Dying without a Will

What happens if someone dies without a Will?

If you die without a Will, you are said to have died "intestate." If you have a will but it doesn't cover all of your assets, you are "intestate" for those assets as well.

Often, people do not like making a Will - they feel it tempts fate.  However, from birth, the government gives you a Will if you fail to make one yourself. The Administration Act in each State sets out rules about how your property is shared. The rules are complicated and change depending on the:

  • Value of your estate and
  • Family members.

Dying without a Will can create three main problems:

  • Your assets will be distributed by an Act of Parliament - not the way you want them distributed;
  • There is no tax planning - so the government becomes one of your beneficiaries through Defacto death duties (Income Tax, Capital Gains Tax and Stamp Duty); and
  • The cost to administer the estate escalates, and the risk of the estate value diminishing increases.  Valid Wills are far quicker and cheaper to administer.

Perhaps there is a Will?

It's essential that you do a full search for the Will. It could be:

  • At home, amongst old papers, 
  • With the bank or Insurance company, 
  • At the Lawyers, Accountant or Financial Advisers office, or
  • With the Public Trustee or Trustee company.

If you fail to find a Will, you might have to advertise in the daily newspaper.

Who inherits your assets where there is no Will?

In each State, married couples, heterosexual Defactos, and LGBTQ Defactos now have the same inheritance rights (Administration Act).   However, there is still plenty of prejudice. Strange outcomes are typical.  Even if separated for 30 years, married couples are still treated as married. This is unless they got around to getting a divorce. However, defactos must prove the relationship - usually for 2 years or more together.  You can shorten this if you have children or are financially interdependent. If you separate for just one day and then die, you are not in a Defacto relationship.

Problems occur when the deceased has a wife, a mistress and a gay lover. Under the law, you can be married to all three persons.

Can I challenge Intestacy or a Will?

Yes, you can challenge the Will. If there is no Will, you challenge the rules in the Administration Act. The approach is the same: does your will or the rules reasonably provide for the dependent? If the suffering beneficiary or family member is unhappy, they apply to the Supreme Court to change the Will or the rules.

Letters of Administration

If you die without a Will, your spouse, de facto partner or next of kin will need to make an application to the Probate Office of the Supreme Court for Letters of Administration. Once approved, the court will appoint you as the personal representative (Administrator of the estate).

Dying intestate can create tax problems

It's a little-known fact that you are taxed long after you die. Although death taxes no longer exist in Australia, your estate is reduced by the three de Facto death taxes: Income Tax, Capital Gains Tax, and Stamp Duty.

Failure to carry out adequate estate planning allows these hungry taxes to eat away at your estate's value.  There are several ways to correctly structure your estate to account for these situations, such as :

  • Three Generation Testamentary Trusts
  • Post-Testamentary Trusts (Poor Man Trusts)
  • Superannuation Testamentary Trusts.

Intestacy rules vary across the country

The states and territories do not all follow the same intestacy rules. There are important differences that, if explained to clients, could make them realise how what they thought would happen if they died suddenly and what will happen can result in very different outcomes.

To speak to our team about your estate planning needs, click here