Part 3.3Part 3.3 Notional estate orders
Note. This Part applies where, as a result of certain property transactions, property is not included in the estate of a deceased person or where property has been distributed from the estate of a deceased person. This Part enables the Court in limited circumstances to make an order designating property that is not included in the estate, or has been distributed from the estate, as “notional estate” of the deceased person for the purpose of making a family provision order under Part 3.2 in respect of the estate of the deceased person (or for the purpose of ordering that costs in the proceedings be paid from the notional estate).Property may be designated as notional estate if it is property held by, or on trust for, a person by whom property became held (whether or not as trustee), or the object of a trust for which property became held on trust:
(a) as a result of a distribution from the estate of a deceased person (see section 79), whether or not the property was the subject of the distribution, or(b) as a result of a relevant property transaction, whether or not the property was the subject of the transaction (see section 80), or(c) as a result of a relevant property transaction entered into by a person by whom property became held, or for whom property became held on trust, as a result of a relevant property transaction or a distribution from the estate of a deceased person (see section 81), whether or not the property was the subject of the relevant property transaction.Property may also be designated as notional estate if it is property:
(a) held by the legal representative of the estate of a person by whom property became held as a result of a relevant property transaction or distribution referred to in paragraphs (a)–(c) above and who has since died (known as the deceased transferee), or(b) held by, or on trust for, a person by whom property became held, or for the object of a trust for which property became held on trust, as a result of a distribution from the estate of a deceased transferee,whether or not the property was the subject of the relevant property transaction or the distribution from the estate of the deceased person or the deceased transferee (see section 82).Section 92 enables the Court to replace property in the estate or notional estate of a deceased person that has been, or is proposed to be, affected by a family provision order with property offered in substitution for the affected property.
Division 1 Relevant property transactions
In this Part:relevant property transaction means a transaction or circumstance affecting property and described in section 75 or 76.
75 Transactions that are relevant property transactions
(cf FPA 22 (1), (3) and (7))
(1) A person enters into a relevant property transaction if the person does, directly or indirectly, or does not do, any act that (immediately or at some later time) results in property being:(a) held by another person (whether or not as trustee), or(b) subject to a trust,and full valuable consideration is not given to the person for doing or not doing the act.(2) The fact that a person has entered into a relevant property transaction affecting property does not prevent the person from being taken to have entered into another relevant property transaction if the person subsequently does, or does not do, an act affecting the same property the subject of the first transaction.(3) The making of a will by a person, or the omission of a person to make a will, does not constitute an act or omission for the purposes of subsection (1), except in so far as it constitutes a failure to exercise a power of appointment or disposition in relation to property that is not in the person’s estate.
76 Examples of relevant property transactions
(cf FPA 22 (4))
(1) The circumstances set out in subsection (2), subject to full valuable consideration not being given, constitute the basis of a relevant property transaction for the purposes of section 75.(2) The circumstances are as follows:(a) if a person is entitled to exercise a power to appoint, or dispose of, property that is not in the person’s estate and does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that the property becomes held by another person (whether or not as trustee) or subject to a trust or another person (immediately or at some later time) becomes, or continues to be, entitled to exercise the power,(b) if a person holds an interest in property as a joint tenant and the person does not sever that interest before ceasing (because of death or the occurrence of any other event) to be entitled to do so, with the result that, on the person’s death, the property becomes, by operation of the right of survivorship, held by another person (whether or not as trustee) or subject to a trust,(c) if a person holds an interest in property in which another interest is held by another person (whether or not as trustee) or is subject to a trust, and the person is entitled to exercise a power to extinguish the other interest in the property and the power is not exercised before the person ceases (because of death or the occurrence of any other event) to be so entitled with the result that the other interest in the property continues to be so held or subject to the trust,(d) if a person is entitled, in relation to a life assurance policy on the person’s life under which money is payable on the person’s death or if some other event occurs to a person other than the legal representative of the person’s estate, to exercise a power:(i) to substitute a person or a trust for the person to whom, or trust subject to which, money is payable under the policy, or(ii) to surrender or otherwise deal with the policy,and the person does not exercise that power before ceasing (because of death or the occurrence of any other event) to be entitled to do so,(e) if a person who is a member of, or a participant in, a body (corporate or unincorporate), association, scheme, fund or plan, dies and property (immediately or at some later time) becomes held by another person (whether or not as trustee) or subject to a trust because of the person’s membership or participation and the person’s death or the occurrence of any other event,(f) if a person enters into a contract disposing of property out of the person’s estate, whether or not the disposition is to take effect before, on or after the person’s death or under the person’s will or otherwise.(3) Nothing in this section prevents any other act or omission from constituting the basis of a relevant property transaction for the purposes of section 75.(4) For the purposes of this Chapter, in the circumstances described in subsection (2) (b), a person is not given full or any valuable consideration for not severing an interest in property held as a joint tenant merely because, by not severing that interest, the person retains, until his or her death, the benefit of the right of survivorship in respect of that property.
