What Is the Forfeiture Rule?

In NSW, the forfeiture rule bars a perpetrator from inheriting from the victim's will or under intestacy laws. It also prevents one beneficiary from killing another beneficiary to claim a larger share of the estate.

The Supreme Court of NSW applies the rule in two main scenarios:

• Where the person has a criminal conviction for the unlawful killing.

• Even without a criminal conviction meeting the "beyond reasonable doubt" standard, as forfeiture proceedings are civil matters decided on the balance of probabilities.

  
  

The court considers several factors before applying or modifying the rule:

• The conduct of the deceased.

• The conduct of the perpetrator.

• The likely impact of forfeiture on the perpetrator and others (e.g., dependents).

• Any other relevant matters.

  
  

The rule extends beyond direct beneficiaries. It can apply indirectly if someone close to the perpetrator (such as their child) stands to benefit from the deceased's estate.

Mental Illness and the Forfeiture Rule

Section 11 of the Forfeiture Act 1995 addresses cases where the perpetrator is found not guilty of the killing by reason of mental illness. The court may still apply the forfeiture rule "as if" the person had been found guilty, but it has discretion to assess whether justice requires this outcome, taking into account all the circumstances.

What Should an Executor Do?

When a death results from the actions of a family member or dependent, the executor must carefully consider whether the forfeiture rule affects any potential inheritance. To avoid personal liability for incorrect distribution, executors are strongly advised to seek a declaration or orders from the Supreme Court of NSW. This clarifies the rule's application and protects the executor against future claims.

Case Study 1: Re Settree Estates; Robinson v Settree [2018] NSWSC 1413

This tragic case illustrates the rule's application in the context of mental illness. Scott Settree killed both his parents following a trivial argument over a bottle of wine. He was found not guilty of murder by reason of mental illness at his criminal trial and remained in protective detention.

Under his parents' wills, Scott stood to inherit approximately half of a $2 million estate, with the other half going to his sister (who was also the executor). The sister applied to the Supreme Court for the forfeiture rule to be applied to her brother's share.

The court examined:

• Evidence of some premeditation (Scott admitted awareness that he would benefit financially).

• Scott's history of domestic violence, drug, and alcohol abuse.

• Lack of provocation by the victims.

  
  

Scott's own children disclaimed any interest in the grandparents' estate. Full forfeiture would have left Scott entirely reliant on social security, while his sister would inherit the entire estate. Balancing public policy against the circumstances, the court made a conditional forfeiture order under section 11 of the Act. Scott received $100,000 (held in trust by the NSW Trustee and Guardian for his maintenance, education, and advancement), with the balance of the estate going to his sister.

This outcome shows the court's willingness to impose partial or conditional relief even in serious cases involving mental illness.

Case Study 2: Wang v Estate of Wang; Lu by his Tutor Fang v Lu [2021] NSWSC 717

This case demonstrates the court's power to modify the forfeiture rule in less culpable circumstances. A husband was convicted of the unlawful death of his wife through dangerous driving and sentenced to two years' imprisonment. The wife died intestate, so under the Succession Act 2006 (NSW), the husband would normally inherit the entire (modest) estate.

The deceased's minor son (from a previous relationship) applied for the forfeiture rule to be applied, which would have excluded the husband.

The court found that while the husband caused the death, it was accidental rather than intentional or premeditated. The husband had also made significant financial contributions to the assets in the estate. Weighing these factors, the court exercised its discretion under the Forfeiture Act to modify the rule, allowing the husband to inherit the whole estate. This enabled him to negotiate a settlement with the son's guardian.

Modification of the Forfeiture Rule

The Supreme Court has broad discretion to modify (or relieve against) the strict operation of the forfeiture rule where "justice requires" it. This is particularly relevant in cases involving:

• Reduced moral culpability (e.g., diminished responsibility due to mental illness).

• Culpable or dangerous driving causing death.

• Long-term domestic violence suffered by the perpetrator.

  
  

Such modifications prevent the rule from operating harshly where public policy would not be served by full forfeiture.

Key Takeaways

The forfeiture rule upholds a fundamental principle: no one should benefit from unlawfully killing another. However, the Forfeiture Act 1995 provides necessary flexibility through judicial discretion, allowing the Supreme Court to tailor outcomes to the specific facts of each case.

For executors, family members, or potential beneficiaries facing these issues, early legal advice is essential. Seeking Supreme Court orders can provide clarity, protect the estate's proper administration, and ensure fair outcomes that balance public policy with individual circumstances.

If you are dealing with a similar situation involving a will, intestacy, or potential forfeiture issues in NSW, consulting an experienced estates lawyer is recommended to understand how the rule and the Forfeiture Act might apply to your specific facts.

Note: This article provides general information only and is not legal advice. Laws can change, and every case turns on its own facts.