A Charity’s Guide to Stepchild Estate Claims in NSW

Introduction

With the growing prevalence of blended families in NSW, a will contest initiated by a stepchild is an increasingly common challenge for the beneficiaries of a deceased estate. For charities that depend on bequests, a family provision claim from a stepparent’s stepchild can place vital funding at risk and challenge the final wishes of the person who made the will.

Unlike a biological child, a stepchild is not automatically entitled to contest a will under the Succession Act 2006 (NSW) and must first overcome significant legal hurdles to be considered eligible. For a charity’s board, understanding these requirements is a core part of their fiduciary duty to assess any claim against the deceased estate and protect the assets intended to fulfil the testator’s charitable intentions.

Interactive Tool: Check the Risk & Strength of a Stepchild’s Estate Claim

Step-Child Claims in NSW Estate Litigation

With the prevalence of separation and divorce, blended families consisting of a couple and children from previous relationships are increasingly common.

A stepchild is the child of a person’s spouse from a former relationship and is not related to the stepparent by biology or adoption.

This shift in family structures has led to a noticeable increase in the number of cases involving a stepchild seeking to contest the will of a deceased stepparent in NSW.

Consequently, these family provision claims have become a high-risk area for charities named as beneficiaries in a deceased estate. When a stepchild makes a claim against the deceased estate, it can:

• Challenge the final wishes of the testator.
• Impact the funds intended for charitable purposes.

Board’s Fiduciary Duty to Defend the Testator’s Wishes

Obligations Under ACNC Governance Standard 5

Under the Australian Charities and Not-for-profits Commission’s (ACNC) Governance Standard 5, individuals in leadership positions, known as “Responsible People,” are bound by specific legal duties—a key aspect of ACNC governance and compliance. These obligations ensure they act with integrity and common sense, always prioritising the charity’s best interests.

The core duties that apply to a charity’s Responsible People include:

• Acting with reasonable care and diligence, meaning board members must be conscientious and careful when making decisions that affect the charity.
• Acting honestly and fairly in the best interests of the charity and aligned with its charitable purposes, placing the organisation’s needs above personal interests.
• Not misusing their position or information they gain from it for personal advantage or to cause harm to the charity.
• Disclosing and managing conflicts of interest between personal interests and the charity’s interests, which must be formally disclosed and managed appropriately.
• Ensuring responsible financial management by overseeing the charity’s financial affairs to ensure they are handled responsibly.
• Not allowing the charity to operate while insolvent, as board members have a duty to prevent the charity from incurring debts it cannot pay.

Protecting Charity Assets & Upholding the Will

A fundamental responsibility for a charity’s board is to ensure the organisation’s financial affairs are managed responsibly. This duty is central to protecting the assets intended to fulfil its charitable purposes, which includes any charitable bequest left in a will.

When a charitable bequest is challenged through a family provision claim, the board’s fiduciary duties require them to defend the will. This obligation stems directly from ACNC Governance Standard 5, which mandates that every board member must personally understand and oversee the organisation’s finances.

Simply accepting a settlement without assessing the merit of the family provision claim could be seen as a failure to manage financial affairs responsibly. The board must act reasonably to preserve the assets of the estate for the charity, which involves:

• Carefully evaluating the strength of the claim.
• Refusing to capitulate early just to avoid a contest.

The Higher Legal Hurdle for a Stepchild Claimant in NSW

Defining an Eligible Person Under the Succession Act 2006

In NSW, a stepchild is not automatically considered an eligible person to make a family provision claim against a deceased estate. Unlike a biological or adopted child, who has a statutory right to contest a will, a stepchild must first prove their eligibility to the Supreme Court under the Succession Act 2006 (NSW).

The law does not list a stepchild as a distinct category of claimant. Instead, they must qualify under Section 57(1)(e) of the Succession Act 2006 (NSW).

This provision applies to individuals who were, at some point, wholly or partly dependent on the deceased and were also a member of the household of which the deceased was a member.

The Two-Part Test – Household Membership & Dependency

For a stepchild to successfully contest a will in NSW, they must satisfy a two-part eligibility test:

• Household Membership – the stepchild must have been a member of the same household as the deceased stepparent at some point in time; there is no rule about how long this co-habitation must have lasted.
• Financial Dependency – the stepchild must also prove they were wholly or partly dependent on the deceased stepparent.

It is important to note that both conditions do not need to have occurred simultaneously. For instance, a stepchild may have lived in the household during childhood and later become financially dependent on their stepparent as an adult; as long as each requirement was met at some stage, the claimant may be eligible to make a family provision claim.

Challenging a Stepchild’s Claim of Financial Dependency

What Constitutes Dependency in the NSW Supreme Court

For a stepchild to successfully contest a will, their dependency on the deceased stepparent must have been material or financial in nature. While an emotional connection is considered, the NSW Supreme Court has established that emotional dependence alone is not enough to make a stepchild eligible for a family provision claim.