77 When relevant property transactions take effect
(cf FPA 22 (2), (5) and (6))
(1) For the purposes of this Chapter, a relevant property transaction is taken to have effect when the property concerned becomes held by another person or subject to a trust or as otherwise provided by this section.(2) A relevant property transaction consisting of circumstances described in section 76 (2) (a), (c) or (d) is taken to have been entered into immediately before, and to take effect on, the person’s death or the occurrence of the other event resulting in the person no longer being entitled to exercise the relevant power.(3) A relevant property transaction consisting of circumstances described in section 76 (2) (b) or (e) is taken to have been entered into immediately before, and to take effect on, the person’s death or the occurrence of the other event referred to in those paragraphs.(4) A relevant property transaction that involves any kind of contract for which valuable consideration, though not full valuable consideration, is given for the person to enter into the transaction is taken to be entered into and take effect when the contract is entered into.
Division 2 When notional estate orders may be made
78 Notional estate order may be made only if family provision order or certain costs orders to be made
(1) The Court may make an order designating property as notional estate only:(a) for the purposes of a family provision order to be made under Part 3.2, or(b) for the purposes of an order that the whole or part of the costs of proceedings in relation to the estate or notional estate of a deceased person be paid from the notional estate of the deceased person.Note. Section 63 (5) enables a family provision order to be made in relation to property designated as notional estate of a deceased person.Section 99 enables the Court to order that costs be paid out of the notional estate of a deceased person.
(2) The Court must not make an order under subsection (1) (b) for the purposes of an order that the whole or part of an applicant’s costs be paid from the notional estate of the deceased person unless the Court makes or has made a family provision order in favour of the applicant.
79 Notional estate order may be made where property of estate distributed
(cf FPA 24)
The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that on, or as a result of, a distribution of the deceased person’s estate, property (whether or not the subject of the distribution) became held by a person (whether or not as trustee) or subject to a trust.
80 Notional estate order may be made where estate affected by relevant property transaction
(cf FPA 23)
(1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that the deceased person entered into a relevant property transaction before his or her death and that the transaction is a transaction to which this section applies.Note. The kinds of transactions that constitute relevant property transactions are set out in sections 75 and 76.(2) This section applies to the following relevant property transactions:(a) a transaction that took effect within 3 years before the date of the death of the deceased person and was entered into with the intention, wholly or partly, of denying or limiting provision being made out of the estate of the deceased person for the maintenance, education or advancement in life of any person who is entitled to apply for a family provision order,(b) a transaction that took effect within one year before the date of the death of the deceased person and was entered into when the deceased person had a moral obligation to make adequate provision, by will or otherwise, for the proper maintenance, education or advancement in life of any person who is entitled to apply for a family provision order which was substantially greater than any moral obligation of the deceased person to enter into the transaction,(c) a transaction that took effect or is to take effect on or after the deceased person’s death.(3) Property may be designated as notional estate by a notional estate order under this section if it is property that is held by, or on trust for:(a) a person by whom property became held (whether or not as trustee) as the result of a relevant property transaction, or(b) the object of a trust for which property became held on trust as the result of a relevant property transaction,whether or not the property was the subject of the relevant property transaction.
81 Notional estate order may be made where estate affected by subsequent relevant property transaction
(cf FPA 25)
(1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that:(a) it:(i) has power, under this or any other section of this Chapter, to make a notional estate order designating property held by, or on trust for, a person (the transferee) as notional estate of the deceased person, or(ii) immediately before the date of the death of a person (the deceased transferee), had power, under this or any other section of this Chapter, to make a notional estate order designating property held by, or on trust for, the deceased transferee as notional estate of the deceased person, and(b) since the relevant property transaction or distribution that gave rise to the power to make the order was entered into or made, the transferee, or the deceased transferee, entered into a relevant property transaction, and(c) there are special circumstances that warrant the making of the order.(2) Property may be designated as notional estate by a notional estate order under this section if it is property that is held by, or on trust for:(a) a person by whom property became held (whether or not as trustee) as the result of the relevant property transaction entered into by the transferee or the deceased transferee, or(b) the object of a trust for which property became held on trust as the result of the relevant property transaction entered into by the transferee or the deceased transferee,whether or not the property was the subject of the relevant property transaction.(3) A notional estate order may be made under this section instead of or in addition to an order under section 79, 80 or 82.
82 Notional estate order may be made where property of deceased transferee’s estate held by legal representative or distributed
(1) The Court may, on application by an applicant for a family provision order or on its own motion, make a notional estate order designating property specified in the order as notional estate of a deceased person if the Court is satisfied that:(a) immediately before the date of the death of a person (the deceased transferee), it had power, under this or any other section of this Chapter, to make a notional estate order designating property held by, or on trust for, the deceased transferee as notional estate of the deceased person, and(b) the power did not arise because property became held by the deceased transferee as trustee only, and(c) in the case of property referred to in subsection (2) (b), there are special circumstances that warrant the making of the order.(2) The following property may be designated as notional estate by a notional estate order under this section, whether or not it was the property the subject of the relevant property transaction or distribution from which the Court’s power to make such an order arose:(a) if administration has been granted in respect of the estate of the deceased transferee—property that is held by the legal representative of the estate of the deceased transferee in his or her capacity as legal representative of the estate of the deceased transferee,(b) if all or part of the estate of the deceased transferee has been distributed—property that is held by, or on trust for:(i) a person by whom property became held (whether or not as trustee) as the result of the distribution of the deceased transferee’s estate, or(ii) the object of a trust for which property became held on trust as the result of the distribution of the deceased transferee’s estate.(3) A notional estate order may be made under this section instead of or in addition to an order under section 79, 80 or 81.Note. Administration of the estate of a deceased transferee may be granted for the purposes of being able to designate property as notional estate under this section (see section 91).
