When your spouse or partner dies, you may need to make important legal decisions at a very difficult time. You may need to understand your rights under their Will, any contracting out agreement (sometimes called a pre-nuptial agreement), the Property (Relationships) Act 1976, and any possible claim under the Family Protection Act 1955 or the Family Proceedings Act 1980. This can be especially difficult in blended families. This article explains some of the key issues.
When your partner dies, three questions often need to be worked through at the same time:
- What is the relationship property?
- What does the Will say?
- Should you elect option A or option B under section 61 of the Property (Relationships) Act 1976 (Act)?
The answers can affect what you receive from the estate. There are also strict time limits for choosing option A or option B, and for bringing any relationship property, maintenance or support claim against the estate.
At a glance
- Relationship property is worked out by looking at any contracting out agreement and the Act.
- If there is a contracting out agreement, start by reviewing what it says happens if one partner dies. Usually, a contracting out agreement does not prevent you from also receiving any gifts left to you under your deceased partner’s Will.
- A contracting out agreement does not become invalid just because it is old. However, major changes in your circumstances may mean it could now be seriously unfair to enforce it. For example, this could apply if one partner stopped paid work for many years to raise children, but the agreement was signed when both partners were working and kept their finances separate.
- Next, find a copy of the Will. There may be a copy at home. If not, contact your partner’s solicitor or the executors and ask for one.
- You then need to decide which option is best for you. Option A means applying for a division of relationship property. Option B means taking what you are entitled to under the Will, or under the intestacy rules if there is no Will.
- The deadline for choosing option A or option B is:
for a small estate where probate or letters of administration are not needed, six months after the date of death; and
for all other estates, six months after probate or letters of administration are granted.
- If no valid choice is made on time, the surviving partner is treated as having chosen Option B under the Act.
- If you are unsure what is in your partner’s estate, or which option is best for you, we strongly recommend getting independent legal advice as soon as possible.
What is a contracting out agreement?
A couple can make a contracting out agreement to set their own rules about property. This lets them opt out of the default equal-sharing rules under the Act. The agreement can say who owns what, and how property will be divided if the couple separates or one partner dies.
A contracting out agreement may say what is relationship property, what is separate property, what share each person gets if one of them dies, and how the property is to be divided.
For the agreement to be valid, it must be:
- in writing
- made after both parties have received independent legal advice
- witnessed and certified by a lawyer
How does the Will interact with a contracting out agreement?
Your Will
If a valid contracting out agreement applies after death, the Will must be read together with that agreement. A Will cannot override a valid relationship property agreement.
A contracting out agreement does not automatically take away everything a person might receive under a Will or under the intestacy rules. The result depends on the wording of both documents, when they were signed, and what they were intended to do.
A Will is usually consistent with the couple’s contracting out agreement. However, a person can choose to leave their partner more under their Will than the agreement provides. This is one reason why it is important to compare option A and option B.
Family Protection Act 1955 & Family Proceedings Act 1980
A surviving partner may be able to apply under the Family Protection Act 1955 (FPA) for more from the estate if the Will, or the intestacy rules, do not make proper provision for their maintenance and support.
If a contracting out agreement tries to deal with FPA claims, that part of the agreement may be challenged. A contracting out agreement should focus on claims under the Act. Trying to cover other types of claims in the same agreement may create risk.
The same issue may apply to maintenance claims against an estate under the Family Proceedings Act 1980. A contracting out agreement may try to prevent those claims, but that could still be challenged in court.
Law Reform (Testamentary Promises) Act 1949
A claim under the Law Reform (Testamentary Promises) Act 1949 may arise if the surviving partner provided work or services to the deceased, and the deceased promised to reward them by leaving them property in their Will. The promise may be express or implied.
The claim requires evidence of:
- work or services provided to the deceased. If the claimant was the deceased’s partner, the work or services must be more than ordinary family responsibilities;
- an express or implied promise;
- a connection between the services and the promise;
- that the person was not properly rewarded under the Will or otherwise; and
- the value of the work or services, what was promised, the value of the estate, and any competing claims from others.
What happens if you choose option A or option B?
If the surviving partner chooses option A:
- they can apply for a division of relationship property. If there is a valid contracting out agreement, they will usually still be bound by it unless it is successfully challenged or does not cover all the property.
- gifts to them under the Will are usually treated as revoked unless the Will says otherwise; and
- the Will is generally interpreted as if the survivor had died before the deceased.
A successful relationship property claim is usually dealt with before the estate is distributed to beneficiaries under the Will or intestacy rules. However, the estate must still be properly administered, and debts, funeral expenses and higher-priority legal claims must be dealt with first.
If the surviving partner chooses option B, any contracting out agreement still applies. The estate is then dealt with under the Will. If there is no Will, the intestacy rules under the Administration Act 1969 apply.
If there is no Will, and the person who has died leaves a surviving partner and children or other descendants, the surviving partner will usually receive:
- the deceased person’s personal chattels;
- a fixed amount set by law, plus interest; and
- one-third of the rest of the estate.
The remaining two-thirds will usually go to the children or other descendants.
The exact result depends on the family circumstances, whether there is a valid Will, whether the Will covers the whole estate, and whether the surviving partner accepts or rejects what they are entitled to under the Will or intestacy rules.
Law changes
The law on options A and B, Wills and contracting out agreements continues to develop. At the time of writing, we are waiting for a Supreme Court decision in Rimmer v Wilton, which considered these issues. If the law changes, this article will be updated.
If you have lost a loved one and need help understanding your rights and entitlements, please contact Dayna Dustan
