What does Intestacy mean?
Intestacy arises when there is no valid Will directing the distribution of the estate of a person who has died. There are two types of intestacy:
Full intestacy – Where the deceased has not left a valid Will the entire estate is distributed under the rules of intestacy.
Partial intestacy – Where the deceased left a valid Will but the Will did not dispose of their entire estate. The undisposed part of the estate is distributed under the rules of intestacy.
What are the rules of intestacy?
The rule of intestacy are set out in the law, primarily Chapter 4 of the Succession Act.
They set out which of the deceased’s family are entitled to the deceased’s estate, and the extent of that entitlement.
Who receives what depends on the particular circumstances of the deceased.
What is the Order of distribution?
In general terms the order is set by the following categories:
- Category 1 – Spouse
- Category 2 – Children (or grandchildren, if a child has died before the deceased)
- Category 3 – Parents
- Category 4 – Siblings
- Category 5 – Nieces and nephews
- Category 6 – Grandparents
- Category 7 – Aunts and uncles (or their children, if an aunt or uncles dies before the deceased)
With one exception (relating to children of a previous relationship) once entitlement is established in one category all subsequent categories are ignored.
If there are no qualifying beneficiaries then the intestate estate will pass to the State of New South Wales (‘the State’). The State may waive its entitlement in favour of a limited class including any other dependants, or others who have a ‘just and moral’ claim on the deceased’s estate.
Who is a Spouse?
The definition of ‘spouse’ includes a both a person who was legally married to the deceased at the time they died, and also a person who was in a ‘domestic partnership’ with the deceased at the time they died.
‘Domestic partnership’ is defined as either a “registered relationship” or a ‘de facto relationship’ that has been in existence for a continuous period of at least 2 years or has resulted in the birth of a child.
In determining whether a relationship is a ‘de facto’ the Court will take into account all relevant circumstances, including:
- The duration of the relationship
- living arrangements;
- the existence of a sexual relationship;
- the couple’s financial arrangements;
- whether property was owned, purchased or used jointly;
- how the couple presented their relationship in public.
How does the spouse get priority?
A Spouse is entitled to the first share of the estate, and, unless there are children from a previous relationship, is entitled to the whole estate. This is a change from the system that existed prior to 2010 (and continues to exist in some other states) which provides that all children have an entitlement.
Where there are children from a previous relationship the estate is distributed according to the following:
- The spouse is entitled to all of the deceased’s personal effects.
- The spouse is entitled to a “statutory legacy”.
- The spouse is entitled to half of the remainder of the estate, if there is any remainder.
- The children of the deceased (whether children of a previous relationship or of the spouse) are entitled to the balance of the remainder of estate in equal shares.
The statutory legacy is an amount defined by law. It increases quarterly by CPI. It is (as at June 2023) $553,635.47.
Example: Person A dies intestate. Their estate is worth $1,300,000.00. They were married at the time of death, with one child from the current relationship and two adult children, one of who had died, from a previous relationship. The child who died left two children.
Under the Intestacy rules the estate (excluding personal effects) will be divided as follows:
Child of current relationship $124,394.10
Child of previous relationship $124,394.10
Children of deceased child $62,197.10 each
Can there be more than one spouse?
The definition of spouse to include both marriage and de facto relationship gives rise to the possibility of a person having multiple spouses at the time of death. Previous spouses are not entitled. A common scenario would be where a person was separated, but not divorced, so still married, and also in a new de facto relationship.
In such scenarios, the spouses are entitled to share the spouse’s share of the estate. The relative portions will be as they agree between themselves, as the Court orders, or in the absence of an agreement or order, in equal shares.
In making an order for distribution between spouses the Court will focus on what it considers just and equitable (or fair).
What if the outcome of rules of intestacy is unfair?
The rules of intestacy do not prevent a person who believes that adequate provision was not made for them under a Will from seeking a family provision order.
Family provision orders permit eligible person (who may not have received anything under intestacy) to approach the Court and seek a greater or different share of the estate, on the grounds that the rules of intestacy does not make adequate provision for their proper maintenance, education or advancement in life of the person.
Segelov Taylor Can assist. If you are faced with dealing with an intestacy, Segelov Taylor Lawyers can provide clear, straightforward advice. Contact us by phone (02 8880 0500), email, or in the form on this website.