Written by Abigail Koch in MoneyMag on July 8, 2020. This article gives us a good initial insight about what happens if we were to die without a will.
There is no right or wrong time or age for someone to organise their will.
However, life is unpredictable – and if the unexpected occurs, your loved ones may not be taken care of like you had hoped.
For this reason, having a will provides peace of mind for the asset-holder and their intended beneficiaries.
Research by comparethemarket.com.au reveals that many Aussies don’t have a will, including nearly half of Aussie mortgagors.
Among under-40s who have a will, they are most likely to organise one when purchasing a property. In contrast, the majority of over-50s say they took out a will once they married or had kids.
Each state in Australia has different laws around wills and in particular, how assets are distributed when there is no will in place, so I encourage Australians to consult a professional for advice when handling issues around their will.
To help clear up potential confusion, here is what happens when you die intestate (without a will).
1. Your family has no control over how your assets are distributed
If an individual dies intestate, their direct family is automatically entitled to their assets.
Specifically, the spouse will inherit the entirety of the assets.
If there is no spouse, however, assets will be inherited by the next available relative and distributed equally.
This is determined by the state order, with the relative order being children, parents, siblings, grandparents, aunts and uncles, then cousins.
If the deceased leaves no spouse, the children will share the assets equally, but if there are no children in this situation, the living parents get equal shares.
It is only in the case that there are no eligible relatives, that your assets will be passed onto the state.
From there, an application must be made by anyone wanting to make a claim.
There are some instances where the court has the discretion to consider an ‘informal will’ – other documents that set out the testamentary intentions of the deceased.
This may include letters, documents created and saved on a smartphone or computer hard drive, video recording or an unsent text message.
2. Your loved ones may have to sell your assets
There are instances where some beneficiaries make a claim for a larger share of an individual’s assets.
If there is no will outlining your intentions in this situation, your partner or family may have to sell your assets to meet the share.
Assets may also be liquidated to pay out debt if bankruptcy is declared when there are more liabilities than assets.
The comparethemarket.com.au survey found that 22% of respondents incorrectly assumed that when they die, their partner or family members won’t be forced to sell assets for other parties to claim a share.
3. You have no control over who becomes guardian of your children
If a parent passes away with children under the age of 18, guardianship is automatically given to the surviving parent.
However, if this option isn’t viable due to them refusing the role or no second parent being alive, the court may appoint a guardian – who may or may not be an individual you would like to be the guardian of your children.
If the deceased individual sent a letter or text message mentioning the intentions of guardianship in the event of your death, the court might also consider these informal documents.
4. Your family or partner could find themselves in court
Similar to point one, if a person dies without a will, the person who inherits the estate will be the first eligible relative moving down the line of succession, with each category being exhausted before moving to the next.
However, individuals may dispute this.
It’s important to be aware that if a party chooses to take a family to court, it is often a highly time-consuming and expensive process that is not guaranteed to be successful.
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