FREQUENTLY ASKED QUESTIONS
What happens if I die without a Will?
If you die without a valid Will, your estate is distributed in accordance with the rules of intestacy.
This means that an Administrator (usually your next of kin) must obtain a grant of Letters of Administration at the expense of your estate to have authority to deal with your assets.
Once a grant is obtained and the Administrator collects your assets, pays your debts and finalises your tax matters, your estate must be distributed as follows:-
- If you have a spouse (including de facto) and no children, your spouse receives your entire estate.
- If you have a spouse and one child, your spouse receives $150,000 from your estate, your personal chattels and half of your residue (everything that remains in your estate after debts have been paid). Your child receives the other half of your residue.
- If you have a spouse and more than one child, your spouse receives $150,000 from your estate, your personal chattels and one-third of your residue. Your children share equally in the remaining two-thirds of your residue.
- If you do not have a spouse, your children share equally in your estate.
- If you do not have a spouse or children, your parents share equally in your estate.
- If you do not have a spouse, children or parents, your siblings share equally in your estate. If a sibling has predeceased you leaving children, those children (your nieces or nephews) will receive their parent’s share of your estate.
- If you do not have a spouse, children, parents, siblings, nieces or nephews, your grandparents share equally in your estate.
- If you do not have a spouse, children, parents, siblings, nieces, nephews or grandparents, your aunts and uncles will share equally in your estate. If an aunt or uncle has predeceased you leaving children, those children (your cousins) will receive their parent’s share of your estate.
- If you do not have a spouse, children, parents, siblings, nieces, nephews, grandparents, aunts, uncles or cousins, the government will receive your entire estate.
A beneficiary must survive you by 30 days to be entitled to a share in your estate.
Step-children and step-parents are not considered next of kin for intestacy purposes.
In-laws are not considered next of kin for intestacy purposes.
Adopted children are considered children for intestacy purposes.
Children born out of marriage are considered children for intestacy purposes.
A de-facto is defined as ‘either one of two persons who are living together as a couple on a genuine domestic basis but who are not married to each other or related by family’ and the relationship must have been in existence continuously for at least two years prior to your death.
If your estate is to be divided between your spouse and minor children, the share for the children must be held on trust by the Administrator. Their surviving parent can only access this money for the benefit of your children.
The rigidity of the intestacy laws may lead to the forced sale of your family home so your estate can be distributed. Furthermore, you will have no say in who administers your estate and who is appointed guardian of your minor children.
To ensure your estate is distributed without hassle and your family is protected in accordance with your wishes, making a Will is imperative.
What is the point of having a Will?
A Will serves the following functions:-
- Disposes of your property on your own terms and avoids the regimented rules of intestacy;
- Appoints a Guardian for your minor children;
- Appoints an Executor to administer your estate;
- Appoints a new controller of your trusts or Self-Managed Super Fund;
- Gives directions for your funeral arrangements;
- Allows for specific gifts and donations to charity; and
- Protects your family’s inheritance against future divorce, bankruptcy or creditors (only relevant if you incorporate a Testamentary Trust into your Will).
Why can’t I complete my own Will from the Newsagent?
You can, but you open yourself or your estate to the following risks:-
- If you complete the Will incorrectly, it may be deemed invalid and your estate will be distributed as per the rules of intestacy;
- If you complete one section incorrectly, that section may be deemed invalid and the rest of the Will may be valid. This could result in your first beneficiary missing out and your estate could go to another beneficiary that you meant to have only as a backup;
- If your wording is unclear or you inadvertently assign your testamentary intention (your power to decide how your estate is distributed), it is likely that your Executor will need to apply to the Court for directions about the interpretation or construction of your Will, which would cost your estate substantial legal fees;
- If your Will is executed incorrectly, your Executor will need to make a special application for Probate of the Will to obtain authority to administer the Will and this will cost your estate unnecessary legal fees. Alternatively, your Will may be deemed invalid.
Who will take care of my children when I die?
You can appoint a Guardian for your minor children in your Will. Your Guardian will be able to make decisions about the long-term care of your children, including where they live, what school they attend and how they are raised.
If you do not have a Guardian provision in your Will or you don’t have a Will, the surviving parent will become your children’s Guardian. If your children do not have a surviving parent, an interested party must apply to the Court to be appointed as Guardian. Obviously, such an application will be costly and may lead to disputes between surviving relatives.
Do I need a Will if I don’t have many assets?
