Having to sit down and talk with your loved ones about your mortality, regardless of your stage in life, is a moment no one looks forward to.
It is essential however that your legacy is protected by ensuring your assets and business interests are adequately protected and distributed in accordance with your wishes after your death. It is vital to prepare a complete estate plan with a qualified and experienced estate planning lawyer.
It is all too common for members of the public to consider preparing their estate plan but then quickly placing the idea in the “important file” and forgetting about completing the task. Meanwhile, your personal and financial circumstances might change considerably leaving you exposed to inadequate estate plans. For this reason, it is imperative to have your wills reviewed and updated regularly (every 3-5 years). This is particularly important for pharmacy owners whose business structures and arrangements can change over time.
It is not wise to handle the preparation of your estate planning yourself. The preparation of a proper estate plan (Wills, Enduring Powers of Attorney, Enduring Powers of Guardianship etc) involves seeking advice from both your lawyer and accountant/financial advisor.
Today, Gus Irdi from Irdi Legal shares some frequently asked questions in relation to what happens if you pass away without a valid will.
Don’t procrastinate on your estate planning. Get it done and more importantly, get it done properly!
Dying without a valid Will
Frequently Asked Questions
What happens if you don’t leave a Will when you die?
If you die without a properly prepared and valid Will, you are considered to have died ‘intestate’.
If you die intestate then, after the payment of all your debts and testamentary expenses, your estate is distributed to family members in accordance with the provisions of the Administration Act 1903 (WA) (the Act).
Compared to probate (distribution of an estate under a valid Will), the distribution of an intestate estate is an expensive exercise and the people who may benefit from your estate under the Act may not be the persons you necessarily wanted to benefit from your legacy.
The advantage of making a valid Will, is that you can specify who will manage the distribution of your estate (executor) and who will receive the benefit of your estate (beneficiaries).
What happens if you leave an invalid Will?
If you have made a Will but it is invalid or part of it is invalid, you may be deemed to have died intestate, or partially intestate.
A Will may be invalid for various reasons, including:
A Will may be revoked due to your divorce or marriage after you made the Will (if the Will was not made in contemplation of these events).
the person making the Will may not have had testamentary capacity at the time the Will was made - for example, if they had dementia at the time the Will was made;
the Will may be presumed to have been revoked by the Will maker during their life (this may occur in certain circumstances where the original Will cannot be located);
where your Will fails to dispose of all of your property - for example, if you list certain assets but fail to deal with the remainder of your estate, even though the remainder may not have a significant value. This can result in a partial intestacy and the Administration Act provisions will apply to the intestate portion of the estate.
There are also strict statutory requirements which must be complied with to ensure a document is a valid Will.
How does the Administration Act divide my estate?
The Act sets out who will be entitled to your estate and the relevant proportions they will receive. Those who may benefit from your estate include one or more of your spouse (including a separated spouse), de facto partner, children, parents, siblings, nieces and nephews.
The specific distribution will depend on the value of your estate and who are your surviving next of kin. In the unlikely event you have no surviving next of kin, your estate goes to the Crown (Government).
You might think that your estate being divided between your surviving spouse and children seems reasonable however the Act is long overdue for amendment and the proportions your spouse/children may receive are likely not what you would expect – for instance, if you are survived by a spouse (married or de-facto) and children (adult or minor) the surviving spouse will receive the first $50,000 of the estate and 1/3 of the residue or remainder of your estate. Your children will receive the remaining 2/3 of your estate.
This could cause significant issues if your spouse needs to sell the family home and buy a new property or pay out an existing mortgage on the property. Problems also arise when minor children inherit estate assets because trustees may need to be appointed to hold the assets or property on behalf of those children. This can create burdensome financial and legal complications.
What are Letters of Administration?
An application for Letters of Administration is an application to the Supreme Court to allow a person to administer an intestate person's estate and finalise his or her affairs.
The Supreme Court will only grant Letters of Administration to one or more persons entitled in the distribution of an intestate estate (limited exceptions apply).
Another type of application to the Supreme Court is called an application for Letters of Administration (Will annexed). This type of application is used when executors of a Will are unable to fulfil their duty as executor (due to death, inability to act etc). In this case, a beneficiary of the Will must apply for Letters of Administration (with the Will annexed).
Both the above applications are considered complex applications to the Supreme Court. Irdi Legal can assist you in preparing these applications.
How can I find out more?
At IRDI Legal, our experienced and specialised Wills and Estates team can assist you with all aspects of your personal succession planning and any questions you may have, including preparing and advising on your Will. Please contact us to find out more.