What Happens to the Assets of an Estate During Contested Will Proceedings in NSW?
While a will is being contested, the assets of an estate will usually be held and controlled by the executor until the will dispute has been resolved.
For this reason, a person considering bringing a family provision claim via a will contest should put the executor on formal notice of their claim as soon as possible. This reduces the risk of the executor distributing assets from the estate before the contest is concluded.
What Assets Fall within a Deceased Estate
The assets that fall within a deceased estate will include all the assets that the deceased person held solely (or as tenants in common with another person) at the time of their death.
This often includes the family home, investment properties, shares in public or private companies, mutual funds, cash, cars and collectables.
Types of Assets That Do Not fall within a Deceased’s Estate
There are other assets that do not usually fall within a deceased person’s estate.
These include assets held by the deceased person as a joint tenant with another person. These will not fall within the deceased’s estate, and instead will pass to the surviving owner under the right of survivorship.
Other assets may also include superannuation, life insurance benefits, and assets held in trust (i.e. family trusts) however a close examination of the binding death benefit nomination form, policy, and trust deed is required to determine the ultimate beneficiary.
The Role of the Court in Contested Will Proceedings
The court’s role in contested will proceedings is to ‘case-manage’ the proceedings to ensure procedural fairness to all parties, to encourage an early resolution, to determine interlocutory issues, and if required, to set the matter down for a final hearing.
If the matter proceeds to a final hearing, the court’s role is to consider and evaluate each party’s evidence, to apply the relevant provisions of the Succession Act 2006 (NSW) and any other relevant legislation, and to determine the success (or degree of success) of each party’s claim.
Factors Considered by the Court When Considering Contested WIll Proceedings
When a person brings contested will proceedings, the court will consider the evidence of all parties, apply the law, and decide the success (or degree of success) of the claim.
In determining an application under section 59 of the Succession Act 2006 (NSW), the court may consider the 16 factors set out in section 60(2) of the Succession Act 2006 (NSW) including:
- Claimant’s age
- Claimant’s character
- What kind of relationship the claimant had with the deceased
- What kind of responsibilities the deceased owe to the claimant
- The claimant’s personal financial situation at the time of contesting, including any future financial needs
- Whether the claimant is financially supported by another person
- Whether the claimant has any physical, mental or intellectual conditions
- If the deceased provided the claimant with any maintenance or support prior to death
- The value and location of any property and other items included in the deceased’s estate
- Any contributions the claimant has made in the past which increased the value of the deceased’s estate
- Claims that have been made by other people on the estate in question
- Any customary law that applies if the deceased was of Aboriginal or Torres Strait Islander descent
- Any other matters deemed relevant by the Court.
Outcome of Contested Will Proceedings
After hearing evidence from all parties, the court will decide the success (or degree of success) of each party’s claim.
Where a claimant is successful, the court may order the estate to pay the claimant a sum of money from the estate. A court order will operate to effectively rewrite the terms of the deceased’s will and the executor must then administer the estate in accordance with the court orders rather than the deceased’s will.
Where a claimant is unsuccessful and the court does not make orders altering the will, the executor must administer the estate in accordance with the terms of the deceased’s will.
The Role of the Executor in Managing the Assets of the Estate
The assets of a deceased person vest in the executor once probate is granted. This means the executor will hold and control the estate assets until the assets are distributed in accordance with the deceased’s will or court order.
If a person intends to bring a family provision claim against the estate their solicitor will usually write to the executor to put them on formal notice of the claim. Once on notice of a claim, an executor will usually hold the assets until the dispute has been resolved.
Asset Management During Contested Will Proceedings
The estate will usually be controlled and managed by the executor until the dispute has been resolved by private agreement or court order.
This will often include managing existing leases and tenancies, investing cash in interest bearing accounts, paying estate loan repayments, paying rates and taxes, and other administrative duties.
The Effect of the Court’s Decision on the Assets of the Estate
If a person successfully contests a will, the court may order the estate to pay the claimant a sum of money from the estate. A court order will operate to effectively rewrite the terms of the deceased’s will and the executor must distribute the estate in accordance with the court’s orders, instead of the deceased’s will.
Where a person is unsuccessful, the court may order the executor to distribute the estate in accordance with the terms of the deceased’s will.
Options for Disputing the Court’s Decision
An unsuccessful or otherwise disappointed claimant should always give consideration to an appeal.
Although not exhaustive, a person may be able to appeal a decision where they can demonstrate ‘an error of principle; a material error of fact; a failure to take into account some material consideration, or the converse; or that the result is unreasonably or plainly unjust so as to bespeak error of such a kind’: Burke v Burke  NSWCA 195 at .
A person who has been unsuccessful or is otherwise disappointed in a recent result should contact an experienced wills and estate lawyer and have them assess any potential grounds of appeal.
Alternatives to Contested Will Proceedings
Most will disputes can be resolved early through a combination of negotiations and mediation.
Negotiations will usually involve a person’s solicitor writing to the executor (or other beneficiaries) detailing the nature of their claim, the legal reasons supporting their claim and make a settlement offer, or counteroffer.
Mediation is an alternative dispute resolution process whereby the parties meet with an independent, impartial and neutral third party mediator who assists the parties to negotiate and help facilitate settlement of the issues.
If the parties can reach agreement, the parties will usually formalise the agreement in a private agreement (i.e. Deed of Family Arrangement) or obtain court orders approving the agreement, if court approval is required.
If negotiations and mediation prove unsuccessful, court proceedings may be necessary to obtain an outcome.
Mediation as an Alternative to Contested Will Proceedings
Mediation is an alternative dispute resolution process whereby the parties meet with an independent, impartial and neutral mediator who assists the parties to reach an agreement.
In NSW, mediation can take different forms including judicial settlement conferences, court-annexed mediation, or private mediation. The success of mediation will largely depend on each party’s willingness and ability to negotiate.
Other Options for Resolving Will Disputes Out of Court
Most will disputes can be resolved without the need for court proceedings through a combination of negotiations and mediation.
The parties can negotiate and mediate before court proceedings have been commenced and the parties can continue negotiations after court proceedings have been commenced.
The parties can reach an agreement through negotiations and mediation at any time before the court makes final orders.
At Empower Wills and Estate Lawyers We Can Assist With Your Will Dispute Case
If you have been left out of an estate or believe you may have grounds to contest a will, contact us now on [email protected] or 1300 414 844 for a confidential and obligation-free initial consultation.
Our fee structures are tailored to each client and include sliding fee scales, payment plans, pensioner discounts, and conditional ‘no win, no fee’ costs agreements in select cases.
Want to learn more?
Read more about how to contest a will in NSW here.
Read more about who can contest a will in NSW here.
Read more about how to gather evidence to support a wills contest here.
Disclaimer: the information in this article relates to NSW law and is general information only. It does not constitute legal advice and should not be relied upon. If you have a question or legal issue we recommend you contact a lawyer and obtain legal advice that takes into account your specific facts and circumstances.