Hypothetical by Manny Wood published on 25 July 2020.
After separating from his wife, Peter commences a relationship with Mary in 2006. Mary has few assets and is 25 years his junior. They keep their finances separate. Peter pays the rent and they share the other expenses. Mary undertakes all of the household cleaning and cooking.
Mary has a poor relationship with Peter’s three children from his previous relationship. Mary’s three children move-in with Peter.
After Peter’s property settlement with his ex-wife is finalised, he purchases a property for $700,000 and Mary and her children move-in with him.
In 2016, Peter and Mary enter into a Binding Financial Agreement (BFA) under the Family Law Act, which is similar to a prenuptial agreement, to the effect that if their relationship breaks-down, Mary receives the sum of $200,000.
In 2018, Peter makes a will granting Mary the right to reside in his home for four months and leaves the whole of his estate to his three children.
When Peter passes-away in 2019, Mary receives legal advice that the Binding Financial Agreement is not valid. This is correct. A Binding Financial Agreement only dictates the division of property in the event of a relationship breakdown and has no legal effect upon the death of either party.
Mary commences action in the Supreme Court of New South Wales, making a family provision claim for further provision out of Peter’s estate. She commences proceedings within the prescribed limitation period, being 12 months from Peter’s date of death.
Mary and Peter’s children are unable to reach an agreement at mediation and after a hearing, costing a total of $150,000, payable from Peter’s estate, Mary is awarded $300,000, being roughly one quarter of the value of Peter’s estate.
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