Don’t die without a Will! - Recent changes to Intestacy: increasing consequences
You’re probably thinking what is “intestacy”?! In brief, it is dying without a valid Will.
What makes a Will valid? A Will is valid if it is executed by the testator (the deceased) when they are over 18, have capacity (that is not under any guardianship, administration or powers of attorney, or have a mental or physical incapacity) and has not been revoked by any subsequent action. In particular, this means that if the testator has remarried following divorce, their Will therefore becomes invalid. An important point that many people do not realise that getting remarried invalidates any Will that they may have.
Legislation would allow for distribution of your estate, however, it does not make it easy for the executor. Recent changes to the Administration Act have changed the allowances for spouses, meaning that any Estate over $472,000 (at the time of writing) is divided differently than in the past.
The key thing, as with anything related to Wills, is clarity of intention. Whilst there is no better time to make a Will, generally after significant events, such as death of a loved one, marriage to another or dissolution of a marriage, it is a prudent time to arrange your personal affairs.
Key consequences of dying without a valid Will are:
Recent marriages would take precedence over existing promises: e.g., if you promised little Johnny that 1971 Ford XY Falcon, and die without a valid Will, it may be that your recent wife Susan ends up with a project car she neither wanted or deserved.
Specific gifts get rolled into the Estate as a whole: The administration act outlines several scenarios where someone would die intestate, and the division of the Estate in those cases. Generally speaking, “household chattels”- that is everything in your house, would be given to the person who is entitled to the majority of your Estate (either the whole estate if it’s under $472,000, or the first $472,000 and the remainder after other beneficiaries)
The administrator is left with a mess: I was once told that “the best way to have your children remember you for a lifetime, is to leave them a million bucks in debt.” Don’t be that person! Losing a loved one can be painful enough and an exhausting time. The last thing anyone wants is to have infighting between relatives following your death.
Loss of your hard-earned work: Typically, the process of dividing an estate would involve liquidating all your assets and dividing the proceeds amongst the beneficiaries. So, that business you spent your entire life building from the ground up?
Chances are, it would be sold to ensure that the first in line beneficiary receives their entitlement. Meanwhile, your children would love to continue your legacy and run your business, it may be that the law says it should be sold to ensure that your spouse who has no interest in antique quilting supplies is provided with this entitlement.
It all sounds a bit too much doesn’t it?
Well, hopefully with this little bit of insight, your Will might get a refresher after your marriage or any other life changing decision.