What is intestacy?
When you die without a will, or without a valid will, it is called dying ‘intestate’. This means you don’t have any say over who gets to handle your estate or how your property gets divided. Instead, the Administration Act 1969 applies a fixed formula of who gets what depending on who survives you.
Who manages the estate?
Since there is no will, or no valid will naming someone as an executor to manage and administer the wishes of the deceased, an application has to be made to the High Court to appoint an administrator of the estate. This is called applying for letters of administration. People with a beneficial interest in the estate have the right to apply, and the High Court Rules 2016 set out who can apply first.
If someone has a higher interest than the person applying, or a similar interest, they must provide consent for the person to apply to administer the estate. Before the application to the court can be made, your family must show that they have made a genuine attempt at locating a will that may have been made, as well as making inquiries into any other children of the deceased through the Department of Internal Affairs. These are additional steps that are not needed if there is a will.
Who inherits?
The Administration Act also sets out who gets what from your estate when you die:
1. If you have a spouse (including civil union and de facto partners) and children, you might think that your spouse will inherit everything, but this might not be the case. Your partner receives your personal belongings, a prescribed amount (the current amount is $155,000.00), and 1/3 of what remains; your children then share the other 2/3.
2. If you have a spouse and no children but parents, then your partner gets your personal belongings, a prescribed amount (the current amount is $155,000.00), and 2/3 of what remains; your parents get the other 1/3.
If you have a partner but no children or parents, your partner receives everything. If you have no partner, your estate passes in a set order firstly to your children, then parents, then siblings, then grandparents, then aunts and uncles. Each group only inherits under your estate if there is no one in the group before it, and the estate goes to the Crown if there are no relatives that qualify.
Where the law falls short
This can be a difficult result for a lot of families, especially for the surviving spouse who might need to manage the home, which is usually the largest asset, and they may be left in a position where this needs to be sold. The formula doesn’t know your situation and in many cases it won’t leave everything to your spouse, nor can it provide for a stepchild you have raised. It also means that people you would not choose to inherit do.
One particularly hard situation for the intestacy rules to handle is modern families, which are frequently blended families, or families with separated but not legally divorced spouses who are still able to inherit under the law. Stepchildren who are not legally adopted have no right to receive anything under their stepparent’s estate, which is often not what people wish to happen.
How to avoid it
The easiest way to ensure that you get to decide what happens when you die is to make a will. It lets you choose who administers your estate and who inherits. The best option is to contact Willis Legal to discuss your wishes and we can walk you through how to make sure those wishes are achieved.
Written by:
Regan Boston
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