Most family provision claims concern the distribution of the deceased’s estate after their death. However, questions arise when a family provision applicant receives an early inheritances. Can a claim for further provision still be made if a person receives early inheritance?
Early inheritance and the s 60 Factors
Pursuant to section 60(2)(i) of the Succession Act, in determining a family provision claim, the Court may consider:
any provision made for the applicant by the deceased person, either during the deceased person’s lifetime or made from the deceased person’s estate.
Accordingly, any gifts in the form of an early inheritance may be taken into account by a Court when determining whether the provision made by the deceased’s will is proper and adequate. The following cases demonstrate that while early inheritance is not an automatic bar to claiming further provision, it can hinder the likelihood of success in certain circumstances.
The Facts
The claimant, Geoff, had been gifted a rural property called ‘Pindaroi’ from his parents, which he sold for $4.2 million. The family had regarded the gift as Geoff’s early inheritance. Geoff and his father had owned in equal shares another property known as ‘The Springs’. When Geoff’s father passed away, Geoff received his father’s share in farming equipment and livestock, roughly valued at $233,835. However, the will excluded Geoff from inheriting his father’s share in the jointly owned property. Geoff's three other siblings inherited the remainder of the estate. Geoff applied for further provision, specifically seeking his father’s 50% share in The Springs.
Initial Decision
At first instance, the primary judge noted that Geoff, who was a farmer of The Springs, would be at risk of being unable to continue living on and farming The Springs. Thus, he would likely need to buy out his siblings’ share to continue farming the land or would need to sell the property if his funds were insufficient to buy out the other shares. Consequently, the judge concluded adequate provision for Geoff’s maintenance and advancement in life had not been made and ordered that he be bequeathed a 75% interest in the property and his siblings be given a 25% interest between them.
On Appeal
The Court of Appeal found the primary judge had erred in deciding to award further provision, as there was no real evidence that Geoff would be placed in the situation described by the primary judge. Most relevantly, the Court of Appeal also concluded that the primary judge had not considered the applicant’s satisfactory current financial position alongside the prior inheritance of a ‘significant’ asset, being the Pindaroi property:
“…his material needs were being met, and the primary judge erred by failing to take into account Geoff’s “early inheritance” of a significant asset earlier gifted to him when concluding that what she proposed to award Geoff was “proper” and “ought to be made.”
Re-exercising the Court’s family provision powers under section 59 of the Succession Act, the Court subsequently reversed the lower court’s provision order and ordered that no provision be made for him out of the estate.
The Facts
The deceased died leaving two daughters, Carmela and Rosa, and only one substantial property, the ‘Greystanes Property,’ valued at $800,000. The remainder of the estate consisted of $19,000 in cash and $5413 in shares and monies in other bank accounts. The deceased's will left the house to Carmela. Rosa had previously received another property as a gift and early inheritance on the understanding that Carmela would receive the Greystanes house under the will, thus, equalising their inheritances. Despite this, Rosa applied for further provision.
Initial Decision
The primary judge awarded further provision on the basis that the deceased and applicant had a close and loving relationship and Rosa had significant financial needs, having only a small hairdressing business and mortgage repayments that would increase once her temporary arrangement with the bank to lower repayments ended.
On Appeal
The Court of Appeal held that the primary judge had fallen into error in his assessment of the significance of Rosa’s early inheritance. The primary judge had mainly focused on Rosa’s financial needs and the fact that Carmela did not raise her financial circumstances in establishing her competing claim.
In the Court of Appeal’s opinion greater weight should have been attached to the earlier inheritance. Consequently, the Court upheld the appeal and ordered that Rosa’s application for family provision be dismissed.
The Takeaway
Receiving an early inheritance is not an immediate bar to a family provision claim. However, the receipt of an early inheritance or provision prior to the deceased’s death will be taken into account when deciding whether the subsequent provision under the will is proper and adequate.
If an applicant has received a significant early inheritance, it may be harder to argue that they had been left without proper and adequate provision, especially if the applicant’s financial position is fairly stable. Likewise, if the lack of provision in the will was based on a clear intention to equalise their early inheritance with the other beneficiaries’ inheritance, the applicant may experience difficulty in making a claim for further provision.
DISCLAIMER: The information provided above is published for general informational purposes only and is not intended to be nor should it be relied upon as a substitute for legal or other advice.