A common question that comes up regularly is what happens if a person dies without having made a valid will.
This is particularly relevant in respect of clients who see implementing a will as something they can put off until they are older and never getting around to it, or failing to recognise the importance of having an appropriate and valid will in place.
For any clients that fall into this category, the Government has an estate plan embedded in legislation in each State.
If a client dies intestate (without a valid will), the intestacy rules in the relevant jurisdiction are applied and the deceased’s assets are distributed accordingly.
While it is slightly different in each jurisdiction, the broad priority is given to any spouse, children, parents, siblings, grandparents, cousins, nieces and nephews.
The allocation and proportion of assets to each beneficiary is also very much dependent on the exact circumstances of the client as at the date of death. Where there are no qualifying relatives or dependants under the intestacy rules, the assets of the deceased will pass to the Government.
A number of issues can arise when it comes to intestacy, including:
- the intended beneficiaries are not included within the range of beneficiaries set out in the legislation;
- the intended beneficiaries are included in the range, however not to the extent the deceased would have otherwise intended;
- the beneficiaries under the intestacy rules include people who the deceased is estranged from or would have otherwise excluded;
- disagreement and difficulties for the people who may have assumed or expected to receive a benefit missing out; and
- missed opportunities in relation to structuring any inheritance for high-risk beneficiaries, asset protection and tax planning.
Relying on the intestacy rules and leaving the distribution of an estate to chance is rarely appropriate and there is an increased the risk of an estate being challenged and being subject to a lengthy and expensive court process.
Comments are closed.