A valid Will determines how your estate is dealt with after you die. Your Will can appoint one or more appropriate family members or trusted friends to administer your estate (your executor/s), nominate guardians for young children, determine who will receive your assets and give directions for specific funeral and burial arrangements.
Without a Will, the finalisation (administration) of your estate could be left to somebody you would not wish to involve. Also, the distribution of your assets will be pre-determined by legislation and may be contrary to your wishes. A family member may need to apply to the Supreme Court which will make the process more stressful, complex and costly for your loved ones.
No matter what your age, health status or financial circumstances, dying intestate (without a Will) is likely to create an additional burden on your family and will prevent you from having a final say in how your life earnings are to be distributed.
What happens to your estate when you die without a Will (intestate)?
If you die intestate (without a valid Will) your assets will be distributed according to pre-determined rules set out in the relevant legislation in each state and territory. For example, in Queensland the relevant legislation is the Succession Act (Qld) 1981. Essentially, the rules provide for a specific order of distribution to the deceased person’s next of kin, depending on each situation.
This distribution is referred to as the rules of intestacy or statutory orders and each jurisdiction has a slightly different process. Importantly, in all jurisdictions these rules do not consider the wishes of a deceased person nor his or her unique circumstances. Generally, without a valid Will, the rules cannot be altered to take account of any verbal or known wishes of the deceased.
What can go wrong?
The formula set out in legislation attempts to reflect society’s expectations as to who should benefit from a person’s estate. The problem is however, we all know that most families are not ‘standard’ – many are blended, and there is often unequal distribution of personal wealth between family members. The application of the rules of intestacy may produce outcomes that are different to what the deceased would have wanted.
Dying intestate cannot guarantee a fair or intentional estate distribution (according to the deceased’s wishes) and may result in undesired consequences, such as:
- family members or friends completely missing out on an inheritance;
- a disproportionate distribution of assets between family members or the possibility of leaving out more needy beneficiaries;
- a distribution to a family member that the deceased disliked or had no meaningful relationship with.
Imagine, for example a man in a second marriage or with a de facto partner. The man has children from a former marriage however the current partner has no children. If the man dies without leaving a Will, some states will determine that the present partner will inherit the entire estate and the deceased’s children will receive nothing. In the same scenario but in other jurisdictions, the partner may receive a much smaller portion of the estate. Neither case may reflect how the deceased man really wanted to distribute his estate.
Further complexities arise where a deceased person is survived by more than one spouse. The result is often uncertainty, additional legal costs and angst within the surrounding family – all a time when a person’s life has been lost. The take-home point is that the rules are prescribed and not negotiable for the intestate’s family, in many cases resulting in a suboptimal outcome.
More convincing reasons to make a Will
An executor is the legal personal representative appointed under a Will to oversee administration of the estate. An administrator has a similar role however is appointed by the Court when a person dies intestate (without a valid Will).
Generally, the next of kin may apply for the role of administrator where the is no valid Will. However, this may not be desirable in some circumstances. There are many dynamics within families and sometimes it may be preferable for a third party to be involved in the administration, removing the emotional factor and bringing more impartiality into the role. Only through a Will can a person nominate a specific executor, or executors, of his or her estate.
Finally, the failure to make a Will may forego opportunities for estate assets to be treated more tax effectively or to protect vulnerable beneficiaries. This may be put into effect by way of a testamentary trust, which is a trust contained in a Will that comes into effect upon the testator’s death.
A testamentary trust provides flexibility and control in asset distribution amongst beneficiaries and assists in protecting assets from third parties and creditors. Assets can be preserved so that they can pass through future generations and the trust can provide for different scenarios.
Summary
Having a Will gives you control of what happens to your assets when you die. Your testamentary wishes are made known and your beneficiaries clearly identified. Good estate planning can also preserve the value of your assets, allow for more tax-effective distribution and protect vulnerable beneficiaries.
No matter what your age, your health status or your financial circumstances, putting off making a Will is something to be avoided. Making a valid Will gives you peace of mind about what will happen to your assets – the assets that you have carefully built up over a lifetime. It is also a way to ensure that your family members are not unduly inconvenienced by your failure to make a Will.
This information is for general purposes, and you should obtain professional advice relevant to your circumstances.
If you or someone you know wants more information or needs help or advice, please contact us on (07) 3255 6327 or email [email protected].