Estate planning, Wills and Succession planning – aren’t the easiest or the most interesting of subjects to grasp and implement. However, each year many people die intestate and leave behind a world of inconvenience and stress for their loved ones.
When a person dies without a valid Will, he is said to have died intestate. In case of someone dying intestate in WA, the estate of the deceased (including real estate, bank accounts, securities, shares, holdings, and other assets owned at the time of their death) is distributed according to set rules of the state legislation, rather than according to their intentions or wishes.
Sometimes, it is a lack of time and people don’t get around to working on their Will. Occasionally, it is the misconception about the time and effort involved in the preparation of the Will and/or the delays with the crucial decisions regarding the distribution of assets. At other times, it is misinformation – the person may have died believing that they have a Will in place, but the Will is later found to be invalid; or the Will fails to deal with all of the estate’s assets properly.
When you have a valid Will, it gives you the best chance to ensure that your assets go – where and to whom – you want them to. This highlights the importance of having a valid Will. But, when you die without leaving a Will, the rules of intestacy apply and your assets may be distributed in a way that is inconsistent with your wishes and may result in unintended outcomes.
Here in WA, Section 14 of the Administration Act 1903 (WA) delivers the rules for dividing the deceased’s estate among their surviving members.
Estate planning, Wills and succession planning – may not be the easiest or the most interesting of subjects to grasp. However, there is help available while preparing a valid Will that deals with all your assets properly. Here in our latest blog post, we discuss the rules that are applicable and offer insights and suggestions for getting your Estate planning underway before it is too late.
Rules for Asset Distribution Under Intestacy
Section 14 of the Administration Act 1903 contains a table that specifies who receives what part of the estate when a person dies.
If a person dies leaving a spouse (or de facto spouse), the spouse will receive all the household chattels;
If a person dies leaving a spouse (or de facto spouse) and children but the estate is worth no more than $50,000, then the spouse gets the entire estate;
If a person dies leaving a spouse (or de facto spouse) and children and the estate is worth more than $50,000, then the spouse (or de facto spouse) will get the first $50,000 plus one-third of the estate, and the children will get the remaining 2/3 of the estate (divided equally);
If a person dies leaving no spouse (or de facto spouse), no children, no sibling, no parents, no grandparents, no nieces or nephews, no cousins and no aunts or uncles, then the whole of the estate passes to the state government (the Crown).
It is easy to imagine a scenario when these rules would not be in keeping with the wishes of the deceased. In most cases, as couples share joint ownership, dying intestate will not result in a surviving spouse being required to sell the marital home in order to contribute a portion to the children. However, where there is no joint ownership, the spouse may stand to lose all ownership of the marital home. With an increasing trend of multiple marriages and blended families, it is more important than ever to have a valid Will that makes your wishes clear and avoid complications and fallouts.
An infographic illustrating intestacy rules for Western Australia
Estate Administrator for Intestacy in WA
Where a person dies intestate without a valid Will, it is necessary to apply to the court for a Grant of Letters of Administration to give authority to an administrator to distribute the estate according to legislation. The following are people who may apply:
One or more of the people named in Section 14 as beneficiaries of the estate.
When people named in section 14 fail to apply, then applications are deemed open and anyone may apply.
This process introduces significant delay and complexity to the process and may require expenditures that may reduce the estate. The individual seeking the Letters of Administration must enclose a Statement of Assets and Liabilities - listing the various assets and liabilities of the estate. After the application has been received and the criteria are ensured as satisfied, the Probate Registry will issue the Letters of Administration.
Intestacy Rules Across Australia
The Australian states and territories do not all follow the same intestacy rules. There are important differences that you need to be aware of and it is vital to research what is applicable to your position.
Estate planning with Oakmont
For more information on the article – questions or concerns, please don’t hesitate to reach our team.
A valid Will is the cornerstone of estate planning. At Oakmont, we understand this and help you with valuable assistance, professional advice and estate planning insight.
If you require financial advice regarding your estate planning and avoiding intestacy, or for any other financial matters, contact us today.
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The information contained on this website and in this blog post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly and, where appropriate, seek professional advice from a financial adviser.
Although every effort has been made to verify the accuracy and correctness of information, Oakmont Financial Group, together with our consultants, officers, agents, and employees, disclaim all liability for any loss or damage suffered by any persons directly or indirectly relying on this information.