When you die without a Will or your Will is ruled invalid, it is called dying ‘intestate’.
Dying without having written a Will is more common, but your Will could also be found to be invalid under certain circumstances. For example: no executor is named in your Will; the executor you named in your Will has died or is unwilling/unable to act; you did not sign your Will in front of witnesses; you wrote your Will while not ‘of sound mind’; or you did not update your Will when you got married.
If you die ‘intestate’ (without a Will) the process of distributing your estate will take longer, likely cost more and the distribution of your assets could be very different from what you would have wanted.
Who will distribute your assets if you die without a Will?
The court will determine who will distribute your assets. They may choose to appoint a professional executor/trustee – which could be costly. Or alternatively, your spouse, a family member or close friend can volunteer and apply to the court to administer and distribute your estate. However, in this latter case the person must first be approved by the court.
If you have passed away leaving children who are minors (under 18), the court may also require a third party administration bond to be arranged. This guarantees any losses if the executor of the estate does not ‘properly administer’ the estate. The bond can prove quite expensive and is usually bought through an insurance company.
The chosen executor of your estate must then establish all eligible next of kin and provide certificates of evidence. This may take time and can be expensive. Once completed, an application for distribution of your assets is then prepared and lodged with the court.
How will your assets be distributed if you die without a Will?
If you die without a Will there is a formula, laid down in legislation, that determines how your assets will be distributed. This may be contrary to your wishes, but without a valid Will the prescribed formula will be followed by the courts.
The formula for distribution is different in each Australian State and Territory. However, the newest laws in NSW are somewhat groundbreaking and may provide a roadmap for what may happen in the rest of Australia.
In NSW, for example:
- If you have children with your current spouse, your children inherit nothing but your spouse is automatically entitled to all your assets.
- If you have children from a previous relationship, there are now limits on how much your current spouse or partner can inherit.
- If you had multiple spouses or partners, they may all be entitled to part of your estate.
- If someone can show they are part of a new, wider definition of friends, family, carers, etc. they may also be entitled to part of your estate.
- If ‘qualifying beneficiaries’ cannot be found, your entire estate will be taken by ‘The Crown’, meaning the Government of NSW.
Although this last item is not new law – and in fact is the case Australia-wide – it should be borne in mind and prompt you to act.
Don’t get caught out, write your Will today. Make sure your assets and valued possessions go to your loved ones – not to those you don’t want to and especially not the government!