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Financial planning, Investment and Self Managed Super Fund Article
Intestacy & the Repercussions on a Family
By Tony Crilly
1st June 2008
This article may be out of date.
Intestacy occurs when a person dies without leaving a will or, at least, a document that the Court recognises as being the intentions of the deceased for the disposal of assets. The deceased person is described as being intestate. Schedule 2 in Succession Act 1981 (Qld), sets out how the intestate’s residuary estate – the estate that remains when the funeral expenses and debts, including taxes, are paid – is to be distributed. This edition, I will discuss the ramifications on families when a family member dies intestate. Unfortunately, death can occur when it is least expected, for example, when a young single adult dies without leaving children.
No spouse or children
Consider the following scenario:
A young professional woman dies as a result of a medical condition. There is no will, nor are there any children. According to the legislation, her surviving parents are entitled to the whole of the residuary estate in equal shares.
This seems a reasonable outcome. However, her parents were divorced from the time she was 13 years of age and her mother raised the two children of the marriage on her own with assistance from the father only for education until the children reached 18 years of age. The medical condition was diagnosed after the daughter turned 18 and she received no support from the father for medical expenses.
The daughter had superannuation and related death benefits beginning from the time she started work at the age of 15. As there was no spouse or dependants, according to the definitions in the Superannuation Industry (Supervision) Act 1993 (Cth), superannuation became part of the residuary estate. Under theSuccession Act, the father is equally entitled to the daughter’s residuary estate.
Had the deceased left a child, children and no spouse, the whole estate would be distributed to the surviving child or children.
When all these possibilities have been exhausted, the residuary estate becomes the entitlement of the Crown.
Surviving children
The second scenario involves one surviving spouse and children. When there are no children, the surviving spouse is entitled to the whole of the residuary estate. However, it becomes more complicated when there are also surviving children.
Where there is one surviving child, the spouse is entitled to $150,000 and the household chattels, plus one-half of the remaining estate. The surviving child inherits the remaining one-half. Where there is more than one surviving child, the share for the spouse is reduced to one-third of the remaining estate. The surviving children are entitled to the remaining two-thirds. Surviving children also include the grandchildren when a parent did not survive.
Surviving spouse and children
Put this into the following context:
Suppose the family home was in the deceased’s name only. The surviving spouse would be entitled to $150,000, plus the household chattels and either half or one-third of the remainder of the estate, according to the number of surviving children.
‘Surviving spouse’ does not necessarily equate to parent of the surviving children. The surviving spouse may be the subsequent spouse, or the de facto partner of more than two years and, therefore, recognised as a ‘spouse’ under the Succession Act.
Where the surviving spouse is not the parent of the surviving children, the legal representatives or guardians of the children may not be inclined to waive the children’s entitlements. The surviving spouse would be forced to sell the family home to meet the entitlements of the children.
With the high current property prices, the sum of $150,000 would be insufficient to provide for the one-half or two-thirds entitlement of surviving children and enable the surviving spouse to remain in the family home.
Similarly, if no provision was made for the surviving spouse, the only avenue of recourse is to make an application in the Supreme Court for further provision from the deceased’s estate. For example, the deceased could have revised his will after his divorce in favour of his adult children, but failed to revise it after he entered a new relationship which lasted for seven years. After the application to the Supreme Court is heard, the costs for both the applicant and the defending executor of the will are paid from the estate, which results in the further diminution of the residuary estate.
Next of kin
In circumstances where the intestate is not survived by spouse, children or parents, the next of kin are entitled to the residuary estate. The legislation lists in order those who qualify as next of kin, beginning with brothers and sisters and including the children of those brothers and sisters (the nieces and nephews) provided they survive the intestate, and continuing to the grandparents. Failing those two categories, the entitlement falls to aunts and uncles or the children of aunts and uncles (the cousins), provided as above they survive the intestate.
When all these possibilities have been exhausted, the residuary estate becomes the entitlement of the Crown.
Tony Crilly F Fin is a solicitor of The Supreme Court Queensland and principal of Crilly Lawyers; Succession & Commercial Law. He lectures for Kaplan Professional and his team is located in Brisbane.
Tony may be contacted at tony@crillylaw.com.au
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This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.
