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Sweeping Changes To Inheritance Rules On The Horizon

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By Deborah Kliger, Lawyer, MST Lawyers

In an article published in August 2017, we reviewed a number of proposed changes to the rules for distributing estate assets where a person dies without a valid Will (“intestate”). These changes, with some modifications, will come into force on 1 November 2017.

Who will be affected by these changes?

The incoming reforms will dramatically alter the entitlements of a deceased’s spouse and/or partner, children and extended family, where the deceased leaves no Will or a partially invalid Will. The implications of these changes on surviving family members are outlined below.

  1.  Multiple partners:

The new laws define “partner” broadly as a spouse, domestic partner or registered caring partner. Under this new regime, if a person dies intestate leaving more than one partner and no children, the deceased’s estate will be divided between the partners according to the terms of:

  1. any agreement reached between the partners;
  2. a court order made on application by one of the partners; or
  3. otherwise in equal shares.

Accordingly, grieving partners will be placed in the uncomfortable position of having to negotiate with each other, or institute legal proceedings, to receive more than a half share of the estate.

2.  Children:

Under the new laws, where a deceased leaves a single partner and a child or children (born of that marriage or relationship), the partner will receive the entire estate (with no direct benefit to the children).

This presumes that the surviving partner will adequately provide for the children during their lifetime or under their Will.  Needless to say, family relationships are ever-changing, and there is no guarantee of a parent making proper provision for their child.

By contrast, where a person leaves a partner and a child or children (of a prior relationship), the partner will receive the deceased’s personal effects, an initial sum known as a “statutory legacy” (currently fixed at $451,909), and half of the balance of the estate.  The children will be entitled to share equally in half of the estate balance. This arbitrary rule does not take into account important factors such as:

  1. the children’s financial needs; or
  2. the relationship between the deceased and their children, including any estrangement.

3.  Extended families:

Significantly, the new laws narrow the categories of family members who are entitled to benefit under an intestacy, before the estate assets can pass to the State. The current rules entitle any known descendants of the deceased to receive the estate. Under the new laws, where a person dies without a valid Will, leaving no:

  1. partner, spouse or children;
  2. parents;
  3. siblings, or if any sibling died first, children of such deceased sibling(s);
  4. grandparents; or
  5. aunts or uncles

their assets will become the property of the State.

Should you have no immediate family or only a few surviving relatives, we urge you to seek professional advice in relation to your Will. 

With these changes impending, it is critically important for all adults, regardless of their age or relationship status, to have a professionally drafted up to date Will.

If you have any questions about your Will or any Estate Planning matter, contact our Wills & Estates team by email or by telephone +61 3 8540 0200.