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Deed of Family Arrangement

14 June 2019

A Deed of Family Arrangement (DOFA) is a document recording the distribution of an estate where this will not be made in accordance with the terms of the Will or the laws of intestacy.

A DOFA can be used in several different circumstances including:

  • where there are doubts about the meaning or interpretation of a Will;
  • where the beneficiaries wish to alter the terms of the Will by re-arranging the distribution of the estate between themselves; and
  • to record settlement of a claim against the estate where a Will has been challenged.

Claims against a deceased person’s estate can be made under the Family Protection Act 1955 (FPA). Under this Act, certain family members can make a claim based on the argument that the deceased person did not fulfill their moral duty as a wise and just will maker and failed to adequately provide for the claimant’s proper maintenance and support. The cost for an estate to litigate an FPA claim can be very expensive so a cost effective and often a more timely alternative is for the parties to agree how an estate will be distributed and then enter into a DOFA to record their agreement.

There are no mandated legislative requirements for a DOFA document. However, careful thought should be given to the drafting of the DOFA to reduce the chance that it may be challenged by a beneficiary in the future. Each DOFA is factually specific to the relevant family or families and the circumstances behind the need for a compromise to be reached between the parties. It will often be necessary to include a detailed background in the DOFA setting out the particular family circumstances and history.

The DOFA may be prepared by the Estate’s solicitors, or conversely, the solicitors for one beneficiary may prepare it and submit it for approval to the Estate solicitors and other beneficiaries’ solicitors.  Depending on who prepares the DOFA, it will often be necessary for the remaining other parties to the DOFA to receive independent legal advice from a Solicitor of their choosing as to the effect and implications of entering into the DOFA.

Executors should be particularly wary when signing a DOFA to ensure that they are indemnified by all the beneficiaries in respect of any liability arising as a result of entering into the DOFA and carrying out its terms. Executors who take actions that have not been properly directed by the beneficiaries in the DOFA may be liable for the consequences of those actions.

In situations where all parties are in agreement, Deeds of Family Arrangements will provide a workable solution, both in a timely and cost efficient manner.

 

Glenda Graham is a Partner in the Private Client Team at Norris Ward McKinnon. You can contact Glenda at glenda.graham@nwm.co.nz

Glenda Graham