Claiming against the estate of a deceased ex-spouse Recently in South Australia, the Succession Act 2023 (“the Act”) came into effect. It defines the categories of persons eligible to claim against the estate of a deceased person if no agreement or order under the Family Law Act 1975 was in force, at the date of […]
Claiming against the estate of a deceased ex-spouse
Recently in South Australia, the Succession Act 2023 (“the Act”) came into effect. It defines the categories of persons eligible to claim against the estate of a deceased person if no agreement or order under the Family Law Act 1975 was in force, at the date of death, to legally finalise property division.
The intent of the new Act is to prevent a further claim on a deceased’s estate such that a former spouse, domestic partner and former domestic partner is ineligible to lodge a claim. Does it achieve this?
Under the Act, “A former spouse or former domestic partner of a deceased person is only entitled to claim the benefit of this Part if the former spouse or former domestic partner satisfies the Court that, immediately before the death of the deceased person, no agreement or order of a prescribed kind relating to the interests in property as between the former spouse or former domestic partner was in force“.
Multiple De Facto’s
It is possible that a domestic partner at the time of death and other former domestic partners of the deceased, are all eligible claimants against the estate of the deceased at the same time if none of them had a family law agreement or order of a prescribed kind.
Married, separated but not divorced
Section 115 (2) Regulation 9 does not include married persons, who have separated but have not yet divorced and have a valid Financial Agreement. These married but separated people are not considered ‘former spouses’. According to section 115 (2) this category of people are eligible to make an application for family provision against the estate of the deceased on the basis that they are and remain a spouse, notwithstanding they have a valid Financial Agreement with the deceased that was in force immediately before death.
When does it commence?
The Regulations to the Act codify that the new regime applies to parties who entered into the agreement or order after the commencement of the Act on 1 January 2025.
“an order of a prescribed kind”
The Act refers to “an order of a prescribed kind”. Neither the Act nor the Regulations to the Act specify what “an order of a prescribed kind” is. Until a challenge, we assume but we don’t know if it is intended to mean a final order made under the Family Law Act for alteration of property. All we know is that it must be an “order of a prescribed kind relating to the interests of property as between the former spouse or former domestic partner” and “was in force”. Potentially, an order from a different jurisdiction, not necessarily finalising all property interests of the parties but a property order relating to the interests in property nonetheless, could be argued to preclude a potential claimant.
Agreement “of a prescribed kind”
Regulation 9 specifies that an agreement made under the Family Law Act 1975 (Cth) is an agreement “of a prescribed kind”. Which Agreements might fall within this definition?
Spouse Maintenance Orders and Agreements
An order or Financial Agreement for ongoing spouse maintenance is not enforceable against the estate of the payer. This is because spouse maintenance is payable from the payer’s income earning activities. If a payer dies, they are no longer earning income therefore there is no future liability. It might also be said that Spouse Maintenance Agreements do not relate “to the interests in property”.
Binding Child Support Agreements & Orders and Adult Child Maintenance Agreements & Orders
Binding Child Support Agreements also do not fall within the category of an Agreement of a prescribed kind because they are not made under the Family Law Act. Binding Child Support Agreements are made pursuant to the Child Support (Assessment) Act 1989 and do not relate “to the interests in property as between the former spouse”.
A child or step child of the deceased is not precluded from claiming under the Succession Act if an Agreement or Order was in force binding their parent immediately before the death of the payer parent. This is because the claimant is the child and not their parent and the child is not bound by the Agreement of their parents.
If an Adult Child Maintenance Order or Agreement is in place, an adult child is also not precluded from making a claim against the estate of a deceased parent, even if the adult child is a party named in the Agreement or Order. This is because the restriction in the Act applies only to a former spouse or former domestic partner of the deceased, not children.
“Valid Financial Agreement”
Regulation 9 to the Act states that “for the purposes of section 115(2) of the Act, a valid financial agreement (within the meaning of the Family Law Act 1975 of the Commonwealth)”…was binding on the parties is an agreement of a prescribed kind”
The Supreme Court of South Australia will be required to interpret whether an order or Agreement presented to them is an order of a prescribed kind or a valid Financial Agreement under the Family Law Act. Could or should they defer that question to the Federal Circuit & Family Court of Australia? There are several reasons in the Family Law Act why the Court may determine an Agreement was not valid or in force (unenforceable) immediately before the death of deceased. These include:
To establish unconscionable conduct, the Court must be satisfied that one party was at a serious or special disadvantage, that the other party knew of this disadvantage and the resulting Agreement is overreaching and oppressive in the sense that it runs contrary to good conduct.
‘immediately before the death of the deceased person’
The inclusion of the words ‘immediately before the death of the deceased person’ could imply that all litigation to set aside a Financial Agreement must be finalised prior to the death of the deceased person.
If the stakes are high enough, upon a former spouse becoming gravely unwell, a healthy former spouse party might apply to set aside a Financial Agreement on the basis it is not a ‘valid financial agreement’ to obtain a determination that there was no valid Agreement in force immediately prior to the date of death.
De Facto Couples with Agreements under earlier legislation
Up until 1 March 2009, separated De facto couples legally formalised division of their property under Part 2 of the Domestic Partners Property Act 1996 (SA).
Other states had similar legislation.
On the face of S115(2) and Regulation 9, those Agreements are not ‘financial agreements (within the meaning of the Family Law Act 1975 (Cth))’
Therefore, a former de facto spouse who entered into an Agreement under the Domestic Partner’s Property Act 1996 (SA) is an eligible claimant against the estate of their former de facto spouse.
Conclusion
The Succession Act 2023 has added another layer of complexity to family law and succession planning that must be considered when finalising property interest under the Family Law Act and when advising parties in their succession planning.
Until a test case, we won’t know how the Supreme Court will approach the questions of what is a valid Financial Agreement, what is an order of a prescribed kind and which eligible claimants that have fallen through the cracks. Potentially proceedings will be stayed for 12 to 24 months pending determination by the Courts as to whether the Agreement or Order is a valid Agreement or order of a prescribed kind.
There is ample room for further guidance in the Regulations to the Succession Act. Solicitors working in this area of law are awaiting this further guidance rather than it being left at the expense of litigants to establish precedents in future case law.
This article was written by Catherine Leis a Senior Associate in our Family Law Team.
Senior Associate
e: cleis@adelta.com.au
p: 8415 5000
Senior Associate
B.A., LL.B.(Hons)
Catherine has over 20 years of experience and expertise in all aspects of family law. She has a Bachelor of Arts and Bachelor of Laws (Hons) from Adelaide University.
Catherine provides pragmatic and empathetic advice to individuals during their relationship, after a separation and if they are having difficulties with parenting arrangements.
Being raised on the Eyre Peninsula in South Australia Catherine understands the specific challenges faced by those in rural and regional areas. She has assisted many metropolitan, rural and agricultural clients to navigate the complexities of family law especially where there is intergenerational business or farming enterprises including companies, trusts and self managed superannuation funds.
Catherine can provide specialised assistance in the following areas:
Being Adelaide metropolitan based since 2012, Catherine has raised two children who have experienced both city and country living like her. They are all avid travellers and campers.
When she can, Catherine likes to get away with friends and family to explore the wide brown land, South Australia’s wineries, restaurants and especially the gin distilleries.
Catherine is a qualified mediator having successfully completed the AIFLAM mediation program in October 2023.
She is a member of Family Law Section; Law Society of SA; and AIFLAM and she is on the Practice & Ethics Committee of Law Society
Contact Catherine Leis