The dependency must be more than minimal. For instance, a stepparent providing sporadic gifts to an adult stepchild who is otherwise independent would likely not be sufficient to establish dependency.

Consequently, the court examines the entire relationship to determine if the stepchild genuinely relied on the deceased for financial or material support.

Demanding Evidence of Financial Need from the Claimant

A critical strategy when defending a deceased estate is to require the stepchild claimant to provide clear evidence of their financial need. Regarding the burden of proof:

• The responsibility to prove their financial circumstances rests entirely with the person making the claim.
• A simple assertion of need is insufficient for the court.

The claimant must make a full and frank disclosure of their financial situation, which includes providing details about:

• Their assets and income.
• Any liabilities or debts.
• Their overall financial resources.

The court relies on independent evidence, such as bank statements, to verify these claims.

NSW Case Law Analysis When Stepchild Claims Succeed & Fail

When a Claim Fails The Importance of Relationship & Testator Wishes

The nature of the relationship between a stepchild and stepparent is a critical factor in a family provision claim. In the case of Plummer & Anor v Montgomery [2023] NSWSC 175, two adult stepdaughters contested their stepmother’s will after receiving no provision from her $1.2 million estate.

Although they were eligible to make a claim and could demonstrate financial need, their application ultimately failed.

The court found that the relationship between the stepdaughters and their stepmother was too remote, noting:

• Almost no contact for over 15 years before her death.
• A statement of wishes detailing the “intolerable behaviour” of the stepdaughters and the distress it caused.

The court gave weight to this statement, concluding that even where eligibility is established, a distant relationship and the clear testamentary intentions of the deceased can defeat a claim.

When a Claim is Dismissed The Competing Needs of Other Beneficiaries

Even if a stepchild is deemed an eligible person, their claim may be dismissed if the court finds that adequate provision was already made. This is especially true when considering the needs of other beneficiaries.

The case of Brown v Brown [2022] NSWSC 1393 involved an adult stepson who made a claim on his deceased stepparent’s estate, which had been left entirely to the deceased’s only biological child.

While the court found the stepson was eligible to make a claim, the case was ultimately dismissed. The court determined that the will did not fail to make adequate provision for the stepson, particularly when weighed against the competing circumstances of the biological son.

This outcome illustrates that a stepchild’s eligibility does not guarantee a provision. The court must balance their needs against those of other beneficiaries named in the will.

Balancing a Claimant’s Moral Claim Against Charitable Bequests

Courts are often tasked with defending a charitable bequest by weighing a family member’s moral claim and financial need against a deceased’s final wishes.

In Flanagan v Fisher [2021] NSWSC 598, the deceased left his entire estate to the Royal Society for the Prevention of Cruelty to Animals (RSPCA), but his son successfully contested the will and was awarded a significant provision. The court recognised the son’s moral claim, noting that the deceased’s connection to the charity was not based on a strong emotional attachment.

Similarly, in Portis v Green [2017] NSWSC 1489, the deceased’s son successfully claimed a provision despite the estate being left to a charitable organisation. The court made the following determinations:

• Acknowledged the deceased’s genuine connection to the charity.
• Found that it did not override the duty to provide for an eligible family member.

These cases show how courts balance a testator’s charitable intentions against the needs and moral claims of close relatives.

A Guide to Strategic Mediation for Charity

Assessing the Merits of a Family Provision Claim Before Settlement

While most family provision claims are resolved through negotiation or strategic commercial mediation to avoid expensive trials, settling early is not always in a charity’s best interests. The executor of the deceased estate has a duty to evaluate whether a claim has merit before agreeing to any settlement.

Capitulating on a weak family provision claim simply to avoid a contest can unnecessarily reduce the value of the estate bequest. For a charity, defending the will is essential to:

• Ensure funds remain available to fulfil the charitable purposes intended by the person who made the will.
• Honour the testator’s final wishes and protect the assets designated for its mission.

Balancing Legal Costs Against the Value of the Estate Bequest

When a will is contested, the board must carefully weigh the expense of litigation against the value of the charitable bequest. The executor has a responsibility to preserve the assets of the estate, which involves balancing:

• The need to avoid prolonged and costly legal battles.
• The duty to uphold the terms of the will.

There is a strong incentive for all parties to resolve a family provision claim early to minimise legal costs and protect the value of the deceased estate. Seeking advice from a lawyer is crucial to assess the strength of the claim and determine the most reasonable path forward, ensuring any decision to defend or settle is made strategically.

Conclusion

A stepchild faces significant legal hurdles to contest a will in NSW, as they must first prove their eligibility before making a family provision claim. Therefore, a charity’s board has a fundamental duty to assess any challenge to a deceased estate and defend the testator’s final wishes to protect the organisation’s assets.

To ensure your charity is prepared to defend a contested will, it is crucial to seek specialised legal advice. For trusted expertise in protecting your charity’s assets, contact LawBridge’s specialist not-for-profit lawyers to discuss how we can help safeguard your charitable bequest and secure your organisation’s future.

Frequently Asked Questions