Simply defined, intestacy describes the process when a person passes away without a valid Will. A person who passes away without a Will is known as having died “intestate”. Failure to prepare a valid Will means you have no formal arrangements in place (of your choosing or direction) for the disposal of your property and assets.
In Australia, intestacy is governed by state-based laws, resulting in each State and Territory in Australia having its own state-based legislation that determines how your estate is managed and distributed if you pass away without a Will in place.
These intestacy laws apply to all matters where a person passes away without a Will, and as the individual’s wishes were not recorded in a valid document, the laws do not take into account an individual’s wishes or situation. Rather, a formula for the distribution of your estate is set, based on your closest relations and next of kin.
In Victoria the rules for distributing a person’s intestate estate are as follows:
The estate does not pass to the government unless there are no living relatives and you don’t have a spouse. If you die without a Will or your Will is not valid, then an application for a Grant of Letters of Administration will need to be made to the Supreme Court.
The same laws apply to same-sex couples as to heterosexual (different-sex) couples. In order to establish a right as a partner under the rules of intestacy, the partner will need to have lived in a genuine domestic or de facto relationship for two years, or have a child together with the deceased, or have formally registered the relationship, before any partner can benefit from your intestate estate.
Not having a Will means you lose control over who will benefit from your estate; often this leads to a situation where your assets could be shared with relatives who you do not wish to benefit, due to family conflict or estranged relationships.
In the event of a family tragedy, where your whole immediate family passes away, your estate may go to a relative that you may have never spoken to, or don’t even like. In such circumstances you also lose the ability to make provisions to create a legacy through charitable gifting to any charitable organisation of your choice.
The lack of planning for a Will may also see your children receive a lesser amount than you would like, and there is no opportunity to protect an inheritance for children by providing it to them via a trust (read more about trusts here). This means that when they reach the age of at 18 they receive all of the funds whether or not you would have chosen that option at that point in their lives and whether or not they have the financial capacity to manage their inheritance at that age. You lose total control over how and when your children receive their inheritance.
Without a Will, you do not have an executor. Therefore, someone must be appointed to act as an administrator of your estate. This means potential delay, expense, frustration, and even loss. In addition you also lose control over who is charged with the role of administering and making final decisions about your estate, as under the laws of intestacy the role is automatically delegated to the individual who has the largest entitlement to the estate.
Without a Will you don’t have the opportunity to select guardians for your minor children, or record your wishes regarding parenting decisions to be made for them which are important to you (such as which school you wish for them to attend). For many parents, the appointment of a guardian for their children is the most important decision and inclusion in their Will.
Whilst not the end of the world, the benefits, control and peace of mind that of having a proper estate plan in place provide are certainly preferable to the inflexible and impersonal rules of intestacy. With the use of Settify, our online on-boarding tool, creating a tailored and effective Will is easier and more convenient than you think.
Get started with our easy online form, send us an email or simply give us a call.