Family provision risk for executors in Victoria

Part IV of the Administration and Probate Act 1958 (Vic) allows the Court to order that provision be made out of an estate for the proper maintenance and support of an eligible person, where the deceased had a moral duty to provide for that person and the distribution under the will or intestacy fails to make adequate provision.

A family provision claim does not challenge the validity of the will. It accepts that the will (or the intestacy rules) apply, and asks the Court to alter the distribution. That distinguishes it from a challenge to the will's validity and from a probate caveat, which objects to the making of a grant.

Only an eligible person may apply. The Act defines eligible persons by reference to categories such as spouses and domestic partners, certain children, and certain other family and household members, with conditions that differ by category. Some categories require the person to show matters such as dependency.

Because the definition is detailed and conditional, it should be read in the current Act rather than reduced to a simple checklist. Whether a particular person is eligible, and whether any claim has merit, are questions for advice on the facts.

Section 99 of the Act provides for a family provision application to be made within six months after the grant of probate or administration. The period runs from the grant, not from the date of death.

The Act also gives the Court power to extend that time in the circumstances it specifies. The terms of that power, and the protections the Act gives in relation to distributions already made, should be read in the current Act. For this reason, the six-month period should not be described as an absolute bar.

The executor is usually the defendant to a family provision claim, but in a representative capacity. The executor's role is to administer the estate and to put relevant information before the Court, not to champion one beneficiary against another. Executors who are also beneficiaries need to be particularly careful to separate their two roles.

• preserve the estate and keep it properly invested and insured;
• provide information about the estate's assets and liabilities as required;
• keep beneficiaries informed of the claim;
• avoid personal comments about the merits of the claim in the capacity of executor;
• consider whether any beneficiary should be separately represented;
• take advice before incurring significant costs on behalf of the estate.

The executor's main personal risk is distributing the estate in a way that defeats or prejudices a claim the executor knew about, or should have taken into account. An executor who has received notice of a potential claim should be cautious about distributing before the position is clear.

The timing of distribution generally, including section 49 of the Act, is covered in when an estate can be distributed.

Depending on the circumstances, protective steps an executor may consider include:

• retaining the estate, or enough of it, until the position is clear;
• obtaining written acknowledgements or agreements from beneficiaries before an interim distribution;
• encouraging early discussion or mediation between the parties;
• seeking the Court's directions where the proper course is genuinely uncertain.

Which options are appropriate depends on the estate and the parties. They are not a substitute for advice on the particular facts.

1. 1Record the noticeNote when and how it was received and keep a copy. Informal notice can still be relevant to how the executor should act.
2. 2Pause relevant distributionsConsider holding back assets that could be affected, rather than distributing in a way that could defeat a possible claim.
3. 3Obtain adviceAn executor should understand their position before responding substantively to a claimant.
4. 4Assemble informationGather an asset and liability schedule, valuations and details of assets passing outside the estate.
5. 5Communicate neutrallyRespond in a measured way; the executor's role is to administer the estate, not to argue a beneficiary's case.

Reliable information about the estate helps everyone assess a claim. Executors are commonly asked for asset valuations, liabilities, estate costs and information about the claimant's and beneficiaries' circumstances. Disclosure should be accurate and appropriately timed.

In a family provision proceeding under Part IV of the Administration and Probate Act 1958 (Vic), the executor is usually expected to take a neutral role and leave the argument to the claimant and beneficiaries. Difficulty arises where the executor is also a beneficiary whose share could be reduced. Separate representation, careful records and advice help manage that conflict.

Interim distributions

Some distributions may still be possible while a claim is threatened or pending, for example where the remaining assets are clearly sufficient or the affected parties agree. These decisions carry risk and should be made with advice and, where appropriate, written agreement or a Court order.

Section 99 of the Act provides that a family provision application must be made within six months after the grant of representation. The Court may extend the time. Six months is therefore not an absolute bar, and waiting for it to pass is not an automatic safe date for distribution. The Act also contains provisions about distributions made after the six-month period. How these provisions apply depends on the facts, including whether the executor had notice of a possible claim.

Mediation, settlement and costs

Many family provision matters are resolved by agreement, often after mediation. Any settlement affecting the estate should be documented properly and may require Court approval, for example where a minor or person without capacity is affected. Costs can be significant and the Court decides how they are borne. Specific costs outcomes should not be assumed.

• Treating six months after the grant as an absolute bar or an automatic safe date.
• Counting the time from the date of death rather than from the grant.
• Distributing after receiving notice of a potential claim without advice.
• Taking sides on the merits in the capacity of executor.
• Confusing a family provision claim with a challenge to the will's validity or a caveat.
• Assuming eligibility based on a general list rather than the Act.

We can advise executors on the practical implications of a potential or actual family provision claim, including the time limit, retaining the estate, communicating with beneficiaries and protecting against personal risk. We do not predict the outcome of claims, which depends on the evidence and the Court's assessment.

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