Have you ever wondered what happens to someone’s assets in the event of their death when in the middle of a property settlement? Whilst a morbid question, it’s an extremely important one to consider, as it can have serious consequences on someone’s assets and how they are dealt with after their death.

The effect of death on property proceedings 

If someone is in the early stages of a property settlement, generally most parties will attempt to resolve their matter outside of the Family Court. This can include independent negotiations, negotiations through lawyers or participating in mediation. This stage is often referred to as “pre-action procedures”.

If this stage is unsuccessful in resolving a matter, sometimes the only alternative course of action is to make an application in the Family Court to resolve the matter.

So, what happens if one of the parties dies prior to the matter being resolved?

If either party in property proceedings has filed an initiating application in the Family Court, under s79(8) of the Family Law Act 1975 (or Section 90SM(8) of the Family Court Act 1997 for de facto relationships), the Family Court has the power to continue the proceedings with the deceased person’s personal legal representative (that is their executor or administer) acting in the place of the deceased person.

The court has the power to make an order relating to the property of the parties if it is of the opinion that it would have made a property order, had the deceased not died or if it is appropriate to make an order. The court must follow this two-step process pursuant to the High Court case of Stanford v Stanford (2012) HCA 52.

What if property proceedings have not been commenced? 

Unfortunately, if people are still in the process of ‘pre-action procedures’ and where neither of them has commenced proceedings in the Family Court prior to the death of a either of them, the Court does not have power make an order or to grant leave to the surviving person to commence proceedings.

In terms of what is considered commencing proceedings, either person must have filed initiating documents, however, no service on the other person is required for the proceedings to be considered commenced.

If no proceedings have been commenced, the assets owned by the deceased will be dealt with under their valid Will (if they have one, remembering that if they have divorced that will have invalidated any Will that they may have had in place before the divorce, unless the Will was made in contemplation of the divorce), and the surviving party may be able to make a claim to property through a Family Provision Act claim, but they will have no claim through the Family Court.

How to protect a person’s interests in the event of death

Upon separation, we recommend that a person should always consider and take steps towards updating their Will and considering other estate matters.

If people are married, but have separated, any Will they have in place will remain valid until either they amend the Will, or they obtain a divorce. Any Will in place at the time of divorce will be null and void, unless made in contemplation of the divorce.

However, if people are in a de facto relationship that has broken down, they should consider amending their Will and other estate planning documents immediately, as there is no automatic provision to render a Will null and void.

For further information on the effect of separation on your estate planning, read here https://www.lynnandbrown.com.au/marriage-separation-and-divorce-the-effect-on-estate-planning/

It is advisable that if people are in the process of a property settlement and either party is terminally ill, both parties should seek advice from a family lawyer immediately to discuss their options. Similarly, while this article summarises the process of what will happen in the event of the death of a party to a property proceeding, there are a number of procedural processes that must take place and further legal advice specific to a person’s current circumstance in this situation is recommended.

Please don’t hesitate to contact one of our six family lawyers should you require further advice.

About the Author: Jasmine Trewin is a family lawyer who has completed both a Bachelor of Laws and Bachelor of Arts (majoring in Journalism). Jasmine spent time working at the Federal Court of Australia before joining Lynn & Brown Lawyers in August 2021.

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