Potential Changes to South Australia’s Succession Laws

Succession law is, or will be, an important consideration for every Australian at some point in their lives. Whether you need to consider your own estate planning, assist in implementing another’s wishes, or consider that you may have an entitlement to another person’s estate, succession law will impact your decisions.

South Australian’s succession laws are presently proposed to go through their most significant amendments in around 30 years by two bills, the Succession Bill 2021, and, more recently, the Power of Attorney Bill 2021.

If the Succession Bill is passed by the state government, it will consolidate and amend the existing South Australian laws relating to wills and the administration of, and provision from deceased estates, including to repeal the existing Administration and Probate Act 1919, the Inheritance (Family Provision) Act 1972 and the Wills Act 1936, and introduce one piece of legislation to govern these areas.

The draft Power of Attorney Bill 2021 has only recently been circulated for feedback prior to introduction for debate into Parliament, and is less progressed in consideration that the Succession Bill. The Power of Attorney Bill intends to reform an area of law that has not been significantly amended in almost 40 years.

Main Reforms proposed by the Succession Bill

  1. The most contentious amendments of the new Succession Bill relates to family provision.
  2. At present, in South Australia, an eligible person may make an application to the Supreme Court under the Inheritance (Family Provision) Act 1972 (SA) to seek provision from a deceased person’s estate if they consider that they have not been left with adequate provision in the deceased person’s will (or otherwise) for “their proper maintenance, education or advancement”.
  3. To assess these claims, the Supreme Court may consider various matters including the applicant’s personal financial circumstances, their relationship with the deceased, and the personal and financial circumstances of other potential beneficiaries.
  4. The new proposed inheritance laws are designed to prioritise the wishes of the deceased person as the primary consideration of the Court.
  5. When faced with a provision claim, the Court must consider:
    • Evidence as to why the deceased disposed of their estate in the manner set out in their will;
    • A person’s vulnerability and dependence on the deceased;
    • A person’s contribution to the deceased’s person’s estate; and
    • The character and conduct of the applicant.
  6. There has been significant debate as to whether there should be the proposed new primary focus on the deceased person’s wishes, as opposed to a consideration of several factors to determine whether a claim for further provision should be granted. This is noting that a Court would generally consider the above listed matters when determining a provision claim in any event.
  7. In general, while the proposed changes are well-intentioned, with a view to avoid “frivolous” or “opportunistic” provision claims, there is a concern in the legal community that they go too far and will prevent people with genuine need from making claims.
  8. For example, the proposed changes would reduce the rights of certain relatives, including grandchildren and stepchildren of the deceased, who are required to satisfy a higher threshold to make a claim. The Court’s ability to step in if the deceased had failed to properly provide for a relative with a valid need, such as a minor or a vulnerable person, may be limited.
  9. Unfortunately, a person’s will is not always a true reflection of a deceased’s wishes, or has been used to air grievances in the context of a family dispute. For example, a deceased person may exclude a family member with a genuine need because there has been a lengthy period of estrangement, or a perceived bad relationship. There are also more extreme cases where a person influences an ageing or unwell person to include them in their will to inherit some (or all) of their estate.
  10. Considering that the proposed new laws place significant and primary emphasis on the deceased person’s wishes as evidenced in a will, it will become harder for a Court to order that persons who have been specifically excluded from a will are provided for from a deceased estate, or that a will perpetuated by a fraud (which can be difficult and costly to prove) should be unenforceable.
  11. While we wait the outcome of the proposed legislation, the Supreme Court is taking steps to discourage claims without merit, through ordering that unmeritorious applicants pay the legal costs of the administrator of the estate, rather than these being met from the deceased person’s estate.
  12. Otherwise, some of the other main reforms in the Succession Bill include that:
    • The following persons will be granted a new, express right to inspect a will of a deceased person, in particular prior to the grant of probate (and likely so that persons can be aware of the deceased wishes so that any interim measures can be put in place, or claims may be considered):
      • Persons named in the will;
      • Beneficiaries;
      • Surviving spouses and domestic partners or former spouses and domestic partners;
      • Parents or guardians of the deceased;
      • Other persons eligible to a share of the estate if the person died “intestate” (meaning without a Will); and
      • Other persons who have a claim against the estate, but only if they demonstrate a “proper interest in the matter” to obtain the permission of the Supreme Court to do so.
    • Persons who hold money or personal property for a deceased person (up to a value of $15,000) may pay the money or transfer the property directly to a surviving spouse or domestic partner of the deceased or a child of the deceased without needing a grant of probate or letters of administration. (This means that money may be transferred to a surviving spouse or other beneficiary of the estate, who may have no other or limited monetary recourse, in a quicker time than it takes to presently obtain a grant of probate for the will.)
    • How the assets of a solvent estate should be applied in the payment of debts and liabilities has been clarified (noting that, if this Bill does not pass, South Australia will need to continue to follow complex common law provisions).
    • The amount of the preferential legacy received by a surviving spouse of a person dying “intestate” (without a Will) is increased from $100,000 to $120,000.
    • There is another category of relatives, the children of the first cousins of the deceased, who may benefit from the estate when a person dies intestate, before the estate is given to the Crown.
    • A spouse or domestic partner of an intestate deceased cannot claim the estate if they are party to a prescribed agreement or Court order. (That is, if spouses or domestic partners have separated, and not legally ended their relationship through divorce or similar, but have finalised the financial matters between them, they cannot claim for inheritance for intestate estates.)

Proposed changes by the Power of Attorney Bill

  1. The Power of Attorney Bill has been drafted to address a report released by the South Australian Law Reform Institute titled “Valuable Instrument or the Single Most Abused Legal Document in our Judicial System? A review of the Role and Operation of Enduring Powers of Attorney in South Australia”.
  2. While the Bill has not yet been read in at Parliament, it has been circulated to stakeholders in the industry for comments and feedback before it is further debated.
  3. A power of attorney is a document that provides a person (called a “donee”, “attorney” or “appointee”) with the power to act on behalf of another person (called the “donor”, “principal” or “appointor”) in relation to their financial affairs.

A power of attorney does not give the attorney the authority to deal with other aspects of the donor’s life, including in relation to health care, residential and accommodation arrangements, and lifestyle matters, which can be dealt with by an Advanced Care Directive.

  1. There are two different forms of a power of attorney:
    • A general power of attorney – which gives a donee the authority to deal with the donor’s financial affairs, but only in particular circumstances (e.g. if the donor is overseas on holiday); and
    • An enduring power of attorney – which gives a donee the authority to deal with the donor’s financial affairs immediately, but usually is not acted on unless the donor becomes incapacitated.
  2. The draft Bill proposes to revoke the current Powers of Attorney and Agency Act 1984 (SA), and to introduce a modern law that clarifies matters not within the existing legislation, including to increase protections to prevent financial abuse.
  3. In general, the draft Bill codifies existing laws in relation to these documents, including to significantly expand on the existing legislation. There are new provisions to address the risk of financial and elder abuse including to prohibit certain persons from acting as an attorney or from being witnesses to a power of attorney, and outlining the powers that one may exercise, as well as those that they must not (including to not make or revoke a will).

Takeaway comments

  1. In conclusion, the realm of estate law is presently the subject of significant government focus, and may affect either your own estate planning, or your entitlement to another’s deceased estate.
  2. If you would like any assistance with drafting estate documents, or consider that you have not been adequately provided for in a relative’s will, please contact Peter Charatsis, Brenton Priestley, Ashlee Provis or Clairissa Hewitt.