If you die without a Will, or for some reason your Will does not deal with all of your assets, this is known as “intestacy”. It can cause considerable stress and expense for your family, which is why you should have a valid will, advises Estate Planning lawyer TERRY MORGAN.
The Probate and Administration Act 1898 (NSW) sets out rules for how your assets will be distributed after all debts have been paid. Without a will, the deceased has no control over their estate and it can be very difficult to determine who should be able to apply for Letters of Administration (the legal process for distributing your assets after you die).
Common myths about dying without a valid Will
- If you die without a Will, the Government will take all of you money. This is generally not true and can only occur if you die without any relatives. However, without a will, your assets will be distributed in accordance to a specific formula, meaning that your assets may not end up with the people you would prefer.
- Your family will all get equal amounts and there will be no disagreements. Every family is different and we must remember that the death of a loved one is an emotionally difficult time. From experience, it is always best to make your intentions clear, just in case.
- Your family will save on the costs of Letters of Administration and other legal fees. Without a Will, the financial and emotional costs of those left behind may far exceed the costs of creating a Will. Potential beneficiaries have to decide who will seek Letters of Administration and pay lawyers to determine how the estate will be divided.
Who gets your assets if you die intestate?
In NSW under the Succession Act 2006, a Spouse can either be a married partner of the deceased, or someone who was in a domestic relationship with them immediately before their death. Domestic relationships must either be registered, or de facto relationships, that have lasted for a continuous two year period, or have resulted in the birth of a child. These partners will either receive the whole or majority of your estate if you die intestate.
As far as children are concerned, they do not need to be born into a legal marriage to have the right to share equally in your assets. It is important to remember that if you want your assets to be distributed unequally, with one child receiving a specific item or amount, the best way to do so is through a formal Will and accompanying documents where appropriate.
The formula for distributing an intestate estate
Without a valid Will, your assets will be distributed in accordance with a legal formula that creates a hierarchy of your family/dependants that you leave behind. Generally, the following points are relevant to the distribution:
- If there are no children, your spouse/de facto will inherit everything
- If there is both a spouse and children from a previous relationship, the spouse will inherit the statutory amount (currenty $446,062) plus half of the residue of the estate and their loved one’s personal effects. The children will inherit the other half of the residue equally.
- If there are children and no spouse, the children will inherit equally. If one of the children is deceased prior to the parent’s death, any children they had will inherit their parent’s share, otherwise the share goes into the remainder of the estate.
- If there are no living spouses, children, or grandchildren, the estate may go to extended family members, such as parent, siblings, aunts or uncles.
How to protect your estate
To avoid your wishes being wrongly assumed, or your assets being subject to rigid formulas and potentially complicated court proceedings, it is always best to create a formal Will and seek legal advice. Where possible, it is recommended that you let your loved ones know that the Will exists and where it is held.