Understanding the value of a family provision claim in NSW
One of the most common questions people ask when considering a family provision claim is: “What is my claim worth?”
It is an understandable question. If you have been left out of a will, received less than you expected, or feel that the provision made for you is inadequate, you will naturally want to know whether it is worth taking action.
The difficult answer is that there is no fixed formula. A family provision claim is not valued in the same way as a debt, a personal injury claim, or a contractual entitlement. The Court does not simply apply a percentage of the estate or compare what each beneficiary has received.
Instead, the Court looks at whether adequate provision has been made for the applicant’s proper maintenance, education or advancement in life. In NSW, a family provision order may be made from the estate or, in some circumstances, from notional estate. The Succession Act 2006 (NSW) defines a family provision order as an order made in relation to the estate or notional estate of a deceased person for the maintenance, education or advancement in life of an eligible person.
That means the value of a claim depends heavily on the facts of each case.
Is there a family provision claim calculator?
No. There is no reliable family provision claim calculator.
While some people hope there is a simple way to calculate the value of a claim, the Court’s approach is much broader. The value of a claim can depend on:
- the size of the estate;
- the applicant’s financial position;
- the applicant’s age and health;
- the applicant’s relationship with the deceased;
- whether the applicant contributed to the deceased or the estate;
- the needs of other beneficiaries;
- the terms of the will;
- any gifts or support received during the deceased’s lifetime;
- whether there are competing claims; and
- the likely legal costs of the dispute.
A claim may be strong in one estate but weak in another. For example, a financially struggling adult child may have a strong claim against a large estate, but the same claim may be much harder to pursue if the estate is modest and the deceased has left behind a spouse with significant financial needs.
Who can make a family provision claim?
Before considering what a claim may be worth, the first question is whether the person is eligible to apply.
In NSW, section 57 of the Succession Act 2006 identifies the categories of eligible persons. These include a spouse, de facto partner, child, former spouse, certain dependent grandchildren or household members, and a person who was living in a close personal relationship with the deceased at the time of death.
Being eligible does not automatically mean the claim will succeed. Eligibility is only the starting point. The applicant must still establish that adequate provision was not made for them and that the Court should make further provision.
What does the Court actually decide?
The Court does not ask whether the will was “fair” in a general sense. The Court asks whether the provision made for the applicant was adequate in all of the circumstances.
The High Court decision in Singer v Berghouse is commonly referred to in family provision cases. It describes the approach as involving a two-stage process. First, the Court considers whether the applicant has been left without adequate provision for proper maintenance, education and advancement in life. Secondly, if that threshold is met, the Court considers what provision should be made.
In practical terms, the Court considers whether the deceased ought to have made further provision for the applicant, and if so, what amount or form of provision is appropriate.
The size of the estate matters
The size of the estate is one of the most important factors in assessing what a family provision claim may be worth.
A larger estate gives the Court more flexibility. If there is a substantial estate, the Court may be able to make meaningful provision for an applicant without unfairly affecting other beneficiaries. In a smaller estate, the Court may be more constrained.
For example, if an estate is worth $5 million, there may be room to make provision for an adult child, while still leaving substantial provision for the beneficiaries named in the will. If the estate is worth $500,000 and there is a surviving spouse who needs housing and financial security, the position may be very different.
The Court is required to consider the nature and extent of the deceased’s estate, including property that is or could be designated as notional estate, as well as the estate’s liabilities and charges.
Your financial needs are central
An applicant’s financial position is usually one of the most important parts of the claim.
The Court will consider your present and future financial needs. This may include:
- your income;
- your earning capacity;
- your assets and liabilities;
- your housing position;
- your health expenses;
- your age;
- your superannuation;
- your dependants;
- your ability to work;
- your future retirement needs; and
- any foreseeable expenses.
The Court may also consider the financial circumstances of a person you live with, such as a spouse or partner. Under section 60 of the Succession Act 2006, the Court may consider the financial resources and needs of the applicant, other applicants and beneficiaries, as well as the financial circumstances of a person with whom the applicant is cohabiting.
This is why two people in the same family can have very different claims. A financially independent adult child who owns a home and has strong income may have a more difficult claim than a sibling who rents, has health issues and limited earning capacity.
The relationship with the deceased is relevant
The Court will look at the relationship between the applicant and the deceased, including the nature and duration of that relationship.
This does not mean that only people with perfect relationships can succeed. Family relationships are often complicated. Estrangement, conflict or limited contact may be relevant, but it is not always decisive.
The Court may consider why the relationship broke down, whether the deceased contributed to the estrangement, whether there were attempts at reconciliation, and whether the applicant still had a moral or financial claim on the deceased’s estate.
For example, an adult child who had little contact with a parent for many years may still have a claim, particularly if there are strong financial needs and the estrangement was not entirely the child’s fault. On the other hand, serious misconduct by an applicant may reduce or defeat a claim.
Contributions can increase the value of a claim
Contributions to the deceased or the estate may also be important.
These contributions may be financial or non-financial. They may include:
- helping care for the deceased;
- assisting with household tasks;
- contributing money to property or expenses;
- working in a family business;
- helping preserve or improve estate assets;
- providing emotional support;
- giving up opportunities to assist the deceased; or
- acting in a way that benefited the deceased or their family.
The Succession Act 2006 allows the Court to consider any contribution by the applicant to the acquisition, conservation or improvement of the estate, or to the welfare of the deceased or the deceased’s family.
A person who has provided significant care or made sacrifices for the deceased may have a stronger claim than someone who had little involvement in the deceased’s life.
What did the will leave you?
The starting point is not always that you were left nothing. A family provision claim can still arise where you were left something, but the provision is inadequate.
