Deeds of Family Arrangement, how binding are they for family provision claims?
Have you been asked to sign a “Deed of Family Arrangement”?
Are you and your family members trying to keep an estate out of Court?
Do you want to head off a dispute over an estate before it starts?
There are many ways that a dispute over a deceased estate or a family provision claim or an invalid will can be resolved by agreement. In fact it is possible to reach an agreement without a Court case. However, any agreement like this requires careful consideration and quality legal advice to ensure they have the effect you want them to – and do not create more problems than they solve.
Family provision claims
As a brief reminder, claims that are brought by an eligible person against the estate of a deceased person are often called “family provision claims”. They are perhaps more properly called “claims for further provision pursuant to [a relevant statute].” For example, in New South Wales, they are a claim for ‘further provision’ under Chapter 3 of the Succession Act 2006.
They require that someone either be one of the classes of eligible person who can claim as of right (usually children, spouses) or the broader classes of persons who can satisfy the Court that their relationship was sufficiently close to merit being considered by the deceased in their will.
Whether the Court will make a family provision order is based on an assessment of whether or not the will of the deceased person (or the laws of intestacy if they died without a will) made:
“adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made”
and in the case of people who have to show the status of their relationship, whether:
“having regard to all the circumstances of the case (whether past or present) there are factors which warrant the making of the application”
Can you contract out of family provision?
When it comes to family provision claims being made on the estate of a deceased person the Courts have been jealous to guard against individuals taking the matter into their own hands and “contracting out” of the jurisdiction of the Supreme Court of the relevant state.
It is not lawful to make a will that is contingent on a person ‘not making a claim’ or that they only get their inheritance if they do not contest the will.
Can you agree with the (potential) claimant?
It is possible to reach agreement with the various family members or potential claimants without the need for a Court case. However, the question is how effective is that agreement?
It is highly desirable that the agreement is documented and that the agreement is written by a lawyer specialising in deceased estate and contested wills. This is especially true with family provision claims – because it is at least possible that the agreement will not be endorsed by a Court if it is later challenged. Any potential claimant on an estate, or an executor/administrator seeking to compromise a claim, should get competent advice before signing an agreement.
For example, in the case of The Estate of Wilson  NTSC 29, the late Mr Wilson was survived by his second wife, two children (of his relationship with his late first wife) and two step-children (the children of his first wife’s prior relationship). Mr Wilson died without a will, and so one of his daughters sought letters of administration from the Northern Territory Supreme Court over his estate – worth just under $400,000 – and she also entered an agreement between herself and the other children, step-children and second wife.
The Court did not grant her letters of administration because it took the view she would not distribute the estate according to law (that is, the bulk passing to the surviving wife) and instead would do so under the agreement. The Court declined to make the grant saying that a Deed of Family Arrangement is only as good as it’s endorsement by the Court – and that the Court may well not endorse an agreement if it is not satisfied the parties understood what they were giving up by signing, or that the parties are simply trying to circumvent the deceased’s intentions or the law of intestacy and vary the distribution of the estate.
 Section 59(1)(c) of the Succession Act 2006 (NSW)
 Section 59(1)(b) of the Succession Act 2006 (NSW)
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