Everyone has an estate plan – even if you didn’t plan one. If you die without a will, the rules of intestacy will apply. The rules of intestacy distribute the estate in accordance with specific rules in the Succession Act 2006 NSW. Leaving your estate planning to the rules of intestacy may mean that assets will not be distributed in the way you intended. Here are five things to know about intestacy:
1. Who gets first priority to your estate?
Broadly, in New South Wales, the order of priority ranks a spouse first, then children, parents, brothers and sisters, grandparents, and aunts and uncles. The legislation acknowledges the changing ideas of “family”, with specific provisions dealing with multiple spouses, adopted children and children born of surrogacy arrangements. With many instances of “blended” families today, where families are reconstructed from multiple relationships resulting in multiple spouses and/or defacto partners, half and/or step-siblings/children, it is sometimes difficult to determine family structure and less straightforward to determine who gets better priority than someone else.
2. De facto relationship and intestacy
Where there is a de facto relationship, it may be difficult to determine if the nature and length of the relationship meets the legal threshold. Each case is very fact specific. Take the two cases below as examples.
- a. Unsuccessful de facto claim
In Sadiq v NSW Trustee and Guardian [2016], the Court of Appeal dismissed a claim that Mr Sadiq was the de facto partner of the deceased. Mr Sadiq provided some documentary evidence listing his address as the address of the deceased but evidence given by neighbours and the state of the property upon the deceased’s death indicated the deceased lived alone. The Court of Appeal upheld the first instance judgment that there was no defacto relationship. This meant that on intestacy, Mr Sadiq would not have been entitled to the deceased’s estate.
- b. Successful de facto claim
In NSW Trustee and Guardian v McGrath [2013], the Court held Mr McGrath was in a de facto relationship with the deceased and the estate should be distributed on that basis. There was a question as to whether Mr McGrath and the deceased “lived together” as they did not formally move in together but the deceased was a regular guest at Mr McGrath’s home. The Court looked at substance of the relationship and not the label put on it — Mr McGrath did not describe himself as the de facto partner.
3. Who benefits – the 30 day survivor
To receive a benefit in your intestate estate, an eligible person has to survive you by 30 days. There is no “survivorship” requirement if you make will.
4. Who deals with your estate?
If you die intestate, an administrator has to apply for Letters of Administration from the Supreme Court in order to deal with your estate. The administrator has various duties including arranging your funeral, paying any debts and taxes, collecting and distributing the assets of your estate according to law and keep accounts/records of the estate.
5. Where there is no person entitled to your estate, traditionally, the estate passes to the State bona vacantia
If you die leaving no person who is entitled to your estate, the State is entitled to the whole of your estate. Bona vacantia means “unclaimed goods” or “property that has no owner”. If there is an application, the State then has the discretion to make provision to any persons dependent on you, any person who, in the Minister’s opinion, has a “just or moral claim” on you, any organisation or person for whom you might reasonably be expected to have made provision or the trustees of any of the above. This covers a broad category of persons and organisations that could make a claim on your estate.
If you or a loved one requires assistance with creating or challenging a will, please contact Swaab Attorneys.
