Intestacy

While dying without a will won’t, necessarily, mean your assets will go to the Crown, it does complicate matters considerably – and the costs of establishing your rightful beneficiaries would, likely, be taken from your estate, diluting it further. The lesson? Make a will while you can.

Where the deceased does not leave a valid will

A person who dies without leaving a will is said to have died intestate, and the estate passes to the next of kin according to a special statutory order that is set out on the following pages. The distribution shown is correct at the date of publication.

This also occurs when the deceased leaves a will that only distributes part of the estate (in which case the deceased is said to have died partially intestate) or where a will is made but is for some reason ineffective. The most common form of intestacy is where no will is made. Where there is an intestacy, letters of administration, not probate, must be applied for.

Finding the will

On many occasions members of the deceased’s family do not know whether the deceased left a will or, if so, where it can be found. If the will is not with the deceased’s personal papers, checks should be made with the deceased’s bank, solicitor, accountant or a likely trustee company. Advertisements should be placed in a daily newspaper and in the Law Institute Journal (at www.liv.asn.au/Practice-Resources/Law-Institute-Journal.aspx).

Disadvantages of intestacy

The most obvious disadvantage of intestacy is that the deceased has no control over the distribution of the estate, which must be distributed among the deceased’s nearest blood relatives, whether they have been close to the testator or not. The estate must be divided in specific fixed proportions depending upon the blood or domestic relationship between the deceased and their family members.

The table (following) explains the distribution of an intestate’s estate to the appropriate next of kin.

As can be seen, this statutory order is fixed, and no special account can be taken of particular wishes of the deceased. Note that:

1 Since 8 November 2001, inheritance rights in respect to intestate estates have been given to domestic partners (s 51A A&P Act) as defined by the Act. Section 3 of the A&P Act defines a “domestic partner” as a person who, although not married, is living with a person as a couple on a genuine domestic basis, irrespective of gender, and either:

ais registered as a domestic partner under the Relationships Act;

blived with the person continuously for a period of two years immediately before the person’s death; or

cis the parent of a child under 18 with the deceased at the time of the person’s death.

Section 35(2) of the Relationships Act and section 4AA of the Family Law Act 1975 (Cth), set out various factors to be considered in evaluating whether a domestic relationship exists. In many cases a de facto or same-sex partner will rank as the spouse of an intestate partner and in some cases will displace the entitlements of a spouse (s 51A A&P Act). Legal advice should be taken as to whether the A&P Act applies in any specific case.

2 “Children” include illegitimate children where a person dies after the commencement of the Status of Children Act 1974 (Vic) (“SoCA”) (i.e. after 1 March 1975) provided that paternity has been expressly or impliedly admitted or has been established against the father in his lifetime or the parents of the child were married to each other at the time of its conception or at some subsequent time (s 7 SoCA).

An additional disadvantage of intestacy is that confusion sometimes arises over who should apply for administration. The court has a very wide discretion as to whom it will grant administration, but in most cases whoever has the largest share in the estate is considered the most suitable. If another applicant applies early and is able to take out administration immediately, that applicant may succeed.

The provisions of the A&P Act stipulate how the assets of the deceased person shall be administered, for instance the assets of the intestate deceased must be sold. These requirements may not be appropriate in many circumstances.

The distribution of an intestate’s estate to the next of kin: a summary table

If an intestate dies leaving only …

Property would be divided …

Spouse or domestic partner

1 and no issue*

all goes to the spouse or domestic partner

2 and no issue but other relations

all goes to the spouse or domestic partner

3 and issue

personal chattels and first $100,000 and interest thereon at 2.5% p.a. – less the proclaimed penalty interest rate to date of payment – to partner; then balance one-third to partner, two-thirds to the issue to be distributed between them as set out in points 5 to 9, below

Note:

1 The surviving spouse/domestic partner has a statutory option to purchase the matrimonial home at market value (s 37A A&P Act).

2 For a definition of “domestic partner”, seeDisadvantages of intestacy” section in this chapter.

3 If deceased has both a spouse and a domestic partner at death, section 51A of the A&P Act divides the “spouse” share between them on a sliding scale according to the length of the relationship with the domestic partner.

