If you die without a Will or leave a Will deemed by the courts to be ineffective as it:
- Fails to properly dispose of all your assets,
- Does not meet the legal formalities of being correctly signed and witnessed, or was made by someone who lacks legal capacity.
- Where part of the Will is valid but part is invalid a person is considered to die partly intestate resulting in greater difficulty than administering a fully intestate estate.
There is a belief that if you wish only for your spouse and children to receive your estate the Laws of intestacy may be suitable; however, under intestacy, the way your estate must be divided is directed in specifically fixed proportions depending upon the family, or domestic relationship between you and your family members.
If a person dies intestate their relatives will have to apply to the Court for an administrator to be appointed. An administrator arranges the funeral, collects assets, pay any debts and taxes the estate owes then distribute any funds remaining. As your assets will be distributed according to legislation the administrator must establish the next of kin. Courts have a broad discretion to appoint an administrator, in most cases whoever has the largest share in the estate is considered the most suitable.
In many cases, a person who can prove that they are the de facto partner may be considered to be the spouse of an intestate partner and in some cases will displace the entitlements of a spouse. In certain circumstances “Children” include illegitimate children
If the next of kin is a child or an incapable person the Court may require the administrator to obtain an administration bond (usually equal to the value of the estate being administered) to guarantee any loss suffered as a result of the appointed administrator failing to properly administer the estate
Importantly the assets of the intestate must be sold in order for the estate to be distributed under administration. You cannot rely on the laws of intestacy to provide specific gifts for friends, charities or to leave provision for pets.
In Western Australia each year, roughly one in four estates administered rely on the intestacy laws set out in the Administration Act 1903 (WA) (“the Act”).
As I have posted earlier Australia’s first Billionaire Robert Holmes à Court, died following a heart attack in 1990 aged 53. His estate was estimated to be worth over $800 million; however, following his death, extensive searches were undertaken but no executed Will was found.
Holmes à Court, a lawyer who planned his business affairs so carefully failed to manage his affairs leaving his estate to be dispensed under the legislative formula of intestacy.
Section 14 of the Act directs the distribution of a person’s estate if they die without a valid will:
- A surviving spouse or de facto partner is entitled to the household chattels, the first $50,000 of the estate and one-third of the balance of the estate and any children will equally share the remaining two-thirds of the estate;
- If a person dies without leaving children, a surviving partner will be entitled to the first $75,000 of the estate and one half of the balance, with the remaining half of the estate distributed amongst the parents and siblings of the deceased.
In June a bill was introduced into Western Australian Parliament to reform the intestacy laws set out in the Act because the current provisions do not adequately provide for a surviving spouse or partner. Additionally, they Harmonise Western Australia’s legislation with Australia’s other states and territories.
The Amendment Bill provides:
- A surviving partner is entitled to the household chattels, the first $435,000 of the estate and one-third of the balance of the estate and any children will share equally the remaining two-thirds of the estate;
- If a person dies without leaving children; a surviving partner will be entitled to the first $650,000 of the estate and one half of the balance, with the remaining half of the estate distributed amongst the parents and siblings of the deceased.
Even with these changes, it is important that you draft a Will that reflects your intentions and will distribute your estate upon your death — in the manner that you want, instead of in the way that is dictated by statutory provisions setting out the distribution of your estate.