Swelling Assets

The net estate of the deceased person, for the purpose of the family rights legislation, includes certain assets that are not strictly part of the net estate. Specific categories of assets may be designated directly to third parties, preventing them from becoming part of the estate. These assets are considered part of the net assets for the purpose of this legislation.

Where the deceased was immediately before their death officially entitled to a joint tenancy, then if, before the end of the six-month period from the date representation was taken out, or 18 months from the date of death, whichever occurs first, an application is made, the court, for the purpose of facilitating financial provision for the applicant, may order that the deceased’s severable share of that property, as it stood immediately before their death, shall, to the extent that it appears just to the court, be treated as part of the net estate of the deceased.

When determining the extent to which any severable share is to be treated as part of the net estate, certain dispositions or transfers made with the intention of defeating applications for financial provision under the legislation may be set aside. An application can be made to the court for a set-aside based on the premise that, within six years before the death, the deceased made a transfer for less than full value with the intention of defeating an application under the legislation, and that the court should have the power to provide financial provision for the applicant in such cases. In such a scenario, the court may order the donee, whether or not they hold the asset, to provide, for the purpose of financial provision, a sum of money specified in the order.

When an order is made, any transfer made by the deceased involving the payment of money for the benefit of the donee or recipient should not exceed the amount paid, less any applicable taxes. When a transfer is made under the above circumstances and not for value, the court will apply powers regarding the variation of that transfer as it does with the variation of gifts under the will, within the context of the legislation.

In deciding whether to exercise its powers to set aside, the court will consider the circumstances in which the disposition was made, any consideration given, the relationship to the deceased, the conduct and financial resources of the donee/recipient, and all other relevant circumstances of the case.

When contracts are made to leave property by will with the intention of defeating applications under the legislation, the contract may be set aside or varied under terms similar to those applicable to dispositions of property. These provisions also apply to contracts not given for full value.

When the court makes an order under the above provisions, setting aside a transfer, it may issue consequential orders to ensure a fair adjustment of the rights of the individuals affected by the order.