If you die without leaving a valid Will, things can be much more complicated than if you die leaving a Will.
It is important to make sure that you have a Will and other Estate Planning documents in place, such as an Enduring Power of Attorney, Appointment of Enduring Guardian, Advance Care Directive and where appropriate, a Superannuation Binding Death Nomination.
Should you die without a leaving a valid Will, then the legal term is that you have died “intestate” and in that case, a government formula will apply as to how your estate assets will be divided amongst your eligible relatives. These could be your spouse (including your ex-spouse if you are not divorced) and other family relatives. If the person who dies without a Will is an indigenous Australian, the government formula may be subject to exclusion or modification in certain circumstances.
The government formula (or “rules of intestacy” as they are also known) may mean that people will inherit all or some of your estate assets whom you did not intend to inherit that much, or even to inherit anything at all from you.
The government formula that applies to the division of estate assets means that your estate will be left to the following relatives –
- If you die leaving a spouse but no children, your spouse will receive the whole estate (see the definition of a “spouse” below).
- If you die leaving both a spouse and children, and the children are also the children of the spouse, your spouse will still receive the whole estate and the children will not receive anything.
- If you die leaving a spouse and children, but the children are not children of the surviving spouse (in other words they are children from a previous relationship) then –
- The spouse will receive the first $350,000 of the estate, indexed to CPI increases since 2010, your personal effects and one half of the residue or balance of the estate; and
- The children will receive the remaining half of the residue or balance of the estate.
- If the deceased person had multiple spouses, then other considerations will apply to determine how the estate assets are to be divided.
- If there is no spouse and no children who survive the deceased, then the estate assets will pass to other relatives as set out in the government formula, namely, in order of priority –
- Brothers & sisters
- Aunts & uncles
- The Crown (Government)
The law defines a “spouse” to be –
- a person who was married to the deceased;
- a person who was living with the deceased in a “domestic partnership” immediately prior to death (this can include a defacto spouse or a same sex spouse).
Relationships which are recognised as a “domestic partnership” can be a relationship that –
- is a defacto relationship;
- is a “registered relationship” within the meaning of the involves an interstate relationship that is a registered relationship under the Relationships Register Act, 2010; or
- is an interstate registered relationship.
For a defacto relationship to be recognised as a “domestic partnership”, the relationship must meet the following test —
- The defacto relationship must have been in existence for a continuous period of at least 2 years; or
- The relationship has resulted in the birth of a child.
It is important to make sure that you plan ahead so that your estate can be distributed in accordance with your wishes.
Call Geoff Brazel on 4324 7699 or reserve your seat at our upcoming Wills & Estates Seminar.