When loved ones are disappointed
When a loved one passes away, discovering that you have not been adequately provided for in their will can be distressing. In NSW many people believe they can challenge a will and their legal costs will come out of the estate. While there is an element of truth to this statement, it depends very much on the particular circumstances. Understanding the distinction between between different types of will challenges and the rules around legal costs is crucial before taking any action.
Is inadequate provision ‘reasonable grounds’ for challenging a will?
Challenging the validity of a will
This involves questioning whether the will is legally valid - perhaps due to concerns about the deceased’s mental capacity, undue influence, fraud, or improper execution. In most cases, the court’s look for ‘reasonable grounds’ - that is, a genuine, evidence-based reason to doubt the validity of the will.
Making a Family Provision Claim
If your concern is that you have not been adequately provided for, your are not challenging the validity of the will itself. Instead, you may be able to make a family provision claim under Ch 3 of the Succession Act 2006 (NSW). This is a separate process, where ‘eligible persons’ (such as spouses (including de facto), children, or dependants) can ask the court to order a share (or larger share) of the estate on the basis that the will does not make adequate provision for their proper maintenance, education, or advancement in life.
Simply believing you have not been adequately provided for does not constitute ‘reasonable grounds to challenge the validity of a will. It may however be the basis for a family provision claim, which is a different type of legal claim.
Who pays the costs if you are unsuccessful?
The rules about who pays legal costs differ depending on the type of claim.
Challenging the validity of a will
In NSW, there is a well established (dating back to Davies v Gregory (1873) LR 3 P&D 28) ‘probate costs exception’. If you bring a challenge to the validity of a will on reasonable grounds and in good faith, the court may order that your legal costs be paid out of the estate - even if you are unsuccessful. This exception exists to encourage proper scrutiny of wills and to protect those who raise legitimate concerns about their validity. However this exception does not apply if your challenge is frivolous, vexatious, brought in bad faith or without reasonable grounds. If the court finds that your challenge lacked merit or was conducted unreasonably, you may be ordered to pay the costs personally.
Family Provision Claims
The approach to costs in family provision claims is different. There is no automatic rule that costs come out of the estate. The court has discretion and will consider the circumstances of the case. If your claim is unsuccessful, you may be ordered to pay your own costs and the costs of the estate, especially if the claim was weak or unreasonable.
Key Takeaways
If you believe you have not been adequately provided for, this is not a ‘reasonable ground’ to challenge the validity of the will, but it may entitle you to make a family provision claim.
The probate costs exception - where costs are paid from the estate, applies to challenges to the validity of a will brought on reasonable grounds, not to family provision claims.
In family provision claims, if you are unsuccessful, you may be liable for your own costs and possible the estate’s costs, depending upon the circumstances.
In all cases, acting in good faith and on reasonable grounds is essential to avoid personal liability for costs.
Conclusion
Before taking any steps to contest a will or make a family provision claim in NSW, it is vital to understand the legal basis for you claim and the potential cost consequences.
Seeking professional legal advice can help clarify your options and ensure you proceed on the right grounds, minimising the risk of an adverse costs order.
