Who gets what? A Q&A on what SA’s new succession laws will mean for families
From next year, major changes to the law governing wills and estates will come into effect. The Succession Act makes a number of key reforms that impact the rights of Will-makers, beneficiaries, and those who want to challenge their exclusion from a Will. It is important that the community is aware of the key changes to SA’s succession laws, and to consider whether they need to review their own Wills.
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 whenassessing 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.
[For example, Oliver lived with his mother and his step-father. The mother worked full-time and made substantial contributions to the house which was in their joint names. When Oliver’s mother died the house passed to the step-father. When the step-father died, he left Oliver with nothing in the Will, even though Oliver’s actual mother made a significant financial contribution to his step-father’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.
The new legislation does not give much guidance about the timeframe that constitutes ‘immediately’, nor is it clear on what would amount to a sufficient level of care or financial support. It won’t be until the courts make determinations on these cases that we will have a clearer idea of who is eligible to make a family provision claim, but it is likely that if you have not provided care or maintenance to a person in the 12 months immediately preceding that person’s death, you may be deemed ineligible to make a family provision claim on that basis
How will the new laws impact grandchildren?
It will be more difficult for grandchildren to make a claim, with the new laws stipulating that a person can only claim from their grandparent’s estate if that person’s own parent (i.e. the child of the deceased) has already died, or if the grandchild was maintained by their grandparent during a period immediately before the grandparent’s death. This appears to reflect a policy position in relation to moral duty. The new legislation suggests that a person has a greater moral duty to consider the needs of a step-child than they do to a grandchild whose parent is still alive or who was not responsible for their grandchild’s maintenance.
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.
For example, if Simon dies without a Will and leaves behind $600,000, and is survived by his domestic partner Lucy and children Bree and Kane:
- His partner Lucy receives the first $120,000
- The remainder of the estate - $480,000 – is divided into two. Lucy gets half ($240,000) and the other half ($240,000) is shared evenly between Bree and Kane (amounting to $120,000 each)
- Therefore, Lucy receives a total of $360,000, and Bree and Kane both receive $120,000 each.
If the children are under 18, the Public Trustee would be appointed to manage the money for the benefit of the children. The surviving spouse can make a Court application to manage the money for the children.
If Simon had no children, the entirety of the estate would go to Lucy. If Simon had children but did not have a spouse when he died, the entirety of the estate would go to his children.
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. To find a suitable wills and estates lawyer, visit the Law Society’s legal referral service, seealawyer.com.au.
In addition to a Will, you should write a letter of wishes, detailing your family circumstances and the reasons for the instructions you made in your Will.
It is recommended that you seek financial advice, especially in relation to ways to increase or restructure your assets to better provide for various beneficiaries, and financial assets such as superannuation or insurance policies that can be transferred directly to a nominated person outside of your estate. Asking your lawyer, accountant and financial advisor to work collaboratively is the most effective way to align your financial goals and testamentary wishes, and to minimise the risk of potential claims against your estate.