The threat of potential claims against an Estate may arise fairly quickly after someone passes away. A potential claimant may approach the executor quite soon after the death of the deceased claiming they have been left out of the will wrongly or that the provision made for them in the will is insufficient. Negotiations can take place between the claimant and the Estate and, in the right circumstances, an agreement between them may be reached before any proceedings have been commenced.
An agreement will avoid lengthy and expensive Supreme Court proceedings for provision. However, to protect the Estate from any later action by the claimant it is crucial that the settlement is properly documented and approved. Firstly, the beneficiaries and the claimant should enter into a deed of settlement and release. The deed will set out what provision will be made for the claimant and how that provision will be made from the Estate. Crucially from the Estate’s perspective, the claimant must also agree to release his or her rights to make a claim for any further provision from the estate. However, the release of this right is not enforceable until it has been approved by the Court.
In New South Wales, the approval is sought by way of application under Section 95 of the Succession Act 2006 (NSW). In such applications, the Court is required to consider all the circumstances, including:
- whether at the time of the agreement, it was to the claimant’s advantage financially or otherwise to make the release;
- whether it is or was prudent for the claimant to make the release;
- whether the provisions of the agreement are or were fair and reasonable; and
- whether the claimant has taken independent advice in relation to the release and has given due consideration to that advice.
Once the Court has approved the release the only way the approval can be revoked is in circumstances of fraud, undue influence or where all interested parties consent. This is the gold standard to resolve family provision claims against the Estate. If you have any enquiries please do not hesitate to contact a member of our Estate Disputes Team.