From 1 January 2025, new SA laws will likely make it more difficult for some family members to challenge the provision of assets in a Will, while others may have a greater claim to an inheritance.
The oldest law firm in SA explains some of the key changes to the circumstances under which a person may be entitled to a deceased person’s assets.
On 1 January 2025, three South Australian Acts are being repealed and replaced with one Act, the Succession Act 2023, making it an appropriate time to consider your current succession planning arrangements.
Succession law is the law that governs the task of preparing for death and disability and all that comes with it – estate planning, deceased estate administration and the possibility of inheritance claims.
Discussions regarding the distribution of assets after death may be a source of tension for many families.
For the most part, the brand new Succession Act is designed to modernise and demystify succession law for the community, implementing the recommendations of seven reports of the South Australian Law Reform Institute.
Much of the Act is business as usual with many procedural matters only typically of interest to lawyers, but there are a number of key changes that the community should be mindful of.
Contesting an estate
The most significant change is how a court will assess inheritance claims against the estate of a deceased person.
These claims are called “family provision” claims and are dealt with by the Supreme Court of South Australia.
Under the current legislation, the Court may make a family provision order for the “maintenance, education or advancement in life” of a current or former spouse or domestic partner, a child or a grandchild of a deceased person.
Stepchildren, parents and siblings are also eligible to make family provision claims under certain limited circumstances.
There is a lot of case law regarding how the Court assesses claims for provision. However, one of the key considerations is the moral obligation of the Will-maker to ensure that their estate, if sufficiently substantial, is distributed so that close family members receive an inheritance which meets their needs.
The new Succession Act changes what the Court is required to consider when determining a claim for family provision. From 1 January 2025, the Court must give “primary consideration” to the “wishes” of the person who made the Will.
In the pursuit of this consideration, the Court must evaluate the deceased person’s reasons for the distribution of their estate, in contrast to the needs of the applicant, the applicant’s vulnerability and dependence on the deceased, the applicant’s contribution to the estate, and their character and conduct.
The effect of this change will be shown in future Court decisions, but lawyers tend to agree that there will be at least some practical implications.
This change in approach gives rise to a philosophical question about a person’s freedom to deal with their own assets as they wish, as against a broader policy consideration of distributing what they have fairly among their dependants.
To clamp down on unmeritorious claims, an eligible person who wishes to challenge someone’s Will may now be required to prove to the Court that they can pay the costs of the other side if their claim goes awry.
Currently there is no provision for this, so an applicant can act unreasonably, dragging a dispute over a Will through a lengthy court process without having to put up their own funds as security.
Expanded provisions for stepchildren to claim
The new Succession Act widens the door for stepchildren to claim against the estate of their stepparent.
The list of eligible claimants is otherwise unchanged but the requirements for claims by grandchildren, former spouses/domestic partners, parents and siblings have changed.
Blended families are increasingly common and can complicate estate planning, but there is some reassurance for stepparent Will-makers that the new expanded provision for claims by stepchildren is still quite narrowly drawn.
Stepchildren will be eligible to make claims against Wills where:
- the stepchild is disabled and is significantly vulnerable due to their disability;
- the stepchild was dependent on the stepparent when they died;
- the stepchild cared for or contributed to the maintenance of the stepparent when they died;
- the stepchild substantially contributed to the stepparent’s estate; or
- assets accumulated by the stepchild’s actual parent substantially contributed to the stepparent’s estate.
Again, how this works exactly will be revealed through the kinds of claims that the Supreme Court will inevitably deal with in the coming years. Naturally, there will be a period of uncertainty as the new legislation is tested in Court and applied to various factual situations.
Reviewing your estate planning arrangements
There is a perception that the above reforms would go some way in deterring trivial and speculative claims and make a Will harder to contest– this was of course in part their purpose.
But, given the fact that there is still scope to make inheritance claims, and the law gives greater recognition to the rights of stepchildren to claim against an estate, those with current Wills or considering their estate planning should review their current arrangements in light of how the law is set to change.
Estate planning isn’t easy and isn’t something you should try and tackle yourself like flat-pack furniture or painting the spare room. The results could be much worse than wobbly furniture or mismatched colours and runs.
The countless family horror stories of non-existent, invalid or poorly drafted Wills demonstrates the importance of consulting an expert to make sure it is fit for purpose and will honour the Will-maker’s wishes when they die.
For some people, the looming threat of an estate claim has motivated them to structure their estate planning in a certain way, or even just distribute their assets while they are still alive.
How will the laws change on 1 January 2025?
There are several key changes to the laws, including:
- Greater weight will be given to the wishes of the person who made the Will (known as the testator).
- The eligibility criteria for step-children to make claims against an estate has been expanded.
- More people will be entitled to inspect a person’s Will.
- Some claimants will need to prove that they cared for the deceased immediately before their death.
Does this mean that it will be harder to contest a Will?
One of the main reasons behind the reforms is to eliminate frivolous, vexatious and speculative inheritance claims that don’t reflect how the testator wanted to distribute their assets. The extent to which this objective is achieved will only be apparent once these laws are tested, but it is likely that the new laws will make it more difficult to challenge a Will on the basis that you don’t believe you were adequately provided for.
Shouldn’t it be the case anyway that the wishes of the testator should be carried out?
Generally, yes, but there are some limitations. The reason a person makes a Will is so they can decide who receives their assets when they die, and how those assets are distributed. However, the law does allow close family members to challenge a Will on the basis that the Will did not adequately provide for their “proper maintenance, education or advancement in life”.
These laws reflect a social policy principle that the testator has some obligation to ensure that their estate, if sufficiently substantial, is distributed in such a way that family members do not face undue financial hardship and create a greater public burden for taxpayers. While the Court will still be able to consider these factors, the Court may be more limited in its ability to intervene in cases where the testator has not provided for a family member who claims to have a legitimate need.
