren and members of the deceased’s household will be able to make a claim if they were wholly or partially financially dependent on the deceased.

“Family maintenance orders are an important means by which the court can rectify the situation where the deceased has failed in their duty to make adequate provision for someone for whom they should have made provision,” Mr Clark said.

“However, this objective has often been lost sight of in recent years. The changes being introduced will help to achieve greater certainty in the law for testators and their families, and for those advising them, and to restore the law to its original purpose.”