What Are the Risks of Making a Family Provision Claim in NSW?
The decision to contest a Will by making a Family Provision Claim in the Supreme Court of NSW is often driven by a sense of urgency, need, or injustice. However, it is a legal process, not an automatic entitlement. While the potential benefit is securing adequate provision, there are significant legal, financial, and emotional risks that every claimant must understand before commencing proceedings.
Our firm is committed to assessing both the prospects of success and the risks of loss to ensure you make an informed decision.
1. The Biggest Financial Risk: Adverse Costs Orders
The most significant financial risk in a Family Provision Claim is the possibility of the Court ordering you to pay the estate’s legal costs, known as an Adverse Costs Order.
The General Rule in Family Provision Claims
Unlike general litigation where the loser always pays the winner's costs, Family Provision Claims stand apart. The NSW Supreme Court has broad discretion under the Succession Act 2006 (NSW), often taking into account the claimant's financial position and the overall merits of the case.
- If Successful: The claimant's reasonable legal costs on the ordinary basis (which is about 70% of total costs) are usually paid from the estate.
- If Unsuccessful: It is common for the unsuccessful claimant to be ordered to pay their own costs only, with the estate bearing its own defence costs.
The High-Risk Scenario: When the Court Orders You to Pay
The Court is highly likely to make an adverse costs order against the unsuccessful claimant where the claim was deemed to be:
- Unreasonable Rejection of an Offer: The claimant unreasonably rejected a genuine, reasonable settlement offer made by the estate (e.g., a Calderbank offer or a formal offer under Court rules).
- Low Prospects of Success: The claim had low prospects of excess (e.g., the claimant was wealthy or ineligible).
- Improper Conduct: The claimant's conduct unnecessarily prolonged the case, increased costs, or involved misleading the court.
Risk Mitigation: Our Full No Win, No Fee service (where available) removes the risk of you having to pay our professional fees or disbursements if you lose, and we can provide you with advice how to minimise the chases of an Adverse Costs Order being made in favour of the estate.
2. Risk of Disproportionate Costs and Provision
Even if you win, there is a risk that the legal costs incurred by all parties will consume a large portion of the estate, reducing the final benefit to everyone, including yourself.
The Risk of Costs Capping
The NSW Supreme Court is increasingly concerned about legal costs becoming disproportionate to the size of the estate.
- The Proportionality Principle: A judge may intervene to limit (cap) the amount of legal costs a successful party can recover from the estate if those costs are deemed excessive compared to the size of the provision awarded and the complexity of the case.
- Diminished Estate: Legal fees are typically paid out of the estate. This means that the total amount available to satisfy your provision and the gifts to the beneficiaries is significantly reduced by the cost of litigation.
Risk Mitigation: An experienced solicitor will always encourage mediation and reasonable settlement offers at an early stage to stop costs from escalating and preserve the value of the estate as much as possible.
3. Legal and Procedural Risks
Family Provision Claims are governed by strict legal criteria under the Succession Act 2006 (NSW). Failing to meet these criteria carries the risk of the case being dismissed.
Risk A: Failing the Eligibility Test
The Court must first be satisfied that you are an Eligible Person under the Act. While spouses and children are usually eligible, other claimants (like grandchildren or a person in a close personal relationship) carry a higher risk of failing to prove they had "factors warranting the making of the claim”.
Risk B: Running Out of Time
In NSW, the claim must be filed within 12 months of the deceased's date of death.
- Strict Time Limit: Failing to file within this period means you must seek "leave" (permission) from the Court to proceed out-of-time.
- Sufficient Cause: The Court will only grant leave if you can demonstrate "sufficient cause" for the delay and that granting leave would not unduly prejudice the beneficiaries. This can be a difficult hurdle to overcome.
Risk C: Proving "Inadequate Provision"
The law does not require the deceased to leave a claimant a specific amount. The test is whether the Will failed to make "adequate provision for your proper maintenance, education, or advancement in life."
- Focus on Need: If you have substantial assets, a high income, or a partner with resources, the risk increases that the Court will find the deceased's provision (or lack thereof) to be adequate, even if no provision was made, resulting in your claim being dismissed.
4. Emotional and Relationship Risks
The risks of making a claim extend beyond financial and legal concerns. Litigating a Will inevitably places significant strain on familial relationships.
- Family Breakdown: The process forces siblings, children, and other family members to swear Affidavits about their financial affairs, their relationship with the deceased, and sometimes negative information about the claimant. This litigation can cause permanent and irreparable damage to family ties.
- Stress and Delay: Will Disputes are stressful, emotionally exhausting, and can take 12 to 24 months to resolve if they proceed to a hearing (though most settle faster). This prolonged uncertainty can severely impact the claimant's mental health.
Mitigating the Risks: The Importance of Expert Advice
The best way to mitigate all these risks is to seek early advice from a specialist Will Dispute lawyer in NSW. Before filing any paperwork, your lawyer should provide a candid, clear assessment of:
- Your Eligibility and the Merits of your case.
- The Likely Costs of your claim from start to finish.
- The potential for an Adverse Costs Order and Strategies to minimise this risk.
Are you ready to explore the merits of your Family Provision Claim? Contact us today for a confidential and obligation-free case assessment.
