Can You Make Claims Against Distributed Estates? (Vic)
There are two deadlines of particular note for anyone considering a claim against a deceased estate in Victoria. The first is the official deadline to file a claim with the Supreme Court of Victoria. The Supreme Court is unlikely to allow a claim after the official deadline, but there are exceptions to this rule. The second deadline is when the estate is fully distributed. In simple terms, the court may allow a late claim but will not allow a late claim after the executor has fully distributed the estate. This article deals with claims against distributed estates in Victoria.
Deadline For Making A Claim Against An Estate
In Victoria, an executor (or administrator) of an estate is obliged to hold on to the estate’s assets for a statutory period of time. This delay allows creditors to come forward and provides eligible parties with the chance to challenge the validity of a will or contest the provisions of a will.
Under the Administration and Probate Act 1958, a claimant must make a Testators Family Maintenance Claim (TFM) within six months of the Supreme Court of Victoria issuing a probate grant. After this deadline, the executor is free to distribute assets to the beneficiaries with the certainty that there will be no further claims against the estate.
Making A Late Claim Against An Estate
The Supreme Court is reluctant to allow an application to proceed after six months but can give leave for an out of time TFM claim. However, the claimant must prove that the late application does not prejudice the estate or create difficulties for the existing beneficiaries. The court will hear arguments from any interested parties and assess whether the claimant has sufficient justification for the delay. The court may decide that the claimant has reasonable grounds for the delay if, for instance, the claimant was ignorant of the time limits, or unaware that the testator had passed away, or received faulty advice from a solicitor.
Making A Claim Against Partially Distributed Estates In Victoria
The court will not assess claims against entirely distributed estates. Recent case law has underscored this statutory principle. For instance, in Robbins v Hume (2015), Justice McMillan refused to allow a plaintiff to contest a will a year after the deadline because the estate was already fully distributed. In that case, the plaintiff was aware of the will’s contents but failed to notify the executor of the estate of her intention to contest the will within appropriate time frames. Justice McMillan found that the executor had acted reasonably in distributing the estate at the proper time, and the plaintiff could not, therefore, make a claim against a distributed estate.
However, the court may choose to hear claims on partially distributed estates. In that case, it is only possible to claim against the undistributed portion of the estate. For instance, a testator might leave an estate worth a million dollars in cash and property. The executor might distribute $400,000 of the designated bequests after six months and still be in the process of selling a house that should clear $600,000. In that case, the court could allow a late claim and make a redistribution only from the house sale proceeds. The court would not retrospectively disturb the early distributions.
The circumstances differ when the claimant files a claim within the statutory waiting period, but the executor has already distributed the estate. Although early distribution is not against the law, it is unwise for this very reason: a claimant could emerge after five months and have a valid claim against an already distributed estate. In that event, the court can hold the executor personally liable for their mishandling of the estate.
The prospect of early distribution is just one reason why a claimant needs to communicate their intent to the executor as early as possible after the testator’s death. The executor has a legal duty to delay the distribution until any pending claim is resolved. On rare occasions, an executor will ignore this notification and distribute the deceased estate. In that case, even if the claimant brings a claim outside the time period, then the court may choose to hold the executor responsible for not heeding this information. The court may even be willing to hear a claim against an already distributed estate in Victoria if the executor improperly failed to delay the distribution.
It is generally impossible to make an out of time claim against a fully distributed estate in Victoria. However, there may be exceptions if the estate is not fully distributed or when the executor distributed the estate too early. Please contact the Armstrong Legal contested will team on 1300 038 223 to discuss your options to bring a claim against an estate in Victoria. The team can also assist you with any other probate or contested estate matter.