The will is one of the first documents people think of when considering their death, but how many of us have a valid and up-to-date will? And what happens if we don’t?
What is ‘dying intestate’?
If you have not completed a will or have an invalid one, this is called ‘Dying Intestate’. The deceased next of kin (or eligible person) can apply for a Grant of Letters of Administration through the Supreme Court in the state or territory where the death occurred to become the responsible person. If there is no eligible person, the Supreme Court can engage the Public Trustee and guardian. If the estate has debts, a creditor can apply to act as administrator.
How does my estate get distributed?
The specifications vary across jurisdictions with the monetary values ascribed, but your estate will first be used to cover your debts and funeral expenses. A hierarchical order of debts (starting with funeral costs and administrative costs, then taxes and mortgages and ending with unsecured debts, such as credit cards and personal loans) will be applied. Where an asset is jointly owned, the deceased portion is calculated. Anyone who guaranteed a debt for the deceased will be responsible for the debt, and if the family home was a secured debt, then this may need to be sold if the inheritor (as determined by the succession hierarchy) can not continue to cover the mortgage. Life Insurance and Superannuation death benefits are exempt from being used to cover general debts, but can cover funeral expenses or the costs of managing the estate.
What if my debts aren’t covered by my estate?
If, in death, you are considered insolvent (unable to pay your debts), your estate will be managed according to bankruptcy rules. This may occur if there are insufficient funds to cover debts, including any after selling any assets.
My debts are covered. What happens to the remaining assets?
In the ACT, an estate with less than $200,000 value is inherited by the spouse alone. If there is no spouse, the succession law is followed. For estates worth over $200,000, the spouse (if there was one) receives their portion and then shares the remainder equally with the child. When there is more than one child, the spouse inherits one-third and the children share the other two-thirds between themselves in equal parts.
The intestate succession act takes into account situations where there was more than one partner who can each establish their relationship (the spousal portion is shared equally).
The succession order is: grandchildren, parents of the deceased, siblings, grandparents, and aunts and uncles. If the deceased has no remaining family members, the estate is transferred to the state.
Only legal children are included, not stepchildren, and if a child is also deceased but had children, that grandchild will get that share. If siblings are deceased, nieces and nephews will get that share. Who received what and how much varies by state and amount in the estate.
What is ‘partial intestacy’?
A partial intestacy occurs when a will was created, but not updated and the deceased has assets not accounted for. Having a solicitor assist you in creating a will can help avoid this happening by ‘future proofing’ the will.
How do I start writing a will?
Having a well-constructed will make it easier to distribute your estate. Without one, it can take many years and great expense to get everything finalised. If your assets and wishes are relatively simple, you can write your own will. Gathered Here is a free will-writing service that takes you through the process step-by-step. Tender Funerals Canberra Region works with Gathered Here to make it easy for the community to leave bequests to us, but you can create a will without leaving any bequests as well. If you’re unsure, or have a more complicated estate, we recommend consulting with a wills and estate solicitor to consider your estate planning. This is particularly important if you have debts associated with any assets (like a mortgage on a property)
If you’d like to use Gathered Here to create a will, please visit https://www.gatheredhere.com.au/c/tender-canberra.
What else do I need to know about end-of-life and death documentation?
There are four legal documents related to end of life and death and other non-legal but very helpful documents you can create. This important documentation assists carers and family supporting a dying person, and then after death for death care and funerals, and in managing the estate. Tender Funerals and the Natural Death Care centre have an Important Documentation Factsheet available to help you plan.
The key take-aways are:
- Make a valid will and keep it up to date!
- Remember any debts you owe need to be considered in your estate
- Chosen family and step-family members are not included in the default succession order
- Consult a solicitor who specialises in estate planning to be sure all your intentions can be followed.