Scott Hay-Bartlem, partner at Cooper Grace Ward Lawyers, said at the CGW annual adviser conference last week that in every other Australian state, estate challenge assets are limited to assets held by the deceased personally.
“This notional estate concept brings in assets which are not estate assets. Some of my richest clients die with no money because it’s all siphoned off into very useful structures, but in NSW, those things don’t work, and one of those is their super,” Hay-Bartlem said.
The assets that can be included under a notional estate, Hay-Bartlem said, are:
· A transaction that takes place within three years of death.
· Jointly held assets such as bank accounts or properties by the deceased as joint tenants.
· Assets held in trust.
· Property that has already been transferred in the administration of the estate.
He added that it can only be applied where there are not enough assets remaining in the deceased’s own name to satisfy a claim.
Clinton Jackson, partner at law firm Cooper Grace Ward, said the transactions considered were broad and hard to circumvent.
“There are two things that need to be considered [when making a notional claim]. The first is anything that’s happened three years prior to death, and we’ve done that transaction to try to stop that asset being part of our estate, or to defeat a claim,” Jackson said.
“The second one is anything done within one year of death and that one’s much broader. How it applies is basically, is there anything we could have done in the last 12 months which would have made that asset an asset of the estate?”
One example of a transaction that may be considered is if something is owned as joint tenants.
“[One of the joint tenants] takes a step to sever that joint tenancy and make their half become an asset of their estate. So, why didn’t you do that in the last 12 months? Could we have used our power of appointment in a trustee to appoint someone who could have benefited? Could we have made a nomination in favour of this date in the last four months?
“All these things, when you look at it, the client probably had the power to do in the last 12 months before their death, and if they did not do it, then the NSW Supreme Court can potentially then go grab that asset to satisfy a payment to someone else.”
Jackson gave the example of the case Boyd v Roberts [2024] NSWSC, which questioned whether assets retained via an SMSF are still subject to attack when the estate is challenged.
In this case, the court confirmed the assets of the SMSF could have been used to satisfy a successful challenge against the estate, it was considered inappropriate and instead other non-estate assets were used to make the required payments to the aggrieved beneficiary.
