Changes to law where persons dying without an effective will

Introduction

The Succession Amendment (Intestacy) Act 2009 commenced on 1 March 2010, and applies to persons dying intestate (without an effective Will) on or after that date.

Definition

Chapter 4 of the Succession Act 2006 contains the intestacy provisions and includes definitions, some of which are:

1. brother or sister (includes siblings of the full blood and half blood);
2. indigenous person - a person who:
   1. is of Aboriginal or Torres Strait Islander descent, and
   2. identifies as an Aboriginal person or Torres Strait Islander, and
   3. is accepted as an Aboriginal person by an Aboriginal community or as a Torres Strait Islander by a Torres Strait Islander community.;
3. spouse – a person:
   1. who was married to the intestate immediately before the intestate's death, or
   2. who was a party to a domestic partnership with the intestate immediately before the intestate's death;
4. domestic partnership – a relationship (other than marriage) between the intestate and another person:
   1. that is a de facto relationship; and
   2. that:
      1. has been in existence for a continuous period of at least 2 years, or
      2. has resulted in the birth of a child;
5. spouse's statutory legacy - the CPI adjusted legacy and interest at the relevant rate if the legacy is not paid within one year after death of the intestate;
6. the CPI adjusted legacy – this is determined in accordance with a formula which includes a factor of $350,000. Under the previous legislation, the 'prescribed amount' for a spouse was $200,000.

Spouse's entitlements

Where the intestate leaves one spouse and no issue, the spouse is entitled to the whole estate.

Where the intestate leaves one spouse and issue, and the issue are also issue of the spouse, the spouse is again entitled to the whole estate.

Where the intestate leaves a spouse and issue, and the issue are not issue of the spouse, the spouse is entitled to:

1. the personal effects;
2. the statutory legacy;
3. half the remainder, if any, of the estate.

Spouse's preferential right to acquire property

These provisions correspond to the former provisions of the legislation concerning the rights of the surviving spouse with respect to the shared home. The new provisions are not restricted to the shared or matrimonial home. The spouse has a 'preferential right to acquire property from the estate' and must exercise his or her right of election within 3 months of the date of the notice from the personal representative of the intestate, or if the spouse is the personal representative or one of them, within 3 months after the grant of administration. Note, under the previous legislation the spouse had 12 months from the date of the grant.

In some circumstances, the approval of the Court may be required to the spouse's right to acquire property.

Exercise price of spouse's right of election

The exercise price is the market value at the date of death. The personal representative must obtain a valuation.

The exercise price is to be satisfied first from money to which the spouse is entitled from the estate and if that is insufficient, from money paid by the spouse to the estate.

Multiple spouses

Where there are more than one spouse but no issue, the spouses are entitled to the whole of the estate in shares determined by Division 3 of Chapter 4 of the Succession Act.

Further, where the intestate leaves more than one spouse and issue who are all issue of one or more of the surviving spouses, the spouses are again entitled to the whole estate in shares determined in accordance with Division 3.

Sharing between spouses

Where there is more than one spouse, and issue who are not issue of a surviving spouse:

1. the spouses are entitled to share the personal effects;
2. each spouse is entitled to share the statutory legacy; and
3. the spouses are entitled to share half the remainder.

Distribution agreement and distribution order

The sharing by the spouses referred above takes place pursuant to either a distribution agreement, a distribution order, or in equal shares where certain conditions are satisfied.

In an application to the Court for a distribution order, the Court may order that the property be distributed between the spouses in any way it considers just and equitable, including allocating the whole of the property to one of the spouses to the exclusion of the others.

Distribution among relatives

Part 4.3 Section 127-132 contain provisions as to entitlement on intestacy amongst other relatives.

This part introduces the term 'presumptive share' which has the same effect as the previous term 'statutory trust'.

Where an intestate leaves no spouse but issue, the children are entitled to the whole estate.

After the categories of spouse and issue, the further categories of relatives entitled to the estate comprise, in order, the parents of the intestate, brothers and sisters (as defined above), grandparents, aunts and uncles, and finally, first cousins (where an aunt or uncle of the deceased, being the brother or sister of a parent of the deceased has predeceased the intestate, leaving a child or children).

Until the new legislation, first cousins were not included in the category of persons entitled on intestacy.

Indigenous person

The personal representative of an indigenous intestate, or a person claiming to be entitled in the estate under the laws, customs, traditions and practices of the indigenous community or group to which the deceased belonged, may apply to the Court for a distribution order. The application must be accompanied by a scheme for distribution in accordance with the laws, customs, traditions and practices of the community or group. The application must be made within 12 months of the grant of administration, or such longer period allowed by the Court, but no application can be made after the estate has been fully distributed.

Absence of persons entitled on intestacy

As under the previous legislation, in the absence of any person entitled, the State of New South Wales is entitled to the whole of the intestate estate. The State has discretion to make provision in favour of dependents, persons in the opinion of the Minister with a just or moral claim on the intestate, and any organisation or person for whom the intestate might reasonably be expected to have made provision or their trustees. This has the effect that charitable organisations who had a close association with the intestate may apply to the Minister by writing to the Crown Solicitor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.