Separated spouse receives further provision from husband’s estate

Jordan Watt v Riordan; In the Estate of Ned William Jordan [2013] NSW SC 1132

The Supreme Court of New South Wales was recently asked to assess a wife’s claim for provision from her deceased husband’s estate under section 59 of the Succession Act 2006 (NSW). Despite the fact that at the time of her husband’s death the couple had been formally separated for approximately two and a half years and that the husband had clearly expressed his intention not to make any provision for his wife, the Court found that the wife was entitled to further provision from his estate.

The husband died in 2010 leaving a Will that made no provision for his wife. He had been married twice and had children of both marriages; two from his first and a further three from his second.

The husband and his second wife separated after 27 years of marriage being two and a half years before his death, although it was accepted that the relationship broke down quite some time beforehand. At the time of his death they were in the process of negotiating a matrimonial property settlement, however the negotiations had stalled. No formal orders for a financial settlement had been made by the Family Court of Australia.

The husband, however, had his own understanding about the financial arrangements that he thought had been agreed between himself and his wife at the time of his death. This was reflected in his Will which made no provision for his wife and stated that she had "already been generously provided for and financial settlement has already been made". He then left the whole of his estate equally between his five children.

The main asset of his estate was a property in NSW which he and his wife had held as joint tenants throughout their married life. After their separation, and only two months before his death, the husband unilaterally (and he no doubt thought prudently) severed the joint tenancy. It was inferred through the failed negotiations for a property settlement that the husband did not want his wife receiving his half of the property. His wife claimed his interest in this property along with a substantial part of the cash of the estate. Notwithstanding the separation, as his wife she was eligible to make a claim for provision from his estate.

In assessing the wife’s claim the Court firstly considered the husband’s basis for not providing for his wife; namely that she had "already been generously provided for and financial settlement has already been made". The Court considered their relationship and the financial contributions they each made. It was held that the reference to a ‘financial settlement’ was not to be given its legal meaning as the husband had not sought legal advice before executing the Will, which was signed in the presence of his social acquaintances. Furthermore, although negotiations were in progress, no formal financial settlement had been reached at the date of death.

It was determined that the statement that the wife has been "generously provided for" was in part a reference to his wife’s sale of another property and the manner in which she used those proceeds of sale. It was suggested that the husband did not have a true understanding of how the proceeds of sale were used by the wife. Evidence was accepted that it was not for the wife’s sole benefit but rather the proceeds of sale were used towards joint family commitments from which the husband also benefitted. Therefore, the husband’s reasoning for the wife’s exclusion from his Will was unfounded.

Giving due consideration to the circumstances of the five beneficiaries, being the husband’s children, the Court held that the wife should retain the whole of the residential property, in which she already had a half share interest in addition to $100,000 to meet contingencies associated with that property and to meet her short to medium term financial needs.

Due to the provision made to the wife and the legal costs associated with the proceedings, the net assets of the estate were significantly reduced. Consequently equal distribution to the remaining beneficiaries was found to be unworkable. Due to their financial need and on the basis that the children of the current marriage would benefit from their mother in any event, it was deemed that the needs of the children of the former marriage were more immediate than the children of the current marriage.

Comment: Whilst no property settlement was agreed between the husband and wife it was clear that the husband did not want his wife to receive his share of the property. Contrary to his wishes however, upon his death the Court found that the wife was entitled to the property, despite their separation.

The case is an interesting example of the intersection of family provision law and family law. If the husband had not died and the matter was pursued by the wife in the Family Court an altogether different result might have transpired. Certainly, the Family Court would not be overtly concerned as to the competing interests of the childrens’ potential inheritance. Clearly, it would have been in the interest of the husband to secure a binding property order after separation.