What is it?

Under the Succession Act 2006, the NSW Supreme Court (the Court) can make orders designating property as notional estate for the purposes of a family provision order or costs order relating to a family provision order. Notional estate refers to property that is not ordinarily considered as property of a deceased estate but has been deemed property of a deceased estate by an order of the Court.

What property can be designated Notional Estate?

The Court may designate property as notional estate if it is satisfied that the deceased person entered into a “relevant property transaction” that disadvantaged the estate, or a person entitled to apply for a family provision order. Examples of such transactions include, but are not limited to:

1. jointly held property;
2. life assurance policies held by the deceased;
3. contracts disposing of property owned by the deceased.

When determining what property should be subject to a notional estate order, the Court must consider the following:

1. the value and nature of any property;
2. the value and nature of any consideration given in a relevant property transaction;
3. any changes in the value of property in the time since the relevant property transaction or the distribution was made;
4. whether the property could have been used to obtain income in the time since the relevant property transaction or the distribution was made; and
5. any other matters the court considers relevant in the circumstances.

Conditions and Limitations

Before making a notional estate order, the Court must have first made a family provision order in favour of the applicant. This is because the purpose of a notional estate order is to allow for provision from an estate to a successful family provision applicant in circumstances where the deceased’s estate is otherwise insufficient to do so.

It is not enough for the deceased to have simply entered into a relevant property transaction prior to their death for the subject property to be considered for a notional estate order.

The Court must also be satisfied the deceased person entered a relevant property transaction before their death which satisfies one of the following conditions:

1. the transaction took effect within 3 years prior to the deceased person’s death and was entered into with the intention of denying or limiting provision being made out of the estate for a person;
2. the transaction took effect within 1 year of the deceased’s death, if the deceased had a moral obligation to make adequate provision for the applicant; or
3. the transaction took effect on or after the deceased’s death.

The transaction must have also directly or indirectly disadvantaged the estate, or a person entitled to apply for a family provision order.

Finally, the Court cannot make a notional estate order if the deceased’s estate is sufficient to satisfy the family provision order and associated costs.

Do you require advice?

Our estates team is highly experienced in assisting with notional estate claims. If you require assistance, please do not hesitate to get in contact with our team.

This article is for general information only and does not constitute legal advice. You should not rely on this information without seeking professional legal advice.