Do you have a valid Will? Do you know what would happen to your assets if you died without a Will tomorrow?
Dying without a Will is called dying ‘intestate’. Where this occurs, the law (not you or your family) determines who is entitled to your assets, based on their relationship with you. These are known as the intestacy provisions.
The current intestacy provisions have long been criticised for being outdated and insufficient, particularly with regards to the treatment of the deceased’s spouse/defacto and their children. If you died intestate and were survived by your spouse and children, your assets would be distributed as follows:
Your spouse would receive the first $100,000 plus 1/3 of the balance of the estate; and
Your children would receive the remaining 2/3 of the balance of the estate equally between them.
The current rules often result in insufficient provision for the surviving spouse. If the major asset of the estate is the family home, it may result in the spouse having to sell the property to pay the children their entitlement. There may be other complications.
A new bill has recently been introduced into Parliament which, if passed, will significantly alter the distribution of intestate estates as follows:
Where the deceased is survived by a spouse and a child or children of that relationship, the spouse will be entitled to the entire estate;
Where the deceased is survived by a spouse and a child or children of the deceased who are not the children of the spouse, the spouse will receive the first $451,909.00 (indexed annually to CPI) plus one half of the balance of the estate, and the children will receive the other half of the balance of the estate equally;
The sole partner of the deceased can elect to acquire the real property of the estate;
Provisions to deal with multiple partners of the deceased; and
Limiting the next of kin entitled to inherit on intestacy limited to the first cousins of the deceased.
Whilst the changes proposed by the Bill provide a much-needed modernisation of the intestacy provisions, they remain inadequate for most individuals and families as they cannot deal with the intricacies and complexities of modern family and financial situations, asset structures and your individual wishes. Of course, all of these issues can easily be avoided if you make a valid Will.
To ensure that your estate plan is current and tailored to your individual wishes, personal and financial circumstances and asset structures, contact Stefan Manche or Daniel Kelliher to discuss your wills, powers of attorney and estate planning needs.
Do you or your clients have a connection to or hold assets in an EU country? If so, you should consider the possible impact of recent changes to applicable EU Regulations when making or updating Wills.