The Family Law Court can make a property settlement after a spouse dies

When a couple separates or divorces, they either agree to a property settlement or they ask a court to divide their property for them. But what happens when one spouse dies before the court acts?

The answer depends upon when the death occurs.

Death before filing an application for property settlement

An application for a property settlement can only be granted if both parties to the marriage are still living when the application is filed. If no application has been filed, the deceased spouse’s Will usually governs the distribution of that spouse’s property after death.

Death after filing an application for property settlement

If an application for a property settlement has been filed with a Family Law Court before a spouse dies, the court has the power to make a property settlement notwithstanding the death. The court can act if it decides that both of the following are true:

• The court would have made a property settlement if the deceased spouse had not died.
• It is still appropriate to make a property settlement.

The same rule applies if the parties were in a de facto relationship for at least two years before their relationship broke down.

The court may decide that no property settlement should be made after a spouse dies. In one case, for example, the court concluded that it would have divided the equity in a house if both spouses were still alive. After death, however, the surviving spouse inherited the entire house because of the way title was held. The court saw no need to disturb that outcome by making a property settlement.

Procedure for making property settlement after a spouse’s death

If the court decides to make a property settlement after a spouse dies, the personal representative of the deceased spouse acts in place of the deceased spouse. That rule raises a potentially troublesome problem if the Will of the deceased spouse names the living spouse as his or her personal representative (or executor). A conflict of interest is obvious if the spouse seeking the property settlement is representing the interests of the deceased spouse.

Practical advice for separating couples

Anytime a relationship breaks down, it is essential for each party to review his or her Will. Provisions that leave property to a spouse or de facto partner should be modified to reflect the party’s current wishes. If the spouse or de facto partner has been named as the executor of the party’s estate, a new executor should be nominated. Parties should seek legal advice to change their Wills as soon as a separation occurs to avoid unforeseen and unwanted outcomes.