Tuesday, March 10, 2015

Beyond death do us part – pre-nups and challenges against estates

Following the posts over recent weeks relating to challenges against deceased estates, this week’s post, with thanks to team member Hayden Dunnett, considers another relevant decision, namely Hills v Chalk & Ors (as executors of the estate of Chalk (deceased)) [2008] QCA 159. The case is important because it starkly highlights the potential significance of a Binding Financial Agreement (BFA) even where the BFA does not comply with the Family Law Act. 

As usual, a full copy of the decision is available via the following link http://www.austlii.edu.au/au/cases/qld/QCA/2008/159.html

Mr Hills and Mrs Chalk entered into a ‘pre-nuptial’ agreement in 1994, which was before the ability to make an enforceable BFA.  The terms of the pre-nuptial agreement were essentially contractually based and provided that in the event of their separation, they were each to retain their own assets and make no claim for property settlement, or maintenance from the other.  The agreement also recorded a joint intention to preserve their assets for their respective families.  Importantly, they acknowledged that each party should not seek to defeat the intention of the other.

Mrs Chalk died in February 2003, and probate was granted in April 2003 to the children of Mrs Chalk.  In September 2007, some 4 years after her death, Mr Hills made an application for further provision from the deceased estate.  In her will, Mrs Chalk had given Mr Hills a right to reside in her house, and a legacy of $20,000 in recognition of him caring for her during illness.  The balance of her estate was left to her children.

The court refused Mr Hills’ application stating it was ‘distinctly improbable’ that  Mrs Chalk had failed to make adequate provision for Mr Hills.

In particular, it was held that the ‘pre-nuptial’ agreement made by the parties, although not of itself directly decisive against Mr Hills' claim, was of significance to the assessment to be made by the court of Mr Hills' application for further provision.

Following the decision in this case it is generally accepted that a BFA, perhaps even if not binding for Family Law purposes, will be taken into account in any claim for further provision from an estate.

Until next week.

Image credit: Leo Grübler cc