Settling Estates Disputes Between Queensland Families

A GUIDE TO DEEDS OF FAMILY ARRANGEMENT

Important Takeaways

Deeds of Family Arrangement are legal agreements between family members and others with interests in the distribution of the estate of someone who has died.
They allow interested parties to determine the allocation of an estate even if this may be contrary to what is set out by a Will or statute in cases of intestacy.
It is an inexpensive and flexible way of resolving disputes that preserves relationships and avoids the need of taking the matter to court.

What is a Deed of Family Arrangement?

Deeds of Family Arrangement (DOFA) provides loved ones with the opportunity to undertake post-death estate planning and alter the distribution of a deceased estate.

This may be appropriate in circumstances where a deceased person has failed to execute a Will prior to their death, in which case the distribution of their estate will be dictated by Queensland’s intestacy laws. It may also be appropriate where the deceased person had made a ‘home-made’ Will that fails to take into consideration various issues that ought to have been addressed. Oversights may include the omission of certain people, failure to consider the entirety of the estate, or the use of vague and ambiguous terms to describe how the distribution of the estate is to be done.

In Queensland, DOFAs are legally binding as contractual arrangements. When agreement is reached between all interested parties, the Deed will override the original Will or intestacy laws where they apply. As an alternative to the litigation process whereby parties resort to the courts to resolve a dispute, DOFAs present a comparatively inexpensive and fast option to families seeking to alter the distribution of the deceased estate. In effect, a DOFA avoids the conflict and uncertainty that an come with the distribution of a deceased estate and provides family members with the closure that they need.

When can a Deed be Used?

DOFAs can be used to address any dispute or unforeseen issue that arises when someone dies and their estate is distributed. Deeds are often made in the following circumstances:

Where there is a need to address an unfair distribution of the deceased estate and allow for a more equitable allocation.
Where the interests of minors (under 18 years) or other vulnerable beneficiaries ought to be protected.
Where there is a need to address uncertainty in how to distribute the deceased estate as a result of vague and ambiguous language in the Will
Where there is a need to respond to potential claims from family members either deliberately or mistakenly omitted from the Will
Where for the purpose of wealth retention, the beneficiaries wish to give effect to a more tax-effective distribution of the deceased estate.

Who is Involved in Executing a Deed?

All Beneficiaries and other individuals who hold a legal interest in the estate must be involved in the negotiation of a DOFA. This could include (1) beneficiaries named in the Will, (2) executors and administrators, (3) family members or other dependents not included in the Will who may have reasonable grounds for a claim, and (4) creditors and other parties with claims against the deceased estate. It is necessary that all interested parties agree to the Deed to be legally binding, and that this agreement be comprehensive to avoid future dispute.

Benefits and Risks Associated with a Deed

Families use DOFAs because they provide an inexpensive and flexible means of resolving disputes without recourse to the courts. As with other forms of dispute resolution there are advantages and disadvantages associated with it. However, when considered alongside the alternative of seeking Court Orders, DOFAs are more attractive in most matters.

The benefits of using a DOFA include the following:

It is a relatively inexpensive means of changing how a deceased estate is distributed.
It provides all interested parties with flexibility in terms of what the agreement contains including solutions not capable of being made by court order.
Without the need for court approval, it provides individuals with greater autonomy and flexibility.
It provides all parties with certainty as to how the distribution of the estate is to occur, including certainty that future disputes do not arise.
It can deal with a broader class of interested persons than is permitted under the family provision claims under Queensland’s succession laws.
Unlike court applications under Queensland’s family provision laws, there are no statutes of limitation with respect to when a DOFA must be entered into by for a dispute to be resolved.

However, whilst the benefits of a DOFA in resolving disputes are significant, family members must be conscious of the following risks:

It may not be possible to reach an agreement between all interested parties without resorting to the assistance of the courts.
Additional disputes can arise about the terms of the DOFA in its drafting stages which can lead to further costs and delay.
If not drafted well, a DOFA will not protect parties from future disputes arising.
A DOFA will require the leave of the Court in certain circumstances. For example, where the Deed would impact the interests of a minor (under 18 years) arising from the terms of the Will or intestacy laws.
In cases of non-compliance with the DOFA, parties may have to rely on the courts for specific performance.

Importance of Legal Guidance

Whilst a DOFA might seem like a simple agreement between interested parties, consideration must be given to the legal requirements that must be met for the Deed to be considered effective as well as tax implications that come about with the distribution of an estate.

Legal considerations that interested parties must be conscious of when executing a DOFA include:

Whether a formal negotiation or mediation process is necessary to bring interested parties together in agreement on how to distribute the deceased estate.
Whether the terms of the Deed detailing the agreed upon distribution of the estate is comprehensive and ensures that no future dispute arises.
The Deed must be a formal written document, consented to and signed by all parties and witnessed according to legal formalities.

Additionally, changes to the distribution of the estate will have complex implications with respect to the movement of property and the payment of taxes. Stamp duties and capital gains tax may apply if assets are transferred in a manner not stipulated under the Will.

Enquire online or call ABKJ Lawyers on (07) 5532 3199 to speak with a legal professional who can guide you through the process of resolving an estate dispute or drafting and executing a Deed of Family Arrangement.