DON'T HAVE A WILL?
WHY THE CHANGES TO THE ADMINISTRATION AND PROBATE ACT 1958 (VIC) MAY AFFECT YOU!
Intestacy occurs when a person dies without having a will, if their will is not valid or if their will only disposes some of their property. New changes to the Administration and Probate Act 1958 (Vic) now specifically provide who is entitled to share an estate in the event the deceased (“the intestate”) does not leave a valid will.
The Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2014 (Vic) received royal assent on 19 September and is scheduled to come into operation on 1 November 2017.
Should you have specific wishes as to how you would like to distribute your property amongst your loved ones, it is important that you prepare a will. If you die without a will, your estate will be administered in accordance with the state law of intestacy and not with your priorities.
Under the current law
The Administration and Probate Act 1958 (Vic) currently provides that when a person dies without a will and leaves a spouse or domestic partner and no children, the partner is entitled to the whole of the deceased’s estate.
However, if the deceased leaves a partner and a child or children:
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The partner is entitled to receive the personal chattels, the first $100,000.00 of the estate and one third of the balance of the estate; and
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The child or child of the deceased are entitled to two thirds of the balance of the estate.
Example:
De Marco Lawyers incorporating Judicate Lawyers recently acted on behalf of the daughter of the deceased. The deceased had no valid will and left a partner and one daughter. The deceased left an estate worth approximately $1.2 million.
Under the current law, the partner received approximately $460,000.00, being the first $100,000.00 of the estate and one third of the balance of the estate.
The daughter received approximately $700,000.00 being two thirds of the balance of the estate.
Under the new law
A new Part IA on intestacy is added to the Administration and Probate Act 1958 (Vic) (“the Act”). The new laws in the Act set out in clear terms who is to receive the estate in the event of intestacy.
Where the intestate leaves a partner and there are only children that belong to the intestate and the partner, then the partner receives the whole estate (sections 70J to 70K).
Example
If the new laws applied to the example above, the partner would receive the whole estate of the deceased.
The daughter on the other hand, would not receive anything from the estate of her late father.
It is obvious from this example that the big winner is the partner. The definition of partner under the Act means “the person’s spouse, domestic partner or registered caring partner at the time of the intestate’s death”.
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Spouse means a person who was married to the deceased at the time of their death;
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Domestic partner means a registered domestic partner or an unregistered domestic partner of the deceased;
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Registered caring partner means a person, who at the time of the deceased’s death, was in a registered caring relationship with the deceased.
If you do not fall within the above definition, you will not be considered the partner of the deceased, and the estate will be distributed amongst the deceased child or children.
How the new law will apply to mixed family dynamics
Where the intestate leaves a partner and there are children that belong to the intestate and not the partner, then the partner receives a defined “partner’s statutory legacy”, the personal chattels, interest on the partner’s statutory legacy and half of the balance of the estate. The other half of the balance of the estate is to be divided equally between the children (section 70L).
The “partner’s statutory legacy” is set at $451,909.00 and indexed every year. The formula for indexing is set out in the Act. However, the Minister must publish the new value every year (section 70M to 70N).
A partner may elect to acquire property from the intestate’s estate. This means that the partner can elect to take any part of the estate, for example, the family home, as part of his or her entitlement to the statutory legacy. A personal representative must give the partner a notice of their rights within 30 days of the grant of administration.
The partner must exercise this right within three months of receiving the notice or three months from the grant of administration if the partner is the personal representative. The election to acquire the property must be made in writing and sent to the various parties named in the Act. The provisions in the Act also set out when a valuation is required, when an application must be made to the Court for an authorising order and when payment and transfer must be made (sections 70O to 70Y).
If there is more than one partner, the estate must be dealt with either by distribution agreement, distribution order or in equal shares. An example of when this situation may apply is where the intestate has separated from their wife/husband, but have not legally divorced, and has a new partner with whom they have been living with. Therefore, in this situation, the partners may enter into an agreement as how to distribute the intestate’s estate between themselves. If the partners cannot reach agreement, then they can seek a distribution order from the Supreme Court of Victoria.
An application for a distribution order must be made within three months of receiving a notice from the personal representative. If three months after the notice is given and no application is made or no agreement has been reached, the personal representative must distribute the estate equally (sections 70Z to 70ZE).
The Act also sets out a hierarchy as to how distributions will be made if the intestate leaves no partner or children. The estate is to be distributed in accordance to the hierarchy set out in sections 70ZF to 70ZL of the Act being: parents - siblings - grandparents - uncles - aunts - cousins.
Why it is important to have a valid will
These new changes to the laws surrounding intestacy emphasis that without a will, the deceased has no control over the distribution of the estate. The estate must be distributed amongst the deceased nearest blood relatives, whether they had a close relationship to the deceased or not. The estate must be divided in specific fixed proportions depending upon the historic blood or domestic relationship between the deceased and their family members rather than more recent but nevertheless deeply caring relationships.
Therefore, these new changes to the Act shows the importance of having a will. De Marco Lawyers can assist in providing you with the appropriate legal advice relating to the laws of intestacy and can also guide you in drafting and preparing a will.
This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any mater contained in this article without first obtaining specific legal advice.
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This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.
DISCLAIMER: We accept no responsibility for any action taken after reading this article. It is intended as a guide only and is not a substitute for the expert legal advice you can get from De Marco Lawyers and other relevant experts.