What happens if I die without a will? – By Jesse Rankine
If a person dies without signing a valid will they die ‘intestate’. This means that the distribution of their estate will be made in accordance with the rules of intestacy.
These rules can be simple or complex depending on your family situation.
Two common misconceptions are that, if you die without executing a will, then:
1. Your estate will pass to the government; or
2. Your surviving spouse will inherit 100% of the estate.
Although both scenarios are possible, both are relatively rare. One requires the person to have died leaving no next of kin and the other requires the person to have died leaving a spouse but no children.
It is more common for a person to die leaving both a spouse and children. The current intestacy rule for this situation is as follows:
- The spouse receives the first $100,000 plus 1/3rd of the balance; and
- The children share the remaining 2/3rds of the balance.
For example, if a person dies with a spouse, two children and a $500,000 estate:
- Spouse = first $100,000 + $133,333 (being 1/3rd of the balance) = $233,333
- Child 1 = $266,666 (remaining 2/3rds of the balance) / 2 children = $133,333
- Child 2 = also $133,333
The inequality of the current formula is better illustrated where there is a spouse, a single child and a $1,000,000 estate:
- Spouse = $100,000 + $300,000 (being 1/3rd of the balance) = $400,000
- Only child = $600,000 (being the remaining 2/3rds of the balance)
In the above example, the child obtains significantly more than the spouse. Most people would want the opposite.
Perhaps this is the reason why the new Administration and Probate and Other Acts (Succession and Related Matters) Bill 2016 now proposes to change the rules of intestacy. Under the new rules if a person dies leaving both a spouse and children the division will be as follows:
- Spouse = first $451,909 plus ½ of the balance
- Children = remaining ½ of the balance
- NOTE: Only children that are not the children of the spouse are entitled to the remaining ½ balance, otherwise the Spouse will receive all of the estate.
This means that, typically, 100% of the intestate’s estate will pass to the surviving spouse unless there are children from other relationships.
The introduction of the above Bill illustrates the importance of having your own will as opposed to leaving the distribution of your estate to the default rules of intestacy. Because the rules are updated from time to time, it is impossible to know what the rules will be at the time of your passing. It would be naive to assume that the rules will not change again at some point. The only way to be completely confident of how your estate will be dealt with is to have your will prepared and executed with a suitably experienced solicitor.