The legal term for dying without a Will is “dying intestate”. My experience is that intestacy can add to a family’s burden and often leads to additional confusion as to what needs to be done and who is able to do it. There is also a misconception that if someone dies without a Will the Public Trustee is the only organisation that is able to look after the deceased’s affairs. That is not true and, particularly where there is a large estate, can significantly add to the cost of administering the deceased’s estate.
The first point that should be made is that just because someone dies intestate does not mean that the family will necessarily need to see a lawyer or anyone else to handle the deceased’s affairs and eventually distribute the estate. It all depends on what assets the deceased owned. In the simplest example, if the deceased has no or very few assets then it may not be necessary to engage a lawyer or to apply to the Supreme Court for Letters of Administration.
Letters of Administration will be required if the deceased died intestate and owned certain property such as real property assets (a house or land), a significant bank deposit, company shares, some nursing home bonds and some superannuation funds.
Assuming Letters of Administration are required (we should be able to advise you if you are unsure) then 2 issues require consideration. They are:
1. Who Can Apply for Letters of Administration?
Generally, the family of the intestate person can apply, but there is an order of priority.
The first person entitled to apply is the spouse or domestic partner of the deceased, followed by the children (provided they are over 18), parents, siblings, grandparents, and finally equal priority is given to uncles, aunts and cousins of the deceased. However, if any of these people is to apply for Letters of Administration they must also be entitled to a beneficial interest in the estate. So, if a spouse or domestic partner does not want to apply for Letters of Administration, they cannot simply pass the job on to the deceased’s parents, because the parents would not be entitled to inherit any of the estate. In this way everyone in the order of priority must be “cleared off” before someone lower in the list can apply.
If the deceased is not survived by any family then the Public Trustee may take control of the estate, or it is also possible for a grant to be made to a creditor of the estate.
2. Who is Entitled to the Benefit of the Deceased Estate?
The rules in relation to who inherits an intestate estate are, not surprisingly, very similar to the order of priority for obtaining Letters of Administration.
If a person passes away leaving a spouse (or domestic partner) but no children, then the spouse is entitled to the whole of the estate.
If they leave a spouse and children, the spouse inherits the first $100,000 of the estate, as well as 50% of the remainder. The children inherit the other 50% of the remainder in equal shares. If the estate is worth less than $100,000 then the children will inherit nothing.
If they leave children but no spouse, then the children inherit the estate equally. However, in all of the above cases, if the deceased had a child who pre-deceased them leaving grandchildren, then those grandchildren will inherit their parent’s share of the estate.
If they leave no spouse or children, then their parents are entitled to inherit the estate in equal shares.
If they leave no spouse, children or parents, then their siblings are entitled to inherit the estate in equal shares.
Thereafter, in general terms the estate is distributed to nieces and nephews, grandparents, aunts and uncles and cousins, with rules determining in what proportions the estate is distributed set out in the Administration and Probate Act.
Finally, if the deceased is not survived by any family, or no family can be located, the estate will be taken by the Crown.