Relationship Property after Death
The survivor needs to consider the options
Part 8 of the Property (Relationships) Act 1976 (“the Act”) deals with the division of property where a marriage or de facto relationship ends because one of the parties has died. The surviving spouse or de facto partner has a choice between two options: Options A and B.
Option A is the choice to apply for a division of the relationship property under the Act. Generally speaking, choosing Option A means the equal sharing regime applies and that your lawful entitlements take priority over the terms of the Will and you do not receive what has been provided for you under the terms of the Will, instead you receive your share of the relationship property.
Option B is to not apply for a division of the relationship property but instead to inherit under the provisions of the deceased’s Will or the provisions of the Administration Act where there is no Will. Option B is the default position if the survivor does not choose Option A within the time limit as detailed below, and in the manner prescribed.
How is the Option Chosen and Notified?
Choosing an option is a formal process that must be made by completing and signing a written notice. The notice must include a certificate signed by a lawyer certifying that the lawyer has explained the effect and implications of the option chosen. It also needs to be lodged with the administrator of the estate. It is not a decision that is to be made lightly, once made, the decision is irrevocable (unless a Court sets it aside). It is therefore important to obtain detailed advice about each option and the implications of the choice to be made.
There are also important time limits that apply to the election of an option. Where the amount is small enough not to require a grant of administration, the choice must be made within six months of the date of death. If a grant of administration is made, then the election must be made within six months of the grant of administration. The time limit is important because the administrator of the estate may distribute the estate if no election has been made within the six month period, and once distributed it cannot be undone. If option A is chosen there is also a time frame for filing the proceedings in court.
There is one important distinction between spouses and de facto partners in regard to the choice of options. Spouses have the right to choose Option A irrespective of the duration of the relationship, whereas de facto partners have that right only if their relationship lasted for three years or more; unless the court is satisfied that there was a child of the relationship or the surviving partner made a substantial contribution to the de facto relationship, and not having option A would result in substantial injustice.
The election of Option A or B may result in vastly different financial outcomes and therefore it is crucial that you obtain proper legal advice about this election and the time-frames that apply to this election. We can assist you in making this important decision. Please contact one of our Relationship Property Lawyers for further advice.