When No Estate Plan = A New Estate Plan In The Football State*

When No Estate Plan = A New Estate Plan In The Football State*

image_pdfimage_print

 

For those of you who have attended one of our estate planning seminars, you may remember our contention that “no estate plan equals an estate plan”. In other words, even if a person dies without a will, the law says that their assets will be distributed to their family, as determined by a set formula (the ‘intestacy’ laws). This set formula is different in every Australian jurisdiction.

In my home State of Victoria, new intestacy laws have just been introduced in relation to deaths occurring after 1 November 2017. In a nutshell, the changes are designed to increase the share given to a person’s partner (as this was arguably appallingly inadequate under the previous law). The new rules also aim to reduce the likelihood of a challenge on an estate by a subsequent de facto partner by removing the formulaic distribution where a person dies with more than one partner (this is likely a lot more common than you might think).

Invariably, distributions under the intestacy rules trigger a ‘triple whammy’ – significantly more costs, extensive time delays and often a distribution that does not reflect the wishes of the deceased. Further, as someone must apply to the court to be appointed to administer the estate as a person’s legal personal representative, intestacy also means that the right person may not end up in control of the deceased’s estate and other non-estate assets such as family trusts or any self-managed superannuation fund.

Broadly, the way the new Victorian intestacy laws work is outlined below. If a person dies leaving:

  1. a partner, but no children: the partner receives everything. A partner includes a legally married spouse and a person (of any sex) with whom the deceased had been living for 2 years at the time of death on a genuine domestic basis;
  2. a partner and children from that relationship: the partner receives everything (this is very different from the previous situation where the partner received the first $100,000 and one-third of the balance, and the children shared in the remaining two-thirds of the balance);
  3. a partner and children from another relationship:

    • if the estate is worth less than the statutory legacy (currently $451,909), then the partner receives everything;
    • if the estate is worth more than $451,909, then the partner receives the deceased’s personal belongings, the first $451,909 and one half of the balance of the estate, and the deceased’s children share the other half of the balance of the estate between them (or if a child dies before the deceased, that child’s children receive the share that child would have taken);

  4. children but no partner: the children (or again their children by substitution) each receive an equal share;
  5. no partner and no children: the person’s parents will share the estate (if both are alive then equally);
  6. no partner, no children and no parents: the siblings share the estate equally (or if a sibling has died before the deceased, that sibling’s children receive that sibling’s share);
  7. no immediate family: then the estate passes to more remote relatives (grandparents, aunts and uncles, then cousins), but stops at cousins, beyond which the assets pass to the government;
  8. more than one partner (for example, where someone has separated from their spouse but not divorced, and is living with another person in a de facto relationship): the partner’s share, as outlined above, must either be shared by agreement (i.e. trouble brewing); or the Court will decide how to split up the partner’s share considering what is ‘just and equitable’ in the circumstances (in our view, by likely applying the well-known legal principle derived from the Australian movie ‘The Castle’, namely ‘the vibe’); or by default equally.

* Victoria is also referred to as the Garden State, On the Move, The Place to Be, The Education State, or the Cabbage Patch, but us Victorians are probably most proud to be known as The Sporting Capital of the World and in particular The Home of Footy – of the Aussie Rules variety of course. Go Hawks!

Disclaimer:

This information has been prepared by Primestock Securities Limited ABN 67 089 676 068, AFSL 239180 (“Prime”). Prime accepts no obligation to correct or update the information or opinions in it. This information is intended to be general in nature and is not personal financial advice. It has been prepared without taking into account your particular circumstances and needs. Hypotheticals, illustrations and examples are provided for illustrative purposes only. They should not be relied on to make decisions. Any reference to taxation, legal or other matters are based on Prime’s interpretation of laws existing at the time and may change with time.

Before acting on any information, you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives. We recommended that you obtain financial, legal and taxation advice before making any financial investment decision. If any products are detailed, you should obtain a Product Disclosure Statement relating to the products and consider its contents before making any decisions. Where quoted, past performance is not indicative of future performance

By | 2017-11-24T11:41:49+00:00 November 24th, 2017|Legal Services for Asset Protection, Life Events, Useful Articles|0 Comments

About the Author:

Legal Practitioner & Director of Prime Financial Group Legal Services. I work in conjunction with accounting partners and financial advisers to deliver high quality, professional and personalised legal services in asset protection (Estate planning, Business succession strategies and structuring , Superannuation, Family Trusts & Powers of Attorney).