Family Provision - full and frank disclosure in contested estates

CASE UPDATE: The Supreme Court of New South Wales has recently handed down a decision (Stone v Stone [2019] NSWSC 233) stressing the need for participants to Family Provision proceedings to make full and frank financial disclosure to the Court, and to the other parties. This means complete disclosure as to, among other things, assets, liabilities, financial resources, and sources of income.  That might mean in some cases, that a spouse’s income and financial circumstances are equally as relevant to the Court.

Applicants who intend to contest an estate through Family Provision legislation must establish that adequate provision for their proper maintenance, education or advancement was not made by the will of the deceased person, and that the Court should make an order for further provision to them.

In order to determine what would have been adequate provision, the Court must look at the facts known to the Court at the time that the Order for provision is made. For that reason, parties in these kinds of proceedings must ensure that they are forthcoming and proactive in the information they provide to their solicitors, and to the Court.

Read about the case below, and see what lessons you should learn from this case:

Background to the Case

In Stone v Stone, a son and daughter became embroiled in court proceedings following the passing of their mother (‘the Deceased’) on whose Estate the claim was made.  The Deceased’s will made no provision for her daughter, and left her entire estate to her son. The daughter then brought her claim. Importantly there had been a breakdown in the relationship between the mother and daughter prior to her death, and this resulted in the Deceased excluding her daughter altogether.

At the time of bringing her claim, the daughter disclosed that she was in a de facto relationship, and gave the Court brief and unsupported comments about her financial circumstances. She did not inform the Court of her income, nor did she give any disclosure about her liabilities or income. She also provided no information about her de facto partner other than to say he worked part time. She maintained that her partner was refusing to provide disclosure.

Before the hearing, the Court gave directions for the parties to file additional and updating material. The daughter did not do so. The legal representatives for the son sent a formal request to the daughter’s solicitor for her partner’s financial circumstances.  This was not complied with either.

When the hearing commenced, the daughter was criticised by the son’s legal representatives for not providing evidence about her partner’s financial circumstances. The presiding Judge also expressed his concern about the state of the daughter’s evidence to the son’s legal representatives. The following day the daughter attempted to introduce into evidence material about her partner’s financial circumstances and the presiding Judge ultimately found that the evidence would not be considered in his decision.

Issues

Could the Court make a determination about what would be adequate provision for the daughter without being fully informed of her financial circumstances?

Decision

No!  The daughter’s application failed entirely and the Court ordered that she pay the son’s costs.

The Judge found that where an estate is of modest value, changes in financial circumstances may be significant even if they aren’t large and therefore the Court needs updated information as it comes to hand.  A failure to provide that information may mislead the Court and therefore make it too difficult to determine the application.

In this case specifically, the daughter’s spouse was found to be material to the daughter’s financial circumstances and therefore, he was crucial to determining the daughter’s claim. Without that evidence the Court could not make any provision to the daughter.

What do you need to know?

• If you intend on bringing an application, make sure you are up to date with your finances and can account for your income and expenses. It’s best if you have independent evidence that can account for your financial situation, such as your bank statements.
• If you are financially dependent or reliant on someone else, be it a partner or otherwise, make sure you obtain advice from your solicitor about whether their circumstances are relevant, and if so, make sure they are prepared and ready to provide that information.  A failure to do so may impact on the Court’s ability to determine your application.
• If you have any doubts or questions about your financial circumstances and whether something may be relevant, tell your solicitor anyway! It’s better for us to have the information at hand so we know how to address it, rather than not saying anything and it becoming an issue down the track.
• Make sure you stick to the Court’s deadlines! If you are ordered to provide updated material to the Court, make sure you do it. Not only can it delay proceedings when you don’t comply, but it can also result in a costs order being made against you.