Many people are not aware of the complications and potential costs associated with dying intestate (without a Will) or the potential benefits of having a Will.
When a person dies without a Will they are said to die ‘intestate‘.
In these circumstances, the provisions of the Administration and Probate Act determine who can administer the estate and how the estate is to be distributed.
Unfortunately, most people do not understand the implications of intestacy and therefore the benefits of having an up-to-date and valid Will.
- Fees. Additional fees are potentially payable following an intestacy as there is an obligation to report and provide a full accounting to the Public Trustee for which an examination fee must be paid.
- Control. The intestacy legislation does not allow you to choose the person who manages your estate or the ultimate distribution of your assets as a formula determined by our state government applies. You therefore lose the option of choosing the most appropriate executor, making specific gifts of items (such as a wedding ring or other item of sentimental value) or distributing the estate to various people in different proportions for instance.
- Husband / Wife. If the deceased is survived by a lawful spouse (i.e. husband or wife) only, then the whole estate will be distributed to them. This distribution can sometimes be different to the distribution that a person chooses when making a Will.
- Domestic Partners. If the deceased is survived by a domestic (de facto) partner only, they must make an application to the court to obtain a declaration that they were the domestic partner of the deceased as at the date of death before they can proceed with obtaining Letters of Administration from the Supreme Court and receiving their entitlements under the intestacy legislation. This therefore exposes a domestic partner to substantial legal costs and court filing fees as well as delay which could be avoided by simply having a Will.
- Spouse or Domestic Partner and Children. In these circumstances, the spouse/domestic partner receives the first $100,000 of the estate, personal belongings of the deceased, and half of the balance of the estate. The children will then share the balance of the estate in equal shares. If the family home or other property (for example, family farm) is held in the name of the deceased, the surviving spouse or domestic partner may be forced to buy the children’s share in order to continue living in the family home. Where the children are under 18, the Public Trustee will act on behalf of the children and can potentially force the sale of the family home or farm. The intestacy formula in these circumstances increases the likelihood of court proceedings and inheritance claims.
- Business Owners. Businesses can be left without anybody being left with the authority to properly manage the business until such time as Letters of Administration have been issued by the Supreme Court.
- Family Trusts. Preparing a Will with a lawyer can often be the ‘trigger‘ for people understanding that they need to make provision for a new ‘appointor‘ for their discretionary (family) trust if they die and that generally provision is included in their Will to address this issue.
- Asset Protection and Tax Advantages. Preparing a Will allows you to choose a Testamentary Trust Will which potentially provides significant asset protection and tax advantages over the intestacy provisions.
- Superannuation. Having a Will prepared by a lawyer is often a ‘trigger‘ for people receiving advice about other estate planning issues such as binding death benefit nominations which can be an important estate planning tool.
- Protective Trusts and Special Disability Trusts. Preparing a Will allows you to consider beneficiaries who may not be able to manage their finances (for example, a gambler or spendthrift) or the potential benefits of establishing a Special Disability Trust for a severely disabled beneficiary.
- Blended Families. The intestacy legislation does not specifically address the complicated issues which needs to be considered for blended families which require consideration of a range of issues including ownership structures, rights of occupation, contracts for mutual wills, amongst other issues. The intestacy legislation therefore increases the likelihood of disputes and inheritance claims for blended families.
- Assets in multiple jurisdictions. The intestacy formula differs in each state and territory and also overseas. People who own assets in different jurisdictions can therefore expose their estate to significant costs and complexity for their family.
- Charities. The intestacy legislation does not make any distribution to charities. A number of people would like to gift a specific sum to a charity or to leave their estate to a charity if all family members died before them.
- Funeral Wishes. Many people express wishes about the disposal of their body in their Will.
The list set out above is by no means exhaustive and there are other issues and reasons which highlight the importance of having a Will prepared by a lawyer.
Contact us on 8523 8400 or email us at email@example.com if you would like to prepare a Will or require any assistance in connection with administering an intestate estate.
- NICK PULLMAN