Many people assume that if they pass away without a will, their assets will automatically pass to their spouse or children. In New South Wales, however, the position is governed by strict legal rules that may produce outcomes very different to what a person intended.
Dying without a will is referred to as dying “intestate”. In these circumstances, a person’s estate is distributed according to NSW intestacy laws, rather than according to their personal wishes.
For families, this can create unnecessary stress, delay, expense and, in some cases, disputes between loved ones at an already difficult time.
Who Manages the Estate?
When a person prepares a will, they appoint an executor to administer their estate. The executor is responsible for collecting assets, paying liabilities and distributing the estate according to the will.
If a person dies without a will, there is no appointed executor. Instead, an eligible person (usually a spouse) must apply to the Supreme Court of NSW for a Grant of Letters of Administration.
This process if often more complicated and time-consuming than administering an estate where a valid will is already in place.
Who Inherits the Estate?
Under NSW intestacy laws, the distribution of an estate depends on the surviving family members.
In many cases, a surviving spouse or de facto partner will inherit the entire estate, particularly where there are no children or all children are from that relationship. However, blended family situations can be more complex, and the estate may instead be divided between the surviving partner and children from another relationship under a statutory formula.
If there is no surviving spouse or de facto partner, the deceased’s children generally inherit the estate in equal shares. If a child has already passed away leaving children of their own, those grandchildren may inherit their parent’s share.
If there are no surviving spouse, children or grandchildren, the estate may pass to other relatives, including parents, siblings, grandparents, aunts, uncles or cousins.
Importantly, stepchildren do not automatically inherit unless they were legally adopted.
Where no eligible relatives can be identified, the estate may ultimately pass to the New South Wales government.
Why Dying Without a Will Can Create Problems
Although intestacy laws provide a framework for distributing an estate, they are necessarily generic and cannot account for individual family circumstances or personal wishes.
Dying without a will can result in:
- delays in finalising the estate;
- increased legal and administrative costs;
- uncertainty regarding entitlements;
- disputes between family members;
- complications for blended families; and
- outcomes that may not reflect the deceased’s intentions.
The administration process can also become more difficult where family members are estranged, relatives live overseas, or supporting records such as birth, death or marriage certificates are difficult to locate.
The Importance of Having a Valid Will
The best way to avoid intestacy is to make a legally valid and up-to-date will.
A will allows you to choose who receives your assets, appoint trusted executors, provide for children and loved ones, reduce the likelihood of disputes and make the administration of your estate significantly easier for your family.
It is also important to update your will after major life events, including marriage, separation, divorce, the birth of children or changes to your financial circumstances.
At Morgan + English, our Future Planning team assists individuals and families with wills, estate planning and succession matters tailored to their personal circumstances.
If you would like advice regarding preparing or updating your will, we would be pleased to assist. Contact Lilly:
