Written by Montana Messina.
Release of Family Provision Rights
Chapter 3 of the Succession Act 2006 (NSW) (“the Act”) enables defined classes of eligible persons, found at section 57 of the Act, to institute proceedings seeking a Family Provision Order out of the estate of a deceased person. Applying to the Court for such an Order seeks provision or further provision out of the deceased’s estate.
Pursuant to section 57 of the Act, a former spouse is an eligible person entitled to make a family provision claim on a deceased’s estate, regardless of any Family Court property orders or settlement, unless a release has been approved by the Supreme Court.
So despite going through a financial settlement under the Family Law Act 1975 (Cth) with the intention to sever the financial relationship between former spouses, if one spouse predeceases the other, the former spouse is entitled to make a claim on the deceased’s estate for provision.
However, pursuant to section 95 of the Act parties are able to release their rights to apply for a family provision order. Parties to family law financial settlements, are able to enter into a written agreement releasing each other from their right to make a claim under Chapter 3 of the Act. Prior to entering into such a deed, each party is required to seek independent legal advice as to the advantages and disadvantages of the release, which will only be effective on approval by the Supreme Court of NSW. An application for approval can be made at any time, and can be made by the executors of the deceased’s estate, if required.
A Court will consider all the circumstances and the following when determining an application for approval:
(a) it is or was, at the time any agreement to make the release was made, to the advantage, financially or otherwise, of the releasing party to make the release, and
(b) it is or was, at that time, prudent for the releasing party to make the release, and
(c) the provisions of any agreement to make the release are or were, at that time, fair and reasonable, and
(d) the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice.
Once approved, the release is binding on the parties in NSW. It is important to note that this release is only binding in NSW.
In Kelly v Kelly  NSWSC 994, Hallen J articulated in some detail, the matters the Court will take into account when determining an application for approval of release under section 95.
While this is beneficial for parties who own assets in NSW, there is no equivalent in the other Australian states. Other states do not have an equivalent section to enable parties to release their rights. A section 95 release approved by the Supreme Court of NSW, would show an intention to release the estate from a Family Provision claim, however would not be binding on the Courts of other states.
In other states, you are not able to contract out of your rights to make a Family Provision claim on a former spouse’s deceased estate. It is an important consideration for parties who are going through family law settlements and who hold or intend to hold assets in other jurisdictions.
The disconnect between the states is due to family law being governed by federal law, while succession legislation is determined state by state.
Uther Webster and Evans has extensive expertise in both family law matters and succession and estate litigation. Please contact our offices to discuss your matter with our experienced family law and succession litigation team.