‘Til death (and the Law) do us part: Deceased Estates, Loss of Capacity and Family Law

It is an unfortunate reality in this day and age that many marriages and de facto relationships no longer last or remain intact until death. So, what happens if a marriage or de facto relationship has broken down and then one or both parties die? And what happens if one party or both parties to a family law matter have lost capacity and cannot manage their own affairs?

Like much in the legal world, it depends and each case may turn on its own set of facts or circumstances, however it is clear that the death or loss of capacity of a party to a family law matter can bring complexity and challenges for all involved.

Death of one party

If a couple have separated, but they have not yet completed a family law property settlement, and one of the parties to the relationship then dies, the ability to pursue a family law property settlement then dies with them.

In other words, unless there is already active family law litigation on foot, if a party to a family law matter dies prior to proceedings being issued, then the Federal Circuit and Family Court of Australia (‘the Court’) has no power to allow the surviving party, or the deceased party’s Legal Personal Representative, to subsequently issue property settlement proceedings.

The relevant state laws governing succession, survivorship and deceased estates, and the deceased’s Will then dictate the distribution of the deceased’s assets.

If there are already family law court proceedings on foot, and a party to the proceedings subsequently dies, the proceedings may be continued by the Legal Personal Representative of the deceased by order of the Court. The appointment of such a Legal Personal Representative to step into the shoes of the deceased is the very next step that must occur in order for the family law proceedings to advance.

Sometimes, if the impending death of a party to a family law matter is known or anticipated, a decision needs to be made as to whether it would be greater benefit to have the matter determined via the family law jurisdiction, or to instead simply rely on the terms of a Will, survivorship for jointly held assets or the provisions of the relevant state laws in relation to succession and deceased estates. The decision as to whether to urgently issue court proceedings or not will vary on a case by case basis. Legal advice from an experienced family lawyer will be necessary and likely urgent if this situation arises.

Death of both parties

In the event that both parties die during the course of family law proceedings, the Court also no longer has jurisdiction to determine the matter and as such, the family law proceedings will also die with the last of the parties to pass away. There is no scope for the parties’ Legal Personal Representatives to continue to proceedings.

Separation - Marriage vs De Facto

A quirk of the current family law legislation is that family law property settlement proceedings can be issued at any time in relation to the parties to a marriage and there is no need for the parties to have necessarily separated or for the relationship to have broken down. This is an important factor to note in the context of death or loss of capacity of a party.

Vastly different to that position is the legislation in relation to a de facto relationship which currently requires that the de facto relationship must have ended or ceased prior to the Court having jurisdiction to make property settlement orders.

This means that a decision as to whether a party to a marriage should issue family law proceedings prior to a death or simply rely on the estate planning of the party who will die is a choice that they may make regardless of whether their relationship remains intact or not. Whereas, the decision for a party to a de facto relationship hinges on whether or not the relationship has already ended and whether the parties have separated.

Survivorship

There can however be unintended consequences of simply relying on the estate planning of a party to a family law matter upon their death, and not having family law property proceedings on foot. For example, when bank accounts or real property are owned in joint names by the parties.

In that situation, the asset/s that are held jointly automatically pass to the survivor, regardless of what the deceased’s Will sets out. This is a process known as ‘survivorship’. This of course may be of benefit to a surviving party in that instead of proceeding down a family law litigation pathway, they can receive jointly held assets like the family home or the joint bank accounts automatically upon the death of their former spouse by way of survivorship. This same process may also be a detriment to a dying party in the event that they do not wish for their surviving former spouse to receive these jointly held asset/s automatically.

Loss of Capacity

In a similar manner to the appointment of a Legal Personal Representative in the case of death, if a party to a family law matter loses or has lost capacity and the ability to make decisions for themselves, one of the first steps in the process is to seek the appointment of a Litigation Guardian to step into their shoes and act on their behalf.

The main difference in relation to death and loss of capacity is however that there is no requirement that court proceedings are already on foot prior to the loss of capacity occurring. An application to the Court can be made by a proposed Litigation Guardian on behalf of a party to the family law matter to seek that they be appointed to act on their behalf. The Court will usually require evidence, generally from a medical practitioner, to support such an application for the appointment of a Litigation Guardian for a party who has lost capacity.

Another difference between death and loss of capacity in the family law jurisdiction is that it is possible for both parties to a family law matter to have lost capacity, and for both parties to have Litigation Guardian’s appointed to act on their respective behalf.

Issues surrounding separation, death and loss of capacity in a family law context do require special consideration and comprehensive legal advice. 

The Family Law team at Harwood Andrews has expertise in the complexities of death and loss of capacity in the family law context. If you have questions about how any of the above applies to your matter, or to make a start on your property settlement negotiations, click here to book an appointment with one of our family lawyers.

Tara Paatsch
Principal Lawyer
M 0412 660 842 | T 03 5225 5254
E tpaatsch@ha.legal