Richard Squire died unexpectedly in April 2015; his second wife Corrine was named executrix in his Will made in March 2007, leaving his entire estate to her and if she did not survive him by 30 days to be divided equally between his three children and two children by Corrine’s first marriage. Three weeks before his death Richard and Corrine separated and made arrangements to divide their assets. Richard told his children that he was preparing a new Will to reflect his changed circumstances.
The principal asset of the marriage was a home unit, which Richard & Corrine held as joint tenants (joint tenants have equal ownership and interest in the property; and a right of survivorship meaning regardless of any contrary intention in the Will that if one of the joint tenants dies, the property will automatically pass to the surviving joint tenant.) The home unit was sold in March 2015 with settlement occurring shortly after Richard’s death; with Corrine entitled by survivorship to the whole of the sale proceeds.
Two of Richard’s adult children Claire and Paul made a family provision claim for $85,000 each under the Succession Act 2006 (NSW). The value of Richard’s estate was minimal (roughly $10,000 at most) but Claire and Paul asked that the proceeds from the sale of the home unit be designated as the notional estate. A deceased’s personal Actual Estate is often only one slice of the bigger “pie” of assets that the Deceased would have been entitled to enjoy if they had not died.
Notional estate orders are issued by the Court with the intention of making available for family provision orders assets that are no longer part of the estate of a deceased person because they have been distributed either before or after the deceased’s death (either with or without the intention of defeating applications for family provision).
The concept of a person’s Notional Estate becomes very significant in the area of family provision claims. If an eligible claimant for family provision (within the Succession Act 2006 (NSW)) believes they have not been adequately provided for, their claim is no longer limited to the Deceased’s Actual Estate – it also takes into account the Deceased’s Notional Estate – if the Actual Estate is insufficient to provide for the successful claimant
At first instance the Court was not satisfied that Claire and Paul had been left without adequate provision for their proper maintenance, education or advancement in life. The Court of appeal disagreed ordering the amount representing the share of the proceeds of sale of the property be designated as notional estate of Richard Squire, providing payments of $85,000 be made for each of Claire and Paul; observing however that the costs incurred by the parties in bringing the claim exceeded the value of the provision ordered.