August 2024 – Ashley Lovelock
Why You Need to Finalise Your Property Settlement Properly
A recent ruling by the Supreme Court of NSW highlights the critical importance of thoroughly finalising property settlements, particularly when they overlap with estate and life planning. The case involved a dispute over the inheritance of a multimillion-dollar estate belonging to a businessman from Sydney’s eastern suburbs, revealing key lessons for both Family Law and Estate/Life Planning
Case background:
In May 2019, Mr F separated from Ms K. Following their separation, the couple finalised a property adjustment under the Family Law Act, which included child support, spousal maintenance and the division of their assets. Mr F paid a substantial sum to Ms K as part of the settlement, and agreed to pay child support including school fees, extra-curricular expenses, health and medical expenses, and monthly spousal maintenance including providing a car.
The couple also entered into a Deed of Release under the NSW Succession Act. The Deed was intended to prevent either party from making any claims against the other’s Estate if they died.
The settlement, including the releases, were properly documented legally. So, why was there a dispute?
The Dispute:
Mr F prepared a new Will in 2019, by which he left his deceased Estate to his children if he died, and removed Ms K as sole Executor and Trustee in his Will. He passed away in 2023, without having signed the Will that he prepared in 2019.
Following Mr F’s death, Ms K then filed an application in the Supreme Court of NSW, claiming entitlement to Mr F’s estate based on an earlier Will from 2015, which he had signed. The 2015 Will named Ms K as the primary beneficiary and executor of his estate.
The Court’s decision:
The Supreme Court determined that the 2019 draft Will represented Mr F’s true intentions, even if unsigned. The Court found that there was a satisfactory explanation as to why he did not sign the document on the basis that he believed “it would do the job”. The Court ruled against Ms K’s claim to Mr F’s estate and Ms K was ordered to pay the Estate’s legal costs.
Key Takeaways:
This case highlights critical principles in both Family Law and Estate/Life Planning:
- Proper Legal Documentation: Ensure that any property adjustment/settlement agreement under the Family Law Act 1975 is properly drafted and executed with the help of a specialist lawyer. This includes child support and spouse maintenance agreements.
- Updating Wills Post-Separation: It is essential to amend your Will, or create a new one after you separate or divorce. Failing to do so can lead to unintended consequences, as seen in this case;
- Deed of Release: Sign a Deed of Release under the NSW Succession Act (or its equivalent in other States), as part of your property settlement, to avoid claims against your Estate; and
- Court Approval of Releases: To further protect against future disputes, consider applying to the Supreme Court to approve the releases in that Deed. If Mr. F had done this, Ms. K would probably have been unable to pursue her claim.
Proper legal advice in both family law and estate/life planning is essential to avoid costly and stressful legal battles later on and to ensure that your wishes are honoured after your death.
Specialist legal advice is not just about preventing future disputes—it’s about securing peace of mind for you and your loved ones.
At Harris Freidman, we specialise in helping clients navigate these complex legal issues with confidence and security. Our team of experienced and specialised family law and estate/life planning professionals is here to guide you every step of the way. Don’t leave your future to chance—contact us today to ensure that your property settlement and estate/life plans are rock-solid, giving you peace of mind for whatever the future holds.