A Will serves purposes other than disposing of your assets, such as appointing Guardianship of your children and passing control of your trusts.
Once you sign a Will it is effective until you revoke it. So if you complete a Will now while you have little to no assets, you will be covered in the event that you receive an unexpected inheritance or windfall.
You should consider that even if you do not have many assets, you may have Superannuation with a life insurance component that can be substantial. So at the very least you should have a Binding Death Benefit Nomination in place.
What will happen to my Superannuation?
Superannuation does not automatically form part of your estate, hence you cannot distribute your Superannuation through your Will. The Trustees of your Superannuation Fund decide who receives the benefit of your accumulated Superannuation and any life insurance component.
To ensure the Trustees of your Superannuation Fund distribute your Superannuation in accordance with your wishes, you must complete a Binding Death Benefit Nomination. Otherwise, the Trustees can elect to pay your Superannuation to anyone they deem to be a dependent of yours, which can include anyone who was living in your house at the time of your death. The Trustees can also decide to pay your Superannuation to your estate, so if you do not have a Will, the laws of intestacy will apply.
Who can contest my estate?
Our legal system allows the following people to apply for further provision from your estate:-
- Your spouse. This includes de facto spouse. This also includes an ex-spouse who was receiving or was entitled to receive spousal maintenance from you.
- Your children. This includes adopted children and children born outside of a marriage. This also includes step-children.
- Your dependents. This includes your parents, the parent of a surviving child or anyone under 18 provided they can show that they were being financially supported by you at the time of your death.
What is the likelihood of an application for further provision from my estate succeeding?
If an eligible applicant seeks further provision, the Court must determine whether they have financial need and whether you failed to adequately provide for their proper maintenance and support in all the circumstances. In practice, provided the applicant is not wealthy, they will often receive something from your estate.
You should keep in mind that most applications do not make it to trial. If an applicant appears to show financial need and received inadequate provision, it is common for the Executor to agree to pay them a lump sum to resolve the proceedings and prevent the estate from paying the legal costs of a trial.
How do I prevent my estate from being contested?
If you decide not to provide for your spouse, children or dependents under your Will, you cannot prevent them from making an application for further provision.
However, there are ways to limit their chances of success by clearly identifying why you did not provide for them and reducing the amount of your estate that can be contested.
If you are concerned that someone will contest your estate, you need to prepare an appropriate estate plan.
Why should I have an Enduring Power of Attorney (EPA)?
If you do not have an EPA and you are in an accident or a medical condition causes you to lose capacity, there may be no one with authority to deal with your financial affairs. Your family members would then need to make an application to have an Attorney appointed, which can be an expensive, timely and difficult process.
You should appoint an Attorney to make decisions on your behalf in the case that something terrible happens to make the event less stressful for your loved ones.
How much will my estate plan cost?
This depends on the complexity of your estate and the level of protection you are seeking.
Our standard Wills start from $400 each plus GST.
Our complex Wills incorporating Testamentary Trusts start from $1,500 each plus GST.
Our Enduring Power of Attorney documents start from $300 each plus GST.
I’m an Executor of a Will. Do I need to get Probate and how much will it cost?
Probate is formal recognition from the Supreme Court that a Will is valid. It provides protection to the Executor to deal with the estate assets. It also provides protection to third parties, such as banks and other institutions, as they can be assured they are paying the deceased’s funds to the right person. It is for this reason that most institutions require that an Executor obtain Probate before they release the deceased’s substantial assets (usually if the amount held is over $20,000).
We charge a fixed fee of $1,500 plus GST for all attendances required to obtain a grant of Probate. Please note there are also outlay costs including advertising fees and filing fees. These are legal costs that will be reimbursed to the Executor from the estate when funds become available.
A relation has died without a Will. Do I need to get Letters of Administration and how much will it cost?
Letters of Administration is formal recognition from the Supreme Court that an estate can be administered by a certain person. It provides authority and protection to the Administrator to deal with the estate assets. It also provides protection to third parties, such as banks and other institutions, as they can be assured they are paying the deceased’s funds to the right person. It is for this reason that most institutions require that an Administrator obtain Letters of Administration before they release the deceased’s assets.
We charge a fixed fee of $1,500 plus GST for all attendances required to obtain a grant of Letters of Administration. Please note there are also outlay costs including advertising fees and filing fees. These are legal costs that will be reimbursed to the Administrator from the estate when funds become available.
These questions and answers are an information resource only and not a substitute for specific legal advice in respect to your circumstances. Please call us for such advice.