For example, you may have been left:
- a small cash gift;
- a percentage of the estate;
- a right to occupy a property;
- personal items only;
- a share that is much smaller than your siblings’ shares; or
- nothing at all.
The question is whether the provision made for you was adequate in your circumstances.
A person who receives nothing may have a strong claim, but that is not automatic. Conversely, a person who receives a substantial amount may still have a claim if the estate is large and their needs are significant.
The needs of other beneficiaries matter
A family provision claim is not assessed in isolation. The Court must consider the competing claims of other people.
This includes beneficiaries under the will and any other eligible persons who have made claims. The Court may consider their financial needs, their relationship with the deceased, their contributions, their health, and their own circumstances.
This is often the most difficult part of valuing a claim. An applicant may have genuine needs, but those needs must be weighed against the needs of others.
For example, if the deceased left everything to a surviving spouse who is elderly, unwell and dependent on the estate for accommodation, the Court may be reluctant to disturb that provision significantly. If the beneficiaries are financially secure adult children and the applicant is in financial difficulty, the claim may be stronger.
Notional estate can affect the value of a claim
In NSW, the Court has powers relating to notional estate. This can be important where assets do not form part of the estate because they passed outside the will.
Examples may include jointly owned property, superannuation death benefits, certain trusts, company interests or property transferred before death.
The notional estate provisions allow the Court, in limited circumstances, to designate property that is not part of the estate, or has already been distributed, as notional estate for the purpose of making a family provision order or costs order.
This can significantly affect the value of a claim. A claim against a small estate may look weak at first, but the position may change if substantial notional estate is available.
Time limits can affect your position
In NSW, a family provision application must generally be made within 12 months from the date of death, unless the Court otherwise orders on sufficient cause being shown or the parties consent to the application being made out of time.
Delay can create problems. The estate may be distributed, evidence may become harder to obtain, and the applicant may need to explain why they did not act sooner.
If you think you may have a claim, it is important to get advice early.
Most claims resolve by settlement
Many family provision claims resolve at mediation or through negotiated settlement.
This is important when considering what a claim is worth. The likely settlement value of a claim may be different from what a Court might order after a final hearing. Settlement usually involves assessing risk, legal costs, delay, uncertainty and the commercial benefit of resolving the dispute.
The Succession Act 2006 expressly encourages settlement of estate disputes, and unless the Court orders otherwise for special reasons, a family provision application must be referred to mediation before the Court considers the application.
A practical settlement may therefore reflect not only the legal merits, but also the cost and risk of continuing the proceedings.
Legal costs can affect the real value of a claim
When asking what a claim is worth, it is important to distinguish between the gross value and the net value.
For example, a claim that settles for $150,000 may not leave the applicant with $150,000 after legal costs, mediation expenses and other disbursements.
Costs in family provision proceedings are discretionary. The Court may order that costs be paid from the estate or notional estate, but this is not automatic. The Court has power to make costs orders in relation to proceedings, including costs connected with mediation, in the manner it thinks fit.
This means that a sensible assessment of a claim must include likely costs and the risk of an adverse costs outcome.
So, what is a family provision claim worth?
A family provision claim is worth the amount that properly reflects the applicant’s unmet need, assessed in light of the size of the estate and the competing claims of others.
In some cases, that may be a modest lump sum. In other cases, it may be a substantial payment, a transfer of property, a life interest, a right of residence, or a larger share of the estate.
The Court is not trying to rewrite the will simply because someone is unhappy with it. The Court is concerned with whether adequate provision has been made for an eligible person’s proper maintenance, education or advancement in life.
The value of a claim depends on evidence. The stronger and clearer the evidence of need, contribution, relationship and estate value, the easier it is to assess the claim.
Practical examples
Example 1: Adult child left out of a large estate
An adult child is left nothing from a $3 million estate. The child rents, has limited savings, modest income and health issues. The other beneficiaries are financially secure.
This may be a strong claim. The value may be significant because the estate is large enough to make provision without causing undue hardship to others.
Example 2: Adult child left out of a modest estate
An adult child is left nothing from a $600,000 estate. The estate is left to the deceased’s surviving spouse, who lives in the estate property and has little income.
This claim may be more difficult. Even if the adult child has needs, the surviving spouse’s need for housing and security may be given considerable weight.
Example 3: Child received something, but not enough
An adult child receives $50,000 from a $2 million estate, while siblings receive substantially more. The child has significant financial need and gave care to the deceased for years.
The claim may not be about being excluded entirely. It may be about whether the amount provided was inadequate.
Example 4: Small estate but possible notional estate
The estate appears to be worth only $100,000, but the deceased transferred a valuable property shortly before death or held major assets jointly.
The claim may depend on whether notional estate arguments are available.
What evidence helps value a claim?
To assess a claim properly, it is usually necessary to gather evidence about:
- the will;
- the probate or administration documents;
- the estate assets and liabilities;
- superannuation and non-estate assets;
- the applicant’s income, expenses, assets and debts;
- medical issues;
- housing needs;
- relationship history;
- contributions to the deceased;
- competing beneficiaries; and
- any relevant statements made by the deceased.
Without that information, any estimate is only preliminary.
Conclusion
There is no simple answer to the question: “What is my family provision claim worth?”
The value of a claim depends on the applicant’s needs, the size of the estate, the relationship with the deceased, any contributions made, the competing claims of beneficiaries, and the risks and costs of litigation.
The most important point is that each case turns on its own facts. A strong claim is usually one supported by clear evidence of eligibility, financial need, relationship, contribution and available estate assets.
If you have been left out of a will, or you believe you have not received adequate provision, you should obtain advice early so that your position can be assessed before time limits or estate distribution create further difficulties.
Call (02) 8066 9990 and send us an email at mail@pbritz.com.au to book a confidential case review with Phillip Briffa.
