Will you let the government decide who gets your assets?
If you don't have a will, then when you die:
- your assets are distributed according to a formula set out in legislation;
- the court will decide who administers your estate;
- the additional administrative steps required will usually result in higher costs being incurred, reducing the amount left for your beneficiaries.
Thankfully, most people will have plenty of time to get a will put in place before they pass away. But we don't know exactly when our last day will be or if we will lose capacity before we can get our affairs in order.
Who can make a will?
The states and territories in Australia are fairly consistent about who can make a will, with the general requirements being that you must:
- be over 18 years of age (or married if under 18 years of age);
- have testamentary capacity, which essentially means that you are not suffering from any delusion or disorder of the mind that impacts on your understanding of:
- what a will is for;
- the general nature and extent of your assets; and
- who would normally be expected to benefit from your estate.
Many people believe that if you die without a will, your entire estate goes to your closest next of kin. However, this will not always be the case.
Dying without a valid will in place is called dying "intestate" and each state and territory has legislation setting out the intestacy rules as to who will receive your estate.
The intestacy rules generally provide that your estate will pass in a cascading fashion, exhausting each stage before moving to the next, as follows (with some slight differences among the states and territories):
- all to your spouse/partner if you have no children;
- shared between spouse/partner and children;
- to your children equally if you have no spouse/partner;
- to parents;
- to siblings;
- to nieces and nephews;
- to grandparents;
- to aunts and uncles;
- to first cousins.
Once the list that applies to your state or territory has been exhausted, your estate will pass to the government.
The intestacy rules can result in estates being distributed in unexpected (and perhaps alarming) ways, as outlined in the examples below:
- The woman who wanted all of her estate to pass to her current partner as most of her assets had been acquired during their relationship. However, she had not yet divorced her "ex" husband (she was fearful of triggering his volatile behaviour). Not having a valid will in place when she died meant that her estate was shared between her partner and her husband.
- The husband who died, expecting that his wife of 40 years would inherit his estate, including the $2m family home which was his biggest asset. However, the home had to be sold, and after the children from the husband's first marriage got their share under the intestacy rules, the wife was left with around $1.3m to buy a new home and fund her needs.
- The son who wanted his estate to pass solely to his mother. He had no spouse or children and had never known his father (who had left shortly before the son's birth). Because the son did not have a will in place when he tragically died in a workplace accident, 50% of his estate went to his estranged father.
We can help you
We can advise you on the way the intestacy rules in your state or territory would apply to your situation if you did not have a valid will in place.
If you don't have a will or your current will no longer aligns with your intentions, our aim is to help you get the right documentation in place to achieve your objectives in as seamless and "pain-free" manner as possible.
If you meet the requirements for making a will but decide not to put a will in place, you are then choosing to allow the intestacy rules in your state or territory to dictate who will receive your estate after your death (i.e. you can't now claim ignorance after having read this article!).
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.