Notional Estate NSW: What Queenslanders Need to Know

Not only did one Mr James Tedesco sink the hearts of all Queenslanders with a last-minute try to clinch this year’s State of Origin Series, now those pesky southerners are trying to disrupt the estate plans of us Queenslanders!

While the rivalry between Queensland and New South Wales is usually confined to the football field, there is another NSW issue that Queenslanders should know about when considering their estate planning: notional estate.

What is a notional estate in NSW?

The laws in New South Wales relating to estates, and particularly challenges to estates, incorporate the concept of a “Notional Estate”.

In simple terms, a notional estate is property that is not otherwise part of a deceased person’s estate. In limited circumstances, the Supreme Court of New South Wales can designate that property as notional estate for the purposes of a family provision claim.

This concept is important because some assets can pass outside a person’s estate. Depending on the circumstances, the NSW Succession Act 2006 allows the Court to look beyond assets the deceased owned directly at the time of death.

This can include certain property affected by relevant transactions, property distributed from an estate and property held through certain structures.

You can read the relevant provisions in Part 3.3 of the Succession Act 2006 (NSW).

Why can notional estate matter to Queenslanders?

Depending on how you hold and own your assets, NSW laws relating to challenges to estates could potentially apply to you.

This may be the case even if you live in Queensland and have no intention of living in New South Wales.

However, not every asset owned by a Queensland resident will be subject to NSW notional estate provisions. Whether the provisions apply depends on the circumstances.

This can include factors such as the deceased person, the property involved and any relevant property transactions.

This is why the structure and location of your assets can be important when preparing an estate plan.

How does the NSW notional estate principle work?

The basic idea behind the “Notional Estate” principle is to extend a deceased person’s actual estate beyond assets held in the deceased’s name.

In appropriate circumstances, the Court can designate certain property outside the deceased’s estate as notional estate. This allows the Court to consider that property when making a family provision order, provided the statutory requirements are satisfied.

This does not mean that trusts, superannuation or other assets automatically become part of a notional estate.

Instead, the legislation sets out circumstances in which the Court may make a notional estate order.

What types of assets can be relevant?

An estate can be more complicated than simply looking at the assets held in the deceased’s personal name.

Depending on the circumstances, estate planning may need to consider assets or interests involving:

trusts and trust structures;
superannuation and superannuation death benefits;
jointly held property or other jointly held assets;
property transferred or otherwise dealt with before death; and
other arrangements that may affect the property available when a family provision claim is considered.

The key question is not simply whether an asset is held outside the deceased’s personal name.

The Court must consider the requirements of the Succession Act 2006 (NSW) before making a notional estate order.

When can a NSW court make a notional estate order?

The New South Wales “Notional Estate” provisions are more complex than a Billy Slater judiciary hearing, so get some advice!

Under Part 3.3 of the Succession Act 2006 (NSW), a court may make a notional estate order in limited circumstances.

These provisions include circumstances involving certain distributions from an estate and relevant property transactions.

For example, section 80 provides for notional estate orders in connection with certain relevant property transactions.

The legislation identifies particular circumstances and time periods that can apply. These include certain transactions occurring within three years before death or within one year before death, as well as transactions taking effect on or after death.

The Court can designate property as notional estate for the purpose of making a family provision order.

The Supreme Court of NSW explains that family provision matters involve claims by eligible persons seeking provision from an estate. The Court considers a range of circumstances when determining these claims.

More information about family provision proceedings is available from the Supreme Court of NSW.

What does this mean for Queensland estate planning?

Part of any estate plan may need to consider which of your assets could potentially be affected by NSW succession laws.

This may be particularly relevant for Queenslanders with assets, business interests, family connections or other arrangements involving New South Wales.

It is worth considering whether your estate plan accounts for the possibility of a NSW family provision claim and the operation of the notional estate provisions.

Estate planning should involve more than simply deciding who receives the assets listed in your Will.

The way your assets are owned and structured can also be important.

Key takeaway: notional estate can extend beyond the Will

The key point to remember is that the assets dealt with under a Will are not necessarily the only assets that may be relevant to a NSW family provision claim.

Notional estate is a NSW legal concept.
It can apply to certain property outside the deceased’s ordinary estate.
Assets are not automatically designated as notional estate.
The Court must be satisfied that the statutory requirements for a notional estate order are met.
The way you own and structure assets can be an important part of estate planning where there are relevant NSW connections.

Frequently asked questions about notional estate in NSW

What is notional estate in NSW?

Notional estate is property that is not otherwise part of a deceased person’s estate. In limited circumstances, the Court may designate that property as notional estate under the Succession Act 2006 (NSW).

It can then be relevant when the Court considers a family provision order.

Does notional estate automatically include superannuation?

No. Superannuation does not automatically become part of a deceased person’s notional estate simply because the person held superannuation.

Whether particular superannuation interests or death benefits become relevant depends on the circumstances and the requirements of the NSW legislation.

Can a family trust be included in a NSW notional estate?

A trust does not automatically become part of a notional estate.

However, trust structures and transactions involving trust property can be relevant to the notional estate provisions, depending on the circumstances.

Can notional estate affect someone who lives in Queensland?

Potentially. Living in Queensland does not, by itself, determine whether NSW succession law may be relevant.

The circumstances of the deceased, the assets involved and any relevant connection with NSW need to be considered.

Why should I consider notional estate when preparing my Will?

An estate plan should consider how assets are owned and structured, not just what is written in the Will.

If you have significant assets or arrangements involving NSW, understanding the potential application of NSW notional estate provisions may help you make more informed estate-planning decisions.

Get advice about your Queensland estate plan