THE Succession Law report of the Victorian Law Reform Commission was tabled in the Victorian Parliament on October 15, 2013.
The report contains significant recommendations that may assist Victorians in preparing Wills and passing assets on to the next generation.
Whilst the recommendations are not yet law, it is important that those contemplating making Wills seek advice as some of the recommendations may affect their estate planning strategies.
One key recommendation is to change the laws of intestacy to distribute a deceased person’s estate when a person fails to make a will, their will is invalid, or does not adequately distribute all of their assets.
Under current laws, a hierarchical approach applies until next of kin is found. This can result in distant relatives inheriting from a deceased person. The Commission has recommended that the hierarchy of next of kin be limited to first cousins, after which point the estate will pass to the State of Victoria.
Another proposed change is to significantly increase the share of an estate passing to a partner (including married spouse, de facto spouse and same sex spouse) to the detriment of children of the deceased. Whilst in the majority of cases, this will reflect the general view of a deceased person, it may in some cases result in children, particularly children from a first marriage missing out altogether.
The Commission has also made recommendations to restrict the category of eligible claimants.
The current law defines an eligible claimant as a person whom the deceased had a responsibility to make provision for. This had led to claims that some lawyers have considered frivolous and resulted in executors settling cases to avoid the risk and cost of litigation.
The proposed restrictions limit claims predominantly to spouses, a former wife or husband, children, dependants, children, and stepchildren.
Another recommendation that has implications for business and farm succession planning is for a recipient of a gift to sign a release of their rights to make a claim against an estate, subject to the approval of the court.
If implemented, this will allow a person, during their lifetime to gift assets to a son or daughter in the certainty that they won’t make a claim for additional provision against their estate. This will assist in estate planning and assist in reducing family disputes after death.
Even though the Commission’s recommendations are designed to improve Succession Laws in Victoria, it is still important for people to make a Will. Failure to do so may mean that those that you wish to inherit may miss out altogether.
Additionally, people with complicated situations may need to consult a lawyer who can advise on possible effects of the recommendations, and put in place a Will that takes into account the chance of amendments becoming law and the necessity for review once the recommendations are considered by parliament.
Disclaimer: Readers should seek independent legal advice as this article is for information purposes only. Kevin Finn is employed by Beck Legal, Bendigo.