Step children and family provision claims

21 August 2018

In an increasingly diversified world, traditional notions of the definition of a “step-child” are being modified.

In earlier times, a step-child was understood to mean the child of a spouse by a previous marriage.

Now, with increasing numbers of partnerships that do not involve marriage, the term is often commonly understood to include a child of a partner by a previous relationship.

Attempting to define a step-child in partnership situations can become difficult when the partnership ends, for example:

  • Does a relationship of “step-child” continue?
  • If the relationship continues, for what purposes?

All Australian jurisdictions have legislation that enables a person who believes that adequate provision has not been made to file a family provision claim.

As legislation governing family provision claims and inheritance issues differs from state to state, the question of who is an eligible person can be complex, especially when blended families live in, and/or have assets located in, different states.

Generally, in order to be able to file a family provision claim, the applicant:

  • must be an “eligible person” and
  • must demonstrate that there was a moral obligation to make provision for them.

In all cases, consideration will need to be given to the extent of any “moral duty” owed to an eligible claimant, especially where the surviving partner has benefitted from the claimant’s parent’s estate.

For example, in order to make family provision claim:

Under Victorian family provision legislation

  • Only assets that form part of your estate at your death are subject to family provision claims.
  • There is no statutory definition of step-child for family provision claim purposes.
  • The question of who is a step-child has been the subject of comment by the Courts, but the position is still unclear as to whether a person may be a step-child for family provision claim purposes, especially in partnership situations where one of the partners has died or a relationship has ended prior to death.

Under New South Wales family provision legislation

  • Assets disposed of shortly prior to death, which may not form part of an estate under Victorian Law, can be reclaimed into a New South Wales estate for family provision claim purposes.
  • Step-children are not specifically mentioned as “eligible persons”, however they may be able to make a claim in certain circumstances, for example, if they are a member of the deceased person’s household at the relevant time.

Problems often arise in situations where step-children of the deceased person feels that they should be included in that person’s Will and share in their estate.

Difficulties commonly arise when a person dies leaving their entire estate to a later partner, potentially leaving children from the prior relationship with no direct provision from their parent’s estate. For example:

  • Where the claimant is a child of the deceased, there is usually no problem with the eligibility of that child to make a family provision claim.
  • Where the claimant is a step-child of the deceased, but the deceased was still in a current relationship with the claimant’s parent upon their death, there should be less problems with the eligibility of that child to make a family provision claim.
  • Where the claimant is a step-child of the deceased, but the relationship between the deceased and the claimant’s parent had ended prior to their death, problems can arise when making a family provision claim against the estate of the step-parent.
  • There is no “one type fits all” solution to these issues. Depending on where you live, who you live with and where your assets are located can produce very different (and often unintended) outcomes.

Our recommendations

The best advice is to consider and execute your estate planning carefully and seek the following advice.

  • Consider where and how your assets are held, remembering family provision claims can only be made against the assets in your estate. The following may or may not form part of your estate:
    • Superannuation
    • Life insurance proceeds
    • Assets held in other entities
  • To the extent that assets do form part of your estate, ensure that you have made adequate provision for those to whom you may have a moral obligation.