Death of a spouse or De Facto partner – Final distribution of property

When married couples or de facto couples separate typically the question of distributing property between them arises.

In some cases parties can reach agreement about such distribution but failing agreement parties are likely to each engage lawyers, hopefully to assist in a successful negotiation of any property dispute.

Failing agreement being reached one of the parties will apply to The Family Court or the Federal Circuit Court seeking Orders from the Court as to how property is to be distributed.

However, what if one of the parties dies before property distribution has been agreed or Ordered by the Court?

If Family Court proceedings are on foot the Family Law Act allows a surviving spouse (or surviving partner) to continue the Family Court proceedings provided:

(a) Family Court proceedings had been issued prior to death; and,
(b) Provided a Court is satisfied that certain requirement are met.

The legislation allows a party to property proceedings to continue the proceedings against the legal personal representative of the deceased. This would generally be the executor of the deceased persons estate.

The requirements to be met mean the Court can allow proceedings to continue if the Court is of the opinion:

(a) That it would have made an order with respect to property distribution if the deceased had not died; and
(b) That it remains appropriate for the Court to make an Order.

It is important to stress that if Family Court proceedings have not been instituted prior to the death of the spouse (or partner) then the surviving spouse or partner has no rights under The Family Law Act.

If Family Court proceedings have not been instituted

In circumstances where proceedings have not been instituted in either the Family Court or The Federal Circuit Court then the surviving spouse or partner may have recourse to State legislation by making a claim for “Family Provision” out of the estate of the deceased. In Victoria the relevant legislation is the Administration and Probate Act where a spouse (or domestic partner) seeks provision out of the estate of the deceased person to provide for their maintenance and support.

It might be anticipated that where a couple have separated it is likely that they have made a new will which excludes their separated partner from any entitlement under the terms of their will.

In such circumstances a spouse (or domestic partner) is considered an “eligible” party to institute such a claim.

Being eligible however does not guarantee success in obtaining benefits under the deceased person’s estate. An eligible person will only be successful if the Court finds that the deceased had a “moral duty” to provide for the person’s proper maintenance and support and has failed to do so. In deciding how much might be awarded the Court must take account not only of the degree of moral duty but also a series of relevant factors including a provision that the Court must not award a person more than is necessary for their proper maintenance and support.

The “risk” therefore is that if a separated spouse or partner is forced to rely upon making a claim for provision under the Administration and Probate Act they may receive less than they might have received pursuant to a Family Court Order.

Negotiations vs Issue of Proceedings

More often than not when parties separate they will, either with assistance of lawyers, or through their own negotiations, reach agreement about property settlement.

However, if as outlined above, a party dies before agreement has been reached, and before any Family Court proceedings have been instituted, then the surviving party is prevented from instituting Family Court proceedings and must rely upon the Family Provision claim referred to above.

It follows that if death is likely then an urgent application to The Family Court ought be made.

Of course death of a party cannot generally be anticipated thus the question arises as to whether, as a precaution, Family Court proceedings be instituted whilst negotiations are being undertaken?

Frost (Deceased) and Whooten

This recent case highlights the importance of considering the issue of proceedings in the Family Court to ensure preservation of a party’s rights to proceed in the Family Court following death.

In this case the married couple had separated, and had commenced negotiations for a property settlement. While such settlement negotiations were undertaken proceedings had not been instituted by either party to the Family Court.

Tragically, the husband was seriously injured in a farm accident prior to negotiations being successfully concluded.

The wife, on learning the extent of the husband’s injuries, sought to file Family Court proceedings, using the Court’s online filing system, hoping to have successfully issued such proceedings prior to his subsequent death.

The application was filed electronically shortly prior to his death.

At first instance the Court held that the initiating application, filed electronically, was validly filed.

The Estate of the deceased appealed that decision successfully, the Full Court finding that the proceedings had not been issued in accordance with the rules of Court.

A subsequent application for leave to appeal that decision to the High Court of Australia was refused.

The unfortunate circumstances of this case demonstrate the risk of death occurring whilst parties are in the course of negotiation and where death could not have been anticipated.

Authors: Ashlyn McCurdy, Amanda Smith