When you have a valid will, you give yourself the best chance of ensuring your assets go where you want them to. But when you die without leaving a will, the rules of intestacy apply.
What is intestacy?
Intestacy occurs when you die without leaving a will. It means you have died intestate. But it doesn’t just happen when you’ve died without leaving a will. It can also occur in the following scenarios:
- The will you created fails to deal with all of the estate’s assets properly;
- The will is invalid because it wasn’t signed or witnessed according to law; or
- Before the time of death, you did not have the mental capacity to make a will.
What are the rules of intestacy?
The law of intestate provides a guide to determine who receives the assets of your estate. Across Australia, each state and territory have different ways of deciding who the ‘Next of Kin’ is and what portion of the estate they will inherit.
Your estate includes all property left over after the funeral costs, administration expenses, tax, and any secured or unsecured debts are closed.
The rules of intestacy state that a deceased person’s spouse or children can receive a portion of the estate and that if there’s no children or spouse, the state will consider their next closest living relatives.
Who’s considered a spouse?
If a person dies intestate, their spouse is entitled to the whole of the estate. A spouse can include a husband, wife, de facto partner, or civil partner, including same-sex marriage.
When determining the viability of ade facto relationship, the law considers several factors, including the length of the relationship (must be together a minimum of 2 years) and the nature of the living arrangements.
Who deals with an intestate estate?
When someone dies without leaving a will, there’s no named executor to handle the estate. In this case, the rules of intestacy suggest that the ‘Next of Kin’ (e.g. spouse or de facto spouse) would need to apply for a letter of administration to be named the estate’s executor.
Letters of administration is a court order that allows the executor appointed by the court to distribute the estate’s assets.
What is the order of administration for the intestate estate?
The order of administration of an estate is based on the relationship to the deceased person. Their loved ones are administered their estate in the following order:
- The deceased person’s spouse
- Followed by their children
- Parents if no other surviving spouse or children
- Further options such as grandparents, siblings, aunts or uncles if no other surviving family members
- If they are not survived by any next of kin, the estate is passed to the state.
The deceased person’s estate will only go to the state or government as unclaimed property when there is no surviving next of kin.
How do you avoid dying intestate?
The best way to avoid dying intestate is to ensure that you’ve created a valid will that properly deals with all of your assets. It’s also best to include a named executor who can handle your will’s responsibility when you pass.
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Disclaimer: The content of this blog is intended to provide a general guide to the subject matter. This blog should not be relied upon as legal, financial, accounting or tax advice.