Estate planning is a crucial process for anyone looking to secure their loved one’s financial future and ensure assets are distributed according to their wishes. Unfortunately, not everyone gets around to creating a will, and when they pass away without one, it leads to a situation known as “intestacy”.
What is Intestacy?
s 102 of the Succession Act 2006 NSW states: “An intestate is a person who dies and either does not leave a will or leaves a will but does not dispose effectively by will of all or part of his or her property.”
In other words, intestacy is a term that refers to the situation when an individual passes away leaving no formal legal documentation outlining how their assets should be distributed upon their death. When this occurs, an application needs to be made to the Supreme Court for ‘Letters of Administration’ – a document providing the court’s formal approval for someone to administer the estate of the deceased.
Letters of Administration
In New South Wales, when someone dies intestate, the Successions Act formulates how their estate will be distributed. Some key points regarding intestacy laws in NSW include:
- Spouse and Children: If the deceased is survived by a spouse and children, the estate is typically divided between the spouse and children. The exact division depends on the number of children and value of the estate.
- No Spouse, but Children: If there is no surviving spouse, but the deceased has children, the estate is usually divided equally amongst the children.
- No Spouse, No Children: If the deceased has no spouse or children, the estate may go to other family members, such as parents, siblings, or more distant relatives depending on the circumstances.
- No Close Relatives: In the cases where no close relatives can be identified, the deceased’s estate may ultimately be claimed by the government.
- Complex Family Structures: Modern family structures can be complex, involving stepchildren, half-siblings, and various other relationships. Intestacy laws are designed to address these complexities, but they may not always align with the deceased person’s intentions.
Can De Facto Partners Inherit the Estate?
NSW legislation defines a de facto relationship as two adults living together and are not married to one another or related by family. The Succession Act establishes the de factor partnerships be treated equally to marriages. Stipulated by the Interpretation Act 1987, in NSW, legal recognition of a de facto relationship is granted when the involved parties have a relationship as a couple living together and are not married to one another or related by family.
In determining whether two people have a relationship as a couple, all circumstances of the relationship are to be taken into account, including any of the following matters:
- the duration of the relationship,
- the nature and extent of their common residence,
- whether a sexual relationship exists,
- the degree of financial dependence or interdependence, and any arrangements for financial support, between them,
- the ownership, use and acquisition of property,
- the degree of mutual commitment to a shared life,
- the care and support of children,
- the performance of household duties,
- the reputation and public aspects of the relationship.
Two people are related by family if:
- one is the child (including an adopted child) of the other, or
- one is another descendant of the other (even if the relationship between them is traced through an adoptive parent), or
- they have a parent in common (including an adoptive parent of either or both of them).
Intestacy may lead to disputes and complications, particularly if there are multiple beneficiaries or family members with differing expectations. Such situations can be emotionally challenging and may result in lengthy legal proceedings. This highlights the importance of having a clear and legally valid will in place to prevent potential conflicts.
To avoid intestacy and its potential complications, it is crucial to engage in proactive estate planning. The Norton Law Group Lawyers can help you with expert will drafting to specify your exact wishes for asset distribution and minimise the risk of disputes among your heirs. If you have any enquiries about intestate succession in NSW, or need advice in your estate planning in general, please do not hesitate to reach out to our team today.