The Costs Sting in the Tail: Why Legal Fees Must Be Front of Mind in Any Family Provision Claim

When a family member is left out of a will or left with less than they believe is fair, the natural focus is on the merits: was the provision adequate? What were the deceased’s obligations? Who needs what? But there is a second question that is every bit as important and far too often pushed to the background until it is too late: what will it cost, and who pays? In family provision litigation, costs are not a footnote. They can consume the very estate the parties are fighting over so that even the “winner” walks away disappointed.

A recent decision of the Supreme Court of New South Wales, Keighran v Bishop (No 2) [2026] NSWSC 748, is a sobering illustration. The successful widow obtained a family provision order and yet the combined legal costs of the two sides came close to the entire value of the estate. The judge’s evident dismay makes this a case every prospective claimant, and every executor, should understand before deciding to fight.

Family provision, and the ever-present question of costs

Chapter 3 of the Succession Act 2006 (NSW) allows an “eligible person" – including a spouse, de facto partner, child or certain dependants – to apply for a family provision order where a will (or the rules of intestacy) has left them without adequate provision for their proper maintenance, education or advancement in life. If the Court agrees, it can order that provision be made out of the estate and even out of “notional estate” (assets that have passed outside the estate).

Winning the substantive claim, however, is only half the story. Someone has to pay the lawyers. The general rule in civil litigation, set out in the Uniform Civil Procedure Rules 2005 (NSW), is that “costs follow the event” the losing party usually pays the winner’s costs (though rarely all of them). But the Court retains a broad discretion over costs under section 98 of the Civil Procedure Act 2005 (NSW).

In family provision cases, the courts have long said that costs depend on the “overall justice of the case”, applying what the authorities call additional “liberality and discrimination”. There is a lingering myth that in estate disputes “the estate pays” regardless of outcome. That is not the law. As this case makes crystal clear, parties should be under no illusion that their financial circumstances, or the family context, will shield them from an adverse costs order.

The facts: a modest estate, and fees to match

Allan died in July 2023, aged 68. About three weeks before his death, he made a will leaving everything to his five children equally and nothing to his wife, Barbara. Two days before he died, he also severed the joint tenancy over the couple’s Berkeley Vale home — the practical effect being that his half-share would pass under his will rather than automatically to Barbara by survivorship. In his final months, while he was gravely ill, a bitter feud had developed between Barbara and two of Allan’s children over his care.

Barbara brought a family provision claim. The main asset was Allan’s interest in the Berkeley Vale property (worth, net of mortgage, roughly $300,000–$350,000), together with some superannuation. In December 2025 the Court decided that Barbara should receive Allan’s interest in the home, but subject to a charge requiring her to pay $125,000 (indexed) back to the estate when the property is sold. She did not succeed on the superannuation.

Then came the costs. The figures are what make this case unforgettable. Barbara’s costs up to and including the hearing were estimated at around $255,000; the executor’s at around $194,000. In other words, the two sides had run up close to $450,000 in legal fees fighting over an estate whose main asset was worth a few hundred thousand dollars. The judge said it “causes a deep sense of disquiet to learn that the legal fees incurred in fighting over an estate approximate the size of the estate”, and recorded that he had warned the parties at the very start of the trial about exactly this danger. They pressed on regardless.

The offers that might have changed everything

A central theme of the costs judgment is settlement and the powerful costs consequences that flow from formal offers. The law gives litigants two main tools to protect themselves on costs: a formal Offer of Compromise under the court rules and a Calderbank letter (a “without prejudice save as to costs” offer named after an English case). If a party rejects such an offer and then does no better at trial, they can be ordered to pay the other side’s costs on the more punishing indemnity basis from the date of the offer.

Here, both sides had made offers but the outcome landed awkwardly between them. Barbara had offered to take the property and assume the mortgage while leaving the other assets to the estate; her result at trial was actually worse than those offers, because she ended up responsible for both the mortgage and the $125,000 charge. The executor, for her part, had offered a conditional “life estate” style arrangement (a Crisp order) but the Court had already decided that such an arrangement was inappropriate for a 54-year-old widow, as it would deny her the independence and autonomy she deserved, and one condition (losing the interest if she remarried) was described as “especially obnoxious”.

Because the final result fell between the two sides’ offers, neither party had made an offer more favourable to the other than what was achieved at trial. The consequence: none of the offers gave either side costs protection. Both had, in effect, wasted the opportunity that a well-judged offer represents.

The decision: a “qualified” costs order

Applying the ordinary rule that costs follow the event, the Court ordered the executor to pay Barbara’s costs but in a carefully qualified way. Rather than requiring cash the estate did not have, the order was that Barbara’s costs would be satisfied by releasing the $125,000 charge over the property. The practical effect is that Barbara keeps the Berkeley Vale home free of the charge — a benefit worth about $125,000 and that stands in place of a conventional costs payment.

The Court was candid that this was a compromise driven by hard reality. The estate had very little left to pay anyone, in large part because significant sums (around $130,000, plus a car) had been paid out or transferred around the time of Allan’s death, mostly for the benefit of one of the children. Had those funds remained, there would have been roughly $170,000 in the estate enough to fund the executor’s costs. As it was, the executor (who has a right to be indemnified from the estate for properly defending the will) was left in a difficult position, because there was simply not enough left.

The judge’s closing observation is the moral of the entire case: he expected both parties to be disappointed, because even the costs order in Barbara’s favour would fall well short of covering her fees. “This is another case where the incidence of legal costs means that there is likely to be disappointment for everybody” and things might have been very different had either side made more generous offers to settle earlier.

The lessons: costs must drive every decision

Keighran v Bishop is not really about who was right. It is about the punishing economics of estate litigation, and it carries clear lessons.

Weigh the cost against the prize from day one. Before starting or defending a claim, get a realistic estimate of likely costs to hearing and compare it honestly against the value in dispute. Where the estate is modest, the maths can be brutal: it is entirely possible to “win” and still be worse off. That assessment should be revisited at every stage.

Do not assume the estate will pay. The idea that costs always come out of the estate is a myth. Claimants can be ordered to pay; executors can find their indemnity worth little if the estate has been depleted. Everyone at the table is exposed.

Make and seriously consider settlement offers early. Formal Offers of Compromise and Calderbank letters are the most powerful costs-protection tools available. A well-pitched offer can shift the entire costs burden onto an opponent who unreasonably rejects it. But, as this case shows, an offer only protects you if you end up doing better than it; offers pitched to give away nothing achieve nothing. Genuine, early, realistic offers are worth far more than aggressive ones made late.

Executors must litigate proportionately. An executor has a genuine duty to uphold the will and represent the beneficiaries and is generally entitled to be indemnified for doing so. But that indemnity is not a licence to run acrimonious, expensive litigation over a small estate. Exploring every issue in exhaustive detail, including allegations later abandoned, burns money the beneficiaries will never see again.

Beware deathbed transactions. The late severance of the joint tenancy and the last-minute will were the seeds of this dispute, and the payments out of the estate near death compounded the problem. Clean, considered, well-advised planning during life is the best way to avoid a fight after death.

Compromise is almost always cheaper than vindication. Family feuds make settlement emotionally hard, but the numbers rarely lie. A negotiated outcome that leaves everyone slightly unsatisfied is usually far better than a judgment that leaves everyone poorer.