Money

Don't die intestate - the perils of passing without a Will

Why make a Will when it might be challenged anyway? Margaret McKay explains the complicated ins and outs of dying without proper legal documents in place like a Will - and why it's worth doing.‍

By Margaret McKay

Robbo told me his mum had died interstate. ‘Oh gee, I’m sorry,’ I said, ‘I guess that’s going to mean some long drives and logistical difficulties.’ He looked at me like I had a fried egg on my head. ‘What? No,’ he said, ‘she died without leaving a Will.’ Ahh, she died intestate!

No Will? No way!

With no will in place, a Court will generally issue Letters of Administration to the immediate family, beginning with the deceased’s spouse or de facto partner, then the children. These Eligible Persons, as defined by the Succession Act or equivalent in most states and territories, are in the following order:

  1. Spouse or de facto partner
  2. Children
  3. Parents
  4. Brothers and sisters
  5. Grandparents
  6. Aunts and uncles
  7. First cousins

Where there are no eligible persons, and no will, estate administration is passed to the particular state or territory’s Public Trustee office to work out.

What happens if you make a claim promises had been made to you before death?

“I’m his mate and he once told me I could have the Picasso.”

If there’s no Will, the Court will ask, “Where’s your evidence?” and then likely say, “Sorry old chum, but the whole estate, including the Picasso, will pass to the state or territory government. Goodbye.”

A Will makes your intentions clear

It’s far better if the accumulated assets and meaningful possessions are distributed according to the wishes of the deceased. That can only be done if those wishes are not only known but recorded and recognised officially with a valid Will.

For a Will to be valid, it must be:

• made while the person has the proper mental (testamentary) capacity to do so
• made without fraud or forgery
• created without undue influence from others
• properly signed, dated, and witnessed.

There is a common misconception that all assets will automatically pass into the estate and therefore be administered as per the directions of the Will. While this is largely true, there are a couple of notable exceptions, specifically with life insurance and superannuation.

• Life insurance policies will have a nominated beneficiary, who may be the same person who is to receive the entire estate under the will. However, the policy is a contract between the insurance company and the beneficiary, and upon the death of the policy holder, the benefit will pass to the beneficiary – but it will go direct, not via the estate. What does it matter? Since the benefit is not part of the estate, any challenge to the will won’t involve the policy benefit.

• Superannuation – Similar logic applies to super benefits, which are held in trust and administered by the superannuation trustee. Trust deeds vary, and such things as a binding death benefit nomination are worth pursuing. However, it is important to be aware that, as with the life insurance benefit, the funds may go direct to the beneficiary, and not via the estate, with similar implications regarding will challenges. Read more on 6 checks to make on your superannuation.

What’s the point if anybody can challenge a Will?

Let’s clear up the terminology. While the 2 terms are often used interchangeably, challenge and contest mean different things.

  • Challenging a will means questioning the validity of it. In general terms, the challenge may question whether the will is valid in respect of the points above, or perhaps that there is a later will which supersedes the current one.
  • Contesting a will occurs when a person questions the directions of it by making a Statement of Claim that they have been treated inadequately or unfairly. This then becomes a Family Provision claim. In order to make such a claim, a person must be:
  1. a beneficiary mentioned in a previous Will
  2. a beneficiary mentioned in the current Will
  3. someone who would be entitled to some portion of the estate if there were no Will.

The last point refers to the list of eligible persons described earlier. As such, the perception that anyone can contest a Will is not accurate. Further, whether it be a challenge to the validity of a Will, or a contest of the intent of it, full details and circumstances need to be submitted to the Court. There is a 12-month limit from the time of death during which such a Family Provision claim must be made.

In assessing the rights of a person to make such a claim, the Court will consider all factors, including:

• The claimant’s current financial position
• Whether duties as a carer existed
• Whether some provision has already been made for that person

Complex or delicate family circumstances need to be properly dealt with in a valid Will. It’s your legacy, your accumulated wealth and precious items that you will want to ultimately end up in the right hands.

“Did you say I could have the Picasso? Just note that in your Will would you, and umm, make sure it’s all properly valid. Thanks.”

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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