No Will?

If there is no valid will when a person dies (or if the will does not deal with all of the assets) then the law sets out who is to receive their assets.  Generally the assets are divided between a partner and children, or other close relatives (parents and siblings).

The relevant law is set out under section 77 of the Administration Act 1969.

How is an estate distributed?

Depending on individual circumstances, this is how the estate is distributed according to section 77 of the Administration Act 1969:

• Spouse/Partner and no children – the spouse receives the estate.
• Spouse/Partner and children – the spouse receives the first $155,000 and a third of the residue. The children share the other two thirds
• Children and no spouse/ partner – the children share equally
• No children or partner – other close family relatives share.

What are letters of administration?

When a loved one has died intestate (without a will) or there are no executors appointed under the will, the court order required to run the estate is called a grant of letters of administration.  If there is a will it is called a grant of probate.  In practical terms it is essentially the same thing.  It is an order from the Court which grants the administrator or executor the power to deal with the deceased’s assets and which third parties (e.g. banks) are entitled to rely on.

This type of grant is needed if your loved one’s assets are over $15,000 and there is no will.  It requires an application filed in the High Court.  There are several steps that need to be taken before the application is filed including:

• Advertising for a will
• Establishing which close relatives are entitled to apply as administrator and which close relatives are entitled to benefit from the estate
• Seeking consent of those close relatives with an equal or higher entitlement
• Status of child search.

What happens to the estate when there are children or a partner?

This depends on whether the deceased had made a will or not. If the deceased had made a will, the estate is usually distributed in accordance with what the will says. If the deceased did not leave a will, then the Administration Act 1969 sets out how the estate is to be distributed and to whom.

Succession can be complicated.  Whole TV series have been based around it.  People can leave their assets to their spouse or partner, children, step-children, friends, pets, charities, or who knows what else.

While there are no hard and fast rules about who you leave things to there are some common themes.  In a traditional nuclear family, the standard will is all to the husband or wife and then to the children.  For blended families the will may be more complex, as there may be a trust or a life interest granted to the new partner.

Having said there are no rules, there are still considerations and the Family Protection Act provides that there is a duty on a person to make “adequate provision” for their spouse and children.  As a result sometimes a will is contested by someone who has been excluded or who feels they have not been adequately provided for. Sometimes such cases can be resolved before the matter proceeds to court, but where an agreement cannot be reached, a Judge will decide whether the excluded person is entitled to anything from the estate.

If there is a spouse and children, then the spouse is entitled to the personal chattels and a prescribed sum as set by the regulations, currently this is $155,000. The balance of the estate is then divided in thirds, with one third going to the spouse and two thirds going to the children.

What happens to the estate if there are no children or partner?

If the deceased had made a will, then their estate will be distributed in accordance with what was set out in their will.

If the deceased had not made a will, then the Administration Act 1969 sets out what happens to the assets. Where the assets go depends on the surviving relatives the deceased had. The deceased’s parents are first in line to inherit. If their parents had already passed away, then any siblings will inherit the estate. The Act goes on to set out where the estate goes if there were no parents or siblings, grandparents or aunts and uncles, depending on the deceased’s circumstances.

How long does it take to wind up an estate?

Winding up an estate can take a considerable time.  Most estates of any size will take at least six months, and some can take years depending on what is involved.  The reason that estates take so long is that there needs to be some time for people to be able to make a claim on an estate.  Claims might be that someone is owed money by the estate, or that a family member has a claim.  For that reason an executor or administrator generally will not distribute the estate until six months have passed from the grant of probate, and no claims have been received.

However, for some estates it can be quicker.  For example if the assets only consist of money in bank accounts and it is clear that there are no claims to be made against the estate then the estate can often be wound up more quickly.

Although estates can be complicated and slow moving, that does not mean that everything must come to a standstill. An estate can take steps if required and do virtually anything that the deceased did in their lifetime.  In particular, an estate can buy and sell assets, run a business and make  interim distributions if those are appropriate. All steps taken will need to be agreed to by the executor/administrator.

Once the estate has been fully administered, the residue will either be transferred to the residuary beneficiaries or continue to be held on any trusts that have been established in the will or intestacy.