Since the 1980’s, the percentage of blended families and stepfamilies in Australia has more than tripled. In addition to difficult family dynamics, these family arrangements can also create challenges in regards to the testamentary wishes of the recoupled spouses. Unlike intact families where it is usually expected that the husband and wife are the sole beneficiaries of each other’s estates, the deceased estates of stepfamilies often involve the competing (and sometimes contrary) expectations of the new spouse and the children from the first relationship.
In New South Wales, a stepchild is only eligible under the Succession Act 2006 (NSW) to make a family provision application in relation to their stepparent’s estate if they satisfy the following criteria:
- The stepchild was, at any particular time, wholly or partly dependent on the deceased stepparent;
- The stepchild was, at that particular time, a member of the deceased stepparent’s household; and
- The stepchild satisfies the court that there are factors that warrant the making of the family provision application.
A decision of the New South Wales Supreme Court (‘Court’) last month has highlighted the seeming unfairness of this eligibility criteria compared with those of other Australian States. For example, in Queensland, a stepchild is automatically eligible to bring a family provision application and does not need to satisfy any further criteria.
Background
In Spata v Tumino; Estate of Gina Spata [2017] NSWSC 111, Gina Spata died in 2014 aged 77 years and left her entire estate to her nephews. Mrs Spata had married Ross Spata in 1980, who died before her in 2010. While Mr and Mrs Spata had no children together, Mr Spata had three children from a prior marriage. One of these children, John, applied to the Court for a family provision order in respect of his stepmother’s estate.
When Mr Spata died in 2010, his last will directed that his estate (worth approximately $1.2 million) was to be divided equally between his three children. Mrs Spata subsequently brought a family provision application in respect of Mr Spata’s estate on the basis that she had not received adequate provision under his will. Mrs Spata’s application was successful and accordingly, the Court ordered that further provision be made for her from Mr Spata’s estate by way of a legacy and one of Mr Spata’s houses (with a combined value of around $743,000).
Despite being successful, Mrs Spata agreed to vary the Court’s order so that she did not receive the legacy of $143,000 and instead received a 1/6th interest in one of Ross’ properties. This was in response to requests from John and his siblings that in order to fund the legacy of $143,000, they would need to sell one of Ross’ properties that John was living in (John had claimed that he was destitute). This effectively left John and his siblings with one of their father’s properties to share, which after it was sold, provided them each with around $200,000.
By the time Mrs Spata died some four years later, her estate consisted of an apartment worth around $675,000 and bank account monies totalling around $70,000. She had used the assets received as a result of the family provision application to purchase the apartment. After the respective legal costs of the parties were deducted, the distributable estate would be around $515,000. Additionally, Mrs Spata held $300,000 in a joint account with one of her nephews, which although it passed by way of survivorship to her nephew, at least half of which could constitute notional estate if required.
John’s needs
John was aged 61 years at the time of the decision but continued to operate a plumbing business. His annual income was around $26,000 whereas his partner’s income was around $40,000. He and his partner owned a house with a mortgage. Their net assets were around $100,000. John also claimed to suffer bipolar disorder, hearing loss and cateracts. His primary needs were to repay the mortgage and a personal loan from his partner’s family.
John’s eligibility
As a stepson, in order to be eligible to bring a family provision application, John needed to prove not only that was he a member of Mrs Spata’s household at any time but that he was also dependent on Mrs Spata at that time. The Court accepted that for about six months in the 1980’s, following Mrs Spata’s marriage to Mr Spatat, they shared a common residence with John and his first wife. The Court also accepted that John resided with Mrs Spata from about 1995 until 1999 during John’s separation from his wife.
Having established that he was a member of Mrs Spata’s household for at least short periods, the next critical issue was John’s dependency on Mrs Spata during those periods of co-habitation. The Court affirmed prior definitions of the term ‘dependent’ as referring to “the giving of financial or other material assistance by the deceased over a significant period of time in order to meet a need of the eligible person, with the result that the recipient has come ordinarily to rely upon that assistance” but did not agree that dependence was limited to mere financial dependence.
John claimed that he was dependent on Mrs Spata during these periods for the carrying out of household duties like cooking, washing and cleaning for his benefit. However, the Court did not agree that these services constituted dependency as intended by the legislation. The Court explained its reasoning as follows:
“ The provision by Gina of services such as putting clothes in the washing machine, hanging them out to dry, preparing meals and shopping for groceries is an aspect of the arrangements of mutual living that makes a household, and reflects the division of labour and responsibilities within the household, but does not constitute a dependency – at least in the case of an adult child who is capable of performing the activities of daily living himself…Nor did Gina’s provision of comfort and solace when he was distressed in the circumstances of his marriage breakdown create a dependency; while dependence is not limited to financial or material dependence, the existence of an emotional relationship alone is insufficient. John refers to having received an occasional financial benefit – $50 or so, so that he could go out for a social occasion – from Gina – such trivial assistance does not make a case of dependency, even if it were established that it was sourced in Gina and not Ross, which it is not. To the extent that John had any remaining need for maternal services of this kind after the death of his mother Nancy – he was then aged 16 – it was his father who provided them.”
Furthermore, since only Mr Spata owned the house that John resided in, it was incorrect to say that John was dependent on Mrs Spata for accommodation. In fact, both Mrs Spata and John were dependent on Mr Spata for accommodation during the above periods. It would be interesting to see whether the decision might be different had Mrs Spata co-owned the properties with Mr Spata. Similarly, the Court indicated that had John been able to prove that Mrs Spata not only prepared but purchased food for him, a partial dependency may have been found.
In the context of stepchildren, the Court held that dependency was more likely to be found with young stepchildren as opposed to able-bodied adult stepchildren.
Decision
Having failed to discharge the onus of proof that he was dependent on the deceased, the Court was forced to dismiss John’s family provision application. However, had John been able to prove that there was dependency present, the Court said it would have concluded that there were factors warranting John’s family provision application and that he did not receive adequate provision for his proper maintenance and advancement. Accordingly, the Court would have ordered John receive a legacy of $300,000 from Mrs Spata’s estate to repay his home loan with enough left over for contingencies.
Although the Court did not find John’s relationship with Mrs Spata was analogous to a parent-child relationship, the main factors that led to the Court’s conclusion that John’s family provision application was warranted were:
- the contributions by John (and his two brothers) to the estate of his father, most of which comprised Mrs Spata’s estate;
- John’s expectations regarding the inheritance from his father, which was significantly reduced by Mrs Spata’s earlier family provision claim; and
- Mrs Spata made representations that she would honour her husband’s testamentary wish that his sons would inherit his estate.
Implications
This case demonstrates that the family provision legislation in New South Wales requires reform to relax the eligibility requirements for stepchildren. Under the current regime, an able-bodied adult stepchild faces the difficult task of proving dependence on their stepparent. Even if the stepparent’s estate was significantly enlarged by the natural parent’s estate, the stepchild is prevented from making any claim on that estate without proving both co-habitation and dependence.
Had the requirement for dependence been removed, the plaintiff in this case would have been successful. Some readers may consider this result unfair. However, until the eligibility requirements for stepchildren are amended in New South Wales, adult stepchildren will continue to face obstacles to making family provision applications notwithstanding that there may be factors justifying the bringing of such applications.
If you require legal advice about your rights with respect to a deceased estate or making a family provision application, please contact HPL Law Group on (02) 9905 9500.