A valid Will determines how your estate is dealt with after you die. Your Will can appoint an appropriate family member, trusted friend, or professional to administer your estate (your executor). Furthermore, it can nominate guardians for young children and determine who will receive your assets. Finally, it gives clear direction for specific funeral and burial arrangements.
Without a Will, the finalisation (administration) of your estate could be left to somebody you would not wish to involve. Consequently, legislation will pre-determine the distribution of your assets. This outcome is likely to be more stressful, complex, and costly for your loved ones.
No matter what your age, health status, or financial circumstances, dying intestate (without a Will) is likely to create an additional burden on your family. Specifically, it prevents you from having a final say in how your estate should be managed and distributed.
What happens to your estate when you die without a Will?
If you die intestate, pre-determined formulae set by legislation in the relevant jurisdiction distribute your assets. Essentially, these rules provide a specific order of distribution to the deceased person’s next of kin, depending on each situation.
In New South Wales, the Succession Act 2006 governs the distribution of an intestate estate. In such cases, ‘spouse’ includes de facto partners and those in a domestic partnership with the deceased (as prescribed by law). Consequently, the following scenarios are the most common:
Intestacy Distribution Scenarios (NSW)
| Family Situation | Entitlement Overview |
|---|---|
| Spouse only (no children) | Spouse is entitled to the whole estate. |
| Spouse & children of that spouse | Spouse is entitled to the whole estate. |
| Spouse & children from other relationships | Spouse receives personal effects, statutory legacy ($573,866*), and 50% of the remainder. Children share the balance. |
| Children only (no spouse) | Children inherit the whole estate in equal shares. |
*Statutory legacy figure as of 1 July 2024.
Complications in Complex Families
This is a general overview only. Therefore, you must consider the circumstances of each case in their entirety. The formula can become complicated, particularly in cases involving blended families. As a result, the Act provides for a range of scenarios. For example, specific provisions explain how the estate is distributed if the deceased leaves more than one spouse.
Additionally, the Act deals with the distribution of the estate among relatives (i.e., parents, siblings, grandparents) if there is no surviving spouse or children. There are also provisions about a spouse’s right to elect to acquire property from the intestate estate. Finally, the law includes provisions dealing specifically with indigenous Australians and intestacy.
What can go wrong?
The formula set out in legislation attempts to reflect society’s expectations. However, the problem is that most families are not ‘standard’. Many are blended, and personal wealth is often distributed unequally between family members.
Dying intestate therefore may not guarantee a fair distribution. Consequently, it may result in undesired consequences, such as:
- Family members and those important to the deceased completely missing out on an inheritance.
- A disproportionate distribution of assets or the possibility of leaving out more needy beneficiaries.
- A distribution to a family member with whom the deceased shared no meaningful relationship.
Letters of Administration
When you die without a Will, the situation often necessitates an application to the Supreme Court for letters of administration. In such cases, the applicant is typically a spouse, partner, child, or other close relative. Because this process is court-driven, it can cause extra stress for a family.
Moreover, the court-appointed administrator may not be someone you would have chosen. Since family dynamics vary, it is often preferable for a neutral party to handle the administration. However, without a Will, you lose that choice.
Using a Testamentary Trust
In addition, failing to make a Will may forego opportunities for estate assets to be treated more tax-effectively. This is usually managed through a testamentary trust. Such a trust is contained in a Will and comes into effect upon your death.
A testamentary trust can provide flexibility and control in asset distribution. Furthermore, it may assist in protecting assets from third parties and creditors. Consequently, assets can be preserved for future generations.
Summary
In summary, having a Will gives you a voice when you die. Your testamentary wishes can be made known, and your beneficiaries identified clearly. Furthermore, good estate planning helps provide for more tax-effective distribution and protects vulnerable beneficiaries.
No matter what your age or financial circumstances, putting off making a Will just doesn’t make sense. Our legal team can help you document your final wishes to ensure your family is protected.
This information is of a general nature only. Therefore, you should obtain professional advice relevant to your circumstances. If you or someone you know needs help or advice, please call our Raymond Terrace office on (02) 4987 3344 or email [email protected].