Claims against your Estate
There are strategies you can use to help reduce the likelihood of successful claims against your estate. The effectiveness of each strategy will depend on your individual circumstances. Some of these strategies will be outlined below.
The most straightforward strategy would be to exhaust all your assets whilst you’re still alive, leaving nothing in your estate. However, this strategy can be disadvantageous and challenging to implement, for example:
- it may be difficult to estimate your remaining life expectancy. If you estimate incorrectly you may run out of money well before you pass.
- there may be circumstances where you wish to leave something to your surviving spouse or children when you pass. Although it is possible to provide for them outside of your estate (e.g. through establishing life insurance policies), you may not always be in a position to use such strategies (e.g. perhaps due to medical issues you are uninsurable). In such circumstances, the only option may be leave something in your estate, which will therefore be potentially exposed to a family provision claim.
Another possible strategy is by pre-empting potential claims against your estate. For example, you may wish to treat a potential beneficiary less favourably or exclude them entirely from your Will altogether. This may occur where you have provided significant benefits to that person during your lifetime (e.g. by the giving of substantial gifts), or that person has treated you poorly.
After you have determined the individuals that might make potential claims against your estate, you should include detailed reasons explaining why you have treated such persons less favourably in your Will. The more detailed and compelling the reasoning behind your decision to treat a potential beneficiary less favourably, the greater your chances of withstanding a potential claim. Please note that this strategy will not guarantee that a successful claim cannot be made against your estate.
Another strategy is to transfer all of your significant assets out of your name. For example, you may transfer your assets to your beneficiaries now. However, the disadvantages of this strategy include:
- The loss of use and control over your assets;
- The loss of income derived from your assets;
- The potential for your assets to be exposed to claims made on the person it has been transferred to; and
- The potential for such assets to be clawed back under the notional estate rules if they have been transferred within 3 years of your passing.
If you have any questions in relation to the above, please do not hesitate to contact our team of lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry form today.