83 Disadvantage and other matters required before order can be made
(cf FPA 26)
(1) The Court must not, merely because a relevant property transaction has been entered into, make an order under section 80, 81 or 82 unless the Court is satisfied that the relevant property transaction or the holding of property resulting from the relevant property transaction:(a) directly or indirectly disadvantaged the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or(b) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that, if not exercised, could have resulted in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or(c) involved the exercise by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) of a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death), or(d) involved an omission to exercise a right, a discretion or a power of appointment, disposition, nomination or direction that could, when the relevant property transaction was entered into or at a later time, have been exercised by the principal party to the transaction or any other person (whether alone or jointly or severally with any other person) so as to result in a benefit to the estate of the principal party to the transaction or a person entitled to apply for a family provision order from the estate or, if the deceased person was not the principal party to the transaction, the deceased person (whether before, on or after death).(2) In this section:principal party to the transaction, in relation to a relevant property transaction, means the person who, under section 75 or 76, enters into the relevant property transaction.
84 Effect of notional estate order
(cf FPA 29)
A person’s rights are extinguished to the extent that they are affected by a notional estate order.
85 More than one notional estate order may be made
(cf FPA 28 (3))
The Court may make one or more notional estate orders in connection with the same proceedings for a family provision order, or any subsequent proceedings relating to the estate of the same deceased person.
86 Power subject to Division 3
The Court’s power to make a notional estate order under this Division is subject to Division 3.
Division 3 Restrictions and protections relating to notional estate orders
87 General matters that must be considered by Court
(cf FPA 27 (1))
The Court must not make a notional estate order unless it has considered the following:(a) the importance of not interfering with reasonable expectations in relation to property,(b) the substantial justice and merits involved in making or refusing to make the order,(c) any other matter it considers relevant in the circumstances.
88 Estate must not be sufficient for provision or order as to costs
(cf FPA 28 (1))
The Court must not make a notional estate order unless it is satisfied that:(a) the deceased person left no estate, or(b) the deceased person’s estate is insufficient for the making of the family provision order, or any order as to costs, that the Court is of the opinion should be made, or(c) provision should not be made wholly out of the deceased person’s estate because there are other persons entitled to apply for family provision orders or because there are special circumstances.
89 Determination of property to be subject to notional estate order
(cf FPA 27 (2), 28 (2) and (4))
(1) In determining what property should be designated as notional estate of a deceased person, the Court must have regard to the following:(a) the value and nature of any property:(i) the subject of a relevant property transaction, or(ii) the subject of a distribution from the estate of the deceased person or from the estate of a deceased transferee, or(iii) held by the legal representative of the estate of any deceased transferee in his or her capacity as legal representative of the estate of the deceased transferee,(b) the value and nature of any consideration given in a relevant property transaction,(c) any changes in the value of property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), in the time since the relevant property transaction was entered into, the distribution was made, the property became held by the legal representative of the estate of the deceased transferee or the consideration was given,(d) whether property of the same nature as the property referred to in paragraph (a), or the consideration referred to in paragraph (b), could have been used to obtain income in the time since the relevant property transaction was entered into, the distribution was made, the property became held by the legal representative of the estate of the deceased transferee or the consideration was given,(e) any other matter it considers relevant in the circumstances.(2) The Court must not designate as notional estate property that exceeds that necessary, in the Court’s opinion, to allow the provision that should be made, or, if the Court makes an order that costs be paid from the notional estate under section 99, to allow costs to be paid as ordered, or both.(3) If, as a result of a relevant property transaction or of a distribution from the estate of a deceased person or from the estate of a deceased transferee, property becomes held by a person as a trustee only, the Court must not designate as notional estate any property held by the person other than the property held by the person as a trustee as a consequence of any such relevant property transaction or distribution.
90 Restrictions on out of time or additional applications
(cf FPA 28 (5))
(1) This section applies to proceedings where:(a) an application for a family provision order is made later than 12 months after the date of the death of the deceased person, or(b) an application for a family provision order is made in relation to an estate that has been previously the subject of a family provision order.(2) The Court must not make a notional estate order in the proceedings unless:(a) it is satisfied that:(i) the property to be designated as notional estate is property that was the subject of a relevant property transaction or of a distribution from the estate of a deceased person or from the estate of a deceased transferee, and(ii) the person who holds the property holds it as a result of the relevant property transaction or distribution as trustee only, and(iii) the property is not vested in interest in any beneficiary under the trust, or(b) it is satisfied that there are other special circumstances that justify the making of the notional estate order.