In this day and age with divorce, remarriage, blended families, and domestic relationships, the need to have a Will to enable you to distribute your estate as you see fit, is more important than ever.
Notwithstanding the avoidance of more onerous administrative work and anxiety placed on family members at a difficult time if you were to die without a Will.
Before the assets of an estate are distributed all funeral expenses, administration costs, debts and other liabilities are first paid out of the estate.
In order to benefit under an intestate estate, a relative must survive the deceased by 30 days.
Therefore if the deceased dies intestate leaving a spouse and issue (being children or lineal descendants such as grandchildren) of another relationship, then legislation provides the estate would be divided as follows:
The spouse would receive:
- Intestate’s personal effects;
- A statutory legacy of $350,000.00 adjusted by the Consumer Price Index (CPI) since December 2005 (presently $459,427.20 in December 2016); and
- One half of the remainder (if any) of the intestate’s estate;
the remaining part of the estate (if any) would be distributed amongst the children from any other relationship.
Children of the intestate and surviving former spouses do not receive a share because the law anticipates that their surviving parent will provide for them.
If you were to die without a Will or with an ineffective Will – that fails to dispose all or part of that person’s property.
The succession act outlines scenarios where parents, siblings, grandparents and even aunts, uncles and cousins may benefit from an intestate estate.
Jack, a 50 year old man died suddenly without a will – leaving a widow, his parents and four siblings. Jack’s estate includes:
- his home, where he lived with his wife, worth $500,000 (debt free and in his sole name); and
- a bank account worth $75,000.
Therefore pursuant to the intestacy rules, Jack’s estate would be distributed roughly as follows:
- his wife would be entitled to $325,000;
- his parents would be entitled to share $128,000;
- his siblings would be entitled to share $122,000.
Under this outcome, Jack’s wife wouldn’t be entitled to keep the home she had been living in with Jack.
Jack’s family might have to sell the home in order to pay out the entitlements, leaving his wife homeless and with only $325,000 to buy an alternative home.
In making a Will you ensure your assets are distributed in accordance with your wishes as opposed to a predetermined formula.