Who pays the legal costs in successful estate claims?

Litigation which involves estate claims is known to at times be lengthy and expensive.

Cases involve family members claiming against a Will-maker for not providing for them in the Will, or providing what they believe is an inadequate amount out of estate assets.

Both claimants, and executors defending the claims on behalf of the estate, incur significant legal costs should the dispute proceed through the High Court.

In our long experience potential claimants are often naturally concerned about how the legal costs will be paid should they be successful against the estate.

There has been a long-standing principle that costs should be paid out of the “residue” of the estate, especially where the litigation arises from the fault of the Will-maker in breaching their moral duty to provide properly for the claimant.

The estate residue is what is left after specific gifts provided for in the Will have been made by the Executor of the Will.

However, this principle is not the only approach to awarding costs. Courts will now sometimes award costs which are calculated on a scale of how time-consuming and complex the matter is. There is guidance under the law as to what these scaled costs are and how they are worked out, so your lawyer should be able to estimate what these could be. Scale costs are unlikely to cover the total cost of the claimant’s legal fees. The Court also has discretion as to how the award of costs would affect the interests of justice between the parties. For example, if an order for costs to be paid out of the estate will have an unfair impact on a beneficiary, and the estate is quite small, Courts may order that each party to the litigation bears their own costs from their share of the estate.

The strength of the claimant’s claim, and their conduct, can have an impact the costs award.

In one case, three children were successful in a claim against their mother’s estate for further provision where they were receiving specific sums of money, and the residue was going to other relatives.

One of the children had a clear claim that his mother failed to adequately provide for him and so the Court awarded all of his legal fees to be paid out of the residue.

However, as the other two children had been partially unsuccessful in some of their other claims and had been criticised by the Judge for their attitude in giving evidence, they were only awarded scale costs, rather than the full amount of their legal fees. These scale costs amounts were to be paid out from the residue too.

Similarly, in another case, the successful claimants had unnecessarily delayed the proceedings, and brought further unsuccessful claims on behalf of the Will-maker’s grandchildren. The Court only awarded a fifth of the amount of the claimant’s costs from the residue of the estate.

Furthermore, Courts may decide that the costs are to come out of an unsuccessful claimant’s share where other claimants are successful.

For example, two daughters were successful in a claim against their mother’s estate, seeking further provision, while a third daughter was not. The Court held that the costs for all the legal fees should come out of third daughter's share of the estate provided in the Will.

The above cases show how complex estate litigation can be, and that even successful claimants are not always guaranteed a full recovery of their legal fees. It pays to seek advice from a legal professional to determine a particular claimant’s chances of success and potential award of costs at trial.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Please note that Rainey Collins is not contracted to provide Legal Aid, other than in the Treaty of Waitangi area.  We therefore are unable to take on any Civil or Family Legal Aid work. If you require Legal Aid in those areas, you can search the list of Legal Aid lawyers on the Ministry of Justice website.