A new Bill embodying a centennial shift towards testamentary freedom in Victoria has been introduced in the upper house of Parliament.

In its second submission to the Financial System Inquiry, the Australian Securities & Investments Commission (“ASIC”) declared its support for regulatory oversight of technology service vendors to Australia’s financial services industry.

The Justice Legislation Amendment (Succession and Surrogacy) Bill 2014 (Vic) ("Bill") was read in the Legislative Council on 20 August 2014.  The Bill’s most dramatic Succession reforms include:

  1. Enabling a person to enter into an agreement with a will-maker releasing any rights the person may have in the future to apply for a family provision order.  This may be most relevant to will-makers with a spouse or domestic partner, and will allow binding arrangements to be entered in similar manner (and perhaps in conjunction with) the BFAs which have now been available in family law for nearly 15 years.
  2. Severely limiting who can make a claim for a family provision order (that is, challenge a deceased person’s Will).  In doing so, the Bill will deprive most adult children of the rights enjoyed in Victoria for the last 100 years, to make application to the Court in circumstances of inadequate provision relative to their needs and the size of the estate of their late parent(s).

The proposed law perhaps points to empowerment of parents in relationships with their adult children, but at the same time may shine a spotlight on inadequacies of the law as regards manipulation of elderly will-makers over inheritance.

Further details:

Under the current version of the law, which has been in effect since 1998, any person for whom the deceased “had responsibility to make provision”, can make a claim.  This allows a broad range of people to seek provision, and all meritorious claims will be considered.  However, there has been concern for some time that the law permits unmeritorious and opportunistic claims to be made.  The courts have been reluctant to summarily dismiss those claims, and have only awarded costs against the plaintiffs in rare cases, resulting in many estates being unjustly diminished by costs and legal fees.

However, under the Bill, an application for family provision can only be made by or on behalf of an “eligible person”.

In general terms, the following “eligible persons” can claim as of right:

  1. a spouse or domestic partner;
  2. a former spouse or former domestic partner who was entitled to take family law proceedings, which have not been commenced or finalised;
  3. children and step-children who:

3.1 are under 18 years old at the date of death;

3.2 are full-time students between 18-25 years old at the date of death; and

3.3 are over 25 years old and have a disability.

Some other categories of “eligible person” (including other adult children and grandchildren) can also make a claim, but only if they were dependant on the deceased for maintenance and support at the time of death.

The introduction of a category-based system was recommended by the Victorian Law Reform Commission in its “Succession Laws” report of August 2013 (at page 114-115).  However, the Commission recommended that any child should remain entitled to make a claim, regardless of age or status.  The Bill clearly goes beyond the Commission’s recommendation in that regard.

In addition, the person making the claim for provision is still required to show that:

  • at the time of death, “the deceased had a moral duty to provide for the eligible person's proper maintenance and support; and
  • the deceased’s will (if any), and/or intestacy rules (if applicable), fail to make adequate provision for the proper maintenance and support of the eligible person.

Other changes proposed in the Bill include:

  • Amendments to the provisions relating to payment of estate debts.
  • Assistance for representatives of small estates not exceeding $100,000.
  • New rules regarding statutory wills.

The changes to family provision law in particular will be highly contentious in the profession and the community.  It remains to be seen whether the legislation will pass through Parliament in the current term, before November’s state election.

For a copy of the Bill, click here.