Will people still be able to make inheritance claims under the new laws?
The law will still allow people to make inheritance claims in circumstances where they can legitimately argue that they are suffering financial hardship. The key difference under the new laws is that the Court will be directed to consider the wishes of the testator as the primary factor when assessing inheritance claims.
This is intended to reduce claims from people who have unmeritorious or dubious reasons to challenge a Will.
It remains to be seen just how much extra weight the Court will give to a testator’s wishes and how this will be balanced against a claimant’s eligibility to claim from the estate.
How will the new laws impact step-children?
Despite the overarching principle that the wishes of the testator be given paramount consideration, the reforms do provide extra scope for step-children to make claims against a step-parent’s estate.
There are five key reasons why the court may allow a step-child to make a claim against their step-parent’s estate.
These are:
- The stepchild is disabled and is significantly vulnerable due to their disability;
- the stepchild was dependent on the stepparent when they died;
- the stepchild cared for or contributed to the maintenance of the stepparent when they died;
- the stepchild substantially contributed to the stepparent’s estate; or
- assets accumulated by the stepchild’s actual parent substantially contributed to the stepparent’s estate.
If you cared for the deceased during their life, does this make you eligible for an inheritance claim?
Not necessarily. The new laws say that parents and siblings need to demonstrate that they cared for or contributed to the maintenance of the deceased in the period immediately before their death (or immediately before they moved to a residential facility), in order to be eligible to make an inheritance claim.
Who has the right to inspect a person’s Will?
Under the new laws, there is an expanded group of people who have the right to inspect a Will.
They are:
- Any person named or referred to in the Will (regardless of whether they are a beneficiary);
- Any person named as a beneficiary in an earlier Will;
- A surviving spouse, domestic partner, child or step-child of the deceased;
- A former spouse or domestic partner of the deceased person;
- A parent or guardian of the deceased person;
- A person who would be entitled to a share of the estate of the deceased died without a Will (“intestate”);
- A parent or guardian of a minor referred to in the deceased’s Will or who would be entitled to a share of the deceased’s estate if they died intestate;
- A person committed with the management of the deceased’s estate under an administration Order immediately before the death of the deceased person; and
- Any other party who has a claim against the estate, so long as they can demonstrate a “proper interest in the matter” and obtains permission from the Court to inspect the Will.
What happens to a person’s assets if they die without a Will?
From 1 January 2025, where the deceased person is survived by a spouse and children, the spouse is entitled to the first $120,000 of the estate plus household furniture and effects (including vehicles). If the value of the estate is not more than $120,000, the spouse receives the entirety of the estate.
After the first $120,000 is distributed, the spouse is entitled to half and the children are entitled to the other half of the estate.
Where there are no children, relatives, or children of relatives, the estate will be forfeited to the State, where the Public Trustee will administer the estate.
If a person dies intestate (without a Will), can a surviving relative make a claim for items that hold sentimental value?
Many family inheritance disputes are over sentimental items, such as a family car, heirloom jewellery, or special pieces of furniture. Technically speaking, a person can’t make a claim for provision seeking specific sentimental items.
If a person dies without a Will, the rules of intestacy do not allow for items of sentimental value to be dealt with – they are automatically transferred to the surviving next of kin.
Can dying without a Will be more costly for surviving family members?
It depends on the circumstances, but generally speaking it is much more likely to be costlier in the long run if a person dies without a valid, professionally drafted Will.
For example, in order to have the authority to administer the estate, the surviving domestic partner would need to prove to the court that they were the deceased’s domestic partner at the time of death, which can be an expensive and time-consuming process.
In situations where a testator separated from his wife, had not formally divorced, but had a different domestic partner at the time of his death, the laws of intestacy may deem that both the previous and most recent partner would share assets equally (if there were no children or grandchildren). However, under the new laws, if the deceased person had separated from their former spouse, not yet divorced, but had formally settled financial matters between them, the former spouse cannot claim an inheritance.
In any case, the absence of a Will, or a poorly drafted Will, can increase the chances of disputes over the testator’s assets.
Who will pay the legal costs of inheritance claims?
The Court still has discretion as to who pays costs. Generally, if the claimant is successful in challenging a Will, the costs of the claimant’s legal fees are likely to be paid out of the estate, but it is not automatic.
The new laws aim to clamp down on unmeritorious or vexatious claims by requiring “security of costs”, which essentially means the Court can require a claimant to demonstrate they can pay legal costs if they lose.
In any case the Court will have ultimate discretion, based on the circumstances of each case, as to who pays costs and the extent to which the costs are paid for out of the estate.
What should you do to ensure your wishes will be carried out when you die and your estate won’t be eroded by uncertainty and disputes?
The best thing to do is to get a professional to help draft your Will so that there is clarity about how you want your assets distributed and to protect against costly disputes over who your assets go to.
Contact the oldest law firm on South Australia – Genders and Partners, established 1848 – to learn more about retirement planning, asset-protection, superannuation, estate-planning and estate-administration solutions, by visiting our website today and schedule a free no obligation telephone consultation to find out how we can help you and yours.
Remember – any mistakes you make in your Will won’t become apparent until after you’re dead, and it’s too late for you to fix them. Get proper advice, and do it right.
It is also vitally important that you keep your Will and estate plan up to date – it is not a set-and-forget exercise.
To learn how to protect yourself, your family and your assets, by creating a professionally-made estate plan, claim your FREE 15 minute Telephone Consultation
With grateful acknowledgement to the Law Society of South Australia for use of their media release ‘What you need to know about SA’s new succession laws’.
