Although Victorian Intestacy Laws have Changed you should still make a Will

In June the Victorian Supreme Court handed down its decision in Jasarevic v Nesovanovic [2017] VSC 267, a matter regarding the intestate estate of Nail Hamidovic, who died intestate on 14 January 2016. Jasmin Jasarevic his nephew was the sole beneficiary under the laws of intestacy and was granted letters of administration. Rada Nesovanovic, Nials partner asked that she be granted letters of administration replacing Jasmin.

Nail had no children and separated from his wife Enesa in 1984. Nail and Enesa had not formally divorced. Enesa died in 2008. Letters of administration of Nail’s estate were granted to Jasmin on 18 April 2016.

Nail left a small estate comprising a property valued at approximately $350,000. The parties combined legal costs are approximately $120,000.

The Court was required to decide whether or not Rada was Nail’s partner at the time of his death, whereby a registered or unregistered “domestic partner” of an intestate deceased who does not leave any child is entitled to the residuary estate of the intestate.

The residuary estate is money that remains, following the sale of the deceased person’s estate and payment of the funeral, testamentary and administration expenses, debts and other liabilities.

Rada and Nail commenced their relationship shortly after they met in 1990. Rada migrated to Australia in 1971, had no file notes, diary entries, emails and limited English and was 85 years old at the time of judgment. The Court found Rada to be a credible witness notwithstanding “her evidence on some issues was incomplete and, on some other matters, inconsistent”.

Jasmin argued that Rada and Niall were not “domestic partners” as they had separate living arrangements, finances, and Rada was Nail’s carer. The court found that this was not evidence to displace the existence of an otherwise genuine domestic relationship.

The Court found that Rada and Niall had “a loving, committed relationship which was observed by third parties to be a genuine domestic relationship”, and granted new letters of administration to Rada. The decisive factors were:

  1. the duration of their relationship;
  2. the public conduct of their relationship as a married or de facto couple;
  3. that both remained in the room during one another’s medical appointments;
  4. that they were sexually active together, travelled together, attended clubs on a weekly basis together, celebrated special events together and shared every day domestic activities together until Nail’s health deteriorated from 2011.

Victoria’s intestacy laws have recently changed with new laws effective from 1 November 2017. In general, assets will usually pass to a spouse, or spouse and children, depending on the circumstances. Provided the estate has sufficient funds, the spouse receives a minimum amount of $451,909 (indexed annually) from the estate, an increase on the previous $100,000 figure.

They new law operate as follows:

  1. In order to participate in the distribution of an intestate estate, a person has to survive the deceased by thirty (30) days;
  2. The distribution of the estate on intestacy:

Where the deceased leaves a partner, but no child – the partner takes the whole of the deceased’s estate;

Where the deceased leaves a partner and children, and the children are also children of the surviving partner, the partner takes the whole of the deceased’s estate.

Where the deceased leaves a partner and a child or children who is not the child of the partner, then:

the children of the intestate are entitled equally among them to the other half of the balance of the estate in equal shares.

 If the deceased leaves more than one partner, then the partners, in the absence of a distribution order or agreement will take the partner’s share equally among them.

Under the new law, where there is a partner with no children all of the assets in the estate will pass to the surviving partner. In the above case Nial’s estate was small and in order to receive the estate Rada had to prove that she was Nail’s partner however under the new laws a person in Rada’s position would be entitled to the whole estate.

Under the new laws if you die without a Will leaving:

  • A partner and children all of the assets in the estate will pass to the surviving partner. Previously your partner received $100,000, the personal effects and 1/3 of the remaining estate and your children receiving 2/3 of the remaining estate.
  • A partner and children from a previous relationship the partner receives $451,909 and ½ of the remaining estate with your children receiving ½ of the remaining estate.
  • More than one partner, with one partner having children from their relationship with you the assets are divided equally between the spouses. As the children are children of one of the spouses, they do not receive a share.
  • No partner, and a number of children the children receive an equal share of the estate.

Even though the new intestacy laws provide improved financial and social stability to a surviving current partner (or partners) of an intestate, however, these laws provide a statutory formula, which may not be the outcome the deceased wanted.

Superannuation and testamentary trusts – for example that on the death of a parent with a child under 18 their share of the assets of the estate are held in trust until that child turns 18 are not part of the statutory formula.

For these reasons and the complexities of modern family relationships, which may include several partners and families, a Will allowing you to direct the administration of your estate should be made.

 

 

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