Our last article discussed claims by a partner on separation or death.
Conversely, some blended families want to provide for their new partner on their death and seek to minimise the risk of a claim by their respective children.
Under the Family Protection Act (FPA), parents owe a moral obligation to make adequate provision for their children in their Will.
To minimise the risk of FPA claims, couples may change the ownership of their assets so that those assets do not form part of their estate and are not open to claims under the FPA.
Some common ownership structures include:
- Transferring property into a discretionary family trust; and/or
- Transferring property into joint names so that it passes by survivorship on death.
These ownership structures make it more difficult for children to make claims against estates.
However, section 88 of the Property Relationships Act (the Act) allows an executor to make an application for division of relationship property against the surviving partner, where refusing them the right to do so would cause a “serious injustice”. If an executor is not willing to make the claim, the deceased’s children may apply to the court to have them removed.
If most relationship property is jointly owned or was transferred to a trust during a relationship, then that could meet the threshold for a serious injustice. In these circumstances the court may divide relationship property so that the estate has property available for the children to make an FPA claim.
A contracting out agreement is one of the only tools that can help to prevent these types of claims.
Libby McDonnell