4 and issue and other relations

as in point 3, above

Issue only (not step-issue)

5 if all children

equally between such children

6 if children and grandchildren only

estate is divided into as many shares as there are living children and deceased children who have left issue

7 if grandchildren only

between grandchildren who are entitled to it in equal shares according to the number of stocks of descents (i.e. the descendants of a deceased child take out that child’s share between them – this is called per stirpes distribution)

8 if grandchildren and great-grandchildren only

equally per stirpes: these issue take between them the share their parent would have taken if living at the death of the intestate

9 if great-grandchildren only

as in point 8, above

Father

all to father

10 and/or grandparents and/or collaterals (descendants from a common ancestry, e.g. brothers, sisters, cousins)

all to father

11 and children (no other issue)

equally to children

12 and issue and grandparents

all to issue, as in points 5 to 9, above

13 and mother

equally between father and mother

14 and mother and grandparents and/or collaterals

equally between father and mother

15 and issue

all to issue, as in points 5 to 9, above

Mother

16 and other relations

as in points 10 to 15 above, with necessary “mother”/”father” substitutions

Brothers and/or sisters

equally between brothers and sisters

17 and grandparents and/or uncles and/or aunts

equally between brothers and sisters

18 and nephews and/or nieces (children of deceased brothers and sisters)

estate divided into as many parts as there are living brothers and sisters, and deceased brothers and sisters who have left children; one share goes to each living brother and sister, and one to the child (if more than one, to them equally) of each deceased brother and sister

19 and the same and grandparents and/or uncles and/or aunts

as in point 18, above

Nephews and/or nieces

equally among all entitled to the estate (per capita, not per stirpes)

20 and grandparents and cousins

equally between grandparents

21 and uncles and/or aunts

equally between nephews, nieces, uncles and aunts per capita

22 and uncles and/or aunts and grandparents and cousins

equally between grandparents

Grandparents

equally between grandparents

23 and uncles and/or aunts and/or cousins

equally between grandparents

Uncles and/or aunts

equally between uncles and aunts per capita

24 and cousins (children of deceased uncles or aunts)

equally between the cousins per capita

25 and children of deceased

as in point 24, above

26 and grandnephews and/or grandnieces

equally between cousins and grandnephews and grandnieces per capita

More remote next of kin

equally between next of kin of equal degree per capita

No relations

all to the Crown

Note: * “Issue” means children, grandchildren and/or great-grandchildren.

Procedure for application for letters of administration

As with an application for probate, an advertisement indicating an intention to apply for letters of administration after the expiration of 14 days is published on the Supreme Court’s Probate Online Advertising System website (at http://www.supremecourt.vic.gov.au). The following documents must then be lodged with the Registrar of Probates (for address details, seeProbate”):

1 affidavit in support of the application sworn by the person applying for administration together with a full death certificate and a list of the deceased’s assets;

2 affidavit of publication and searches as to search in Registrar General’s office and Probate Office;

3 surety’s guarantee or insurance bond (if required);

4 notice of motion;

5 order for letters of administration; and

6 letters of administration parchment.

As a condition of granting letters of administration to an applicant, the court, or Registrar of Probates, may require one or more sureties or an insurance bond.

These sureties are to guarantee that they or the insurance company will make good, in an amount not exceeding the amount of the deceased’s property as sworn, any loss that any person interested in the administration of the estate may suffer as a result of a breach by the administrator of duties (s 57 A&P Act). The question whether sureties are required or not is governed by the Supreme Court (Administration and Probate) Rules 2004 (Vic) (“A&P Rules”).

Order 7.01 provides that a guarantee under section 57 of the A&P Act is not required except where it is proposed to grant administration:

1 to a creditor of the deceased or the legal representative of such a creditor;

2 to a person having no immediate beneficial interest in the deceased’s estate;

3 to an attorney of a person entitled to a grant of administration;

4 to the use and benefit of a minor or of a person incapable of managing their own affairs;

5 to any person who appears to the court or the Registrar to be resident outside Victoria;

6 where a grant of administration relates to a grant to collect and preserve the deceased’s assets (ad colligendum bona) or to bring or defend a proceeding (ad litem);

7 under sections 20, 22 or 24 of the A&P Act;

8 where the court or Registrar considers that there are special circumstances making it desirable to require a surety or sureties; or

9 where application can be made to the Registrar to dispense with a surety.

Time for payment of debts

The procedure here is the same as applies where the deceased left a will (seeEstates”). The notice to claimants would refer to the administrator rather than the executor.