Historically, in all Australian jurisdictions, courts have only been able to make further provision for a beneficiary out of the assets that directly form part of the deceased’s estate.
In New South Wales however, special rules have been implemented that allow the courts to make orders in relation to assets that do not in fact form part of a deceased’s personal estate.
In many respects, the rules are analogous to the bankruptcy legislation in that will makers who take steps to remove assets from their personal name leave those assets exposed to be 'clawed back' into the estate for the purposes of family provision applications made within 3 years of the date of their death.
While the rules apply to anyone living in New South Wales at the date of death, they also potentially apply where the will maker has any assets connected with New South Wales (including shares in companies whose registered office is located there). While there have to date been very few cases that have applied the notional estate provisions, we are seeing an increasing number of clients implementing specific strategies to reduce the risk of the rules applying to their estate plan.