By now, you’re probably aware that it’s important to have a will. After all, we’ve been banging on about creating a watertight will for a while now (you can read more about contesting a will and using DIY will kits here)!
That doesn’t mean everybody does have a will, however. About half of the Australian population doesn’t, perhaps because they just haven’t got around to it or the will they did have has become invalid and hasn’t been updated.
That thinking is easy to understand; if your financial affairs are pretty simple and you expect your partner to inherit everything anyway, you’d assume a will is superfluous. But by not having a will, things actually become more complex, as we’ll explain.
If you die without a will, you are said to have died intestate. And not only do the rules governing the distribution of estates where there isn’t a will vary between Australia’s states and territories, but they change over time too. Here are a few examples.
Queensland laws changed in 1998 to give de facto partners the same rights as spouses. Now, if you die intestate in Queensland, your spouse is generally entitled to the first $150,000 of your estate plus household chattels and a share of any excess assets.
The court will then distribute the surplus (in decreasing priority) to children, grandchildren, great-grandchildren, siblings, parents and so on. You may be pleased to note that in-laws are not eligible for a distribution!
In Victoria, the rules on intestacy changed in November 2017. Under the new rules, your partner will receive your estate, unless you have children from a previous relationship. If there are children involved, your partner will receive what’s called a statutory legacy (currently worth $451,909) and any amount over the statutory legal is divided, with 50 per cent going to your partner and 50 per cent to your children.
If you have no partner or children, your estate is distributed to your relations in a decreasing priority order that’s quite different to that of Queensland’s: parents, siblings, grandparents, uncles and aunts, cousins.
As you can see from these examples, your local intestacy rules will be specific about who receives your assets, and the mandated distribution may not match your wishes for your estate.
Westpac’s Head of Customer Segments Neil Herlihy recommends contacting the trustee in your state or territory to learn more about the intestacy laws that would apply to your estate or, better still, make sure you don’t die without a will.
Even where there is a valid will in place, Herlihy says, it’s common for delays to occur in distributing an estate, not least because people tend to forget the ‘safe place’ they kept their will or they fail to tell anyone else where it was stored.
The reality is that an executor cannot act without a signed, hard copy of your will, so it’s important to ensure your loved ones know where you have stored or lodged the document and who you’ve appointed as your executor (that’s a whole ‘nother topic that you can read more about here!).
You might also think in the age of tax file numbers and online banking, it would be easy to track down a missing bank account. But Herlihy points out that there are billions of dollars in unclaimed funds sitting in bank accounts that will eventually be passed back to the government.
“Many older customers like to spread their deposits around across multiple banks, depending on interest rates or for safety and security,” he says. “Nobody knows that, other than them. It might be written in their will, but if nobody knows where their will is, after a period of time that goes to the government to be held in trust.
“There’s no central list of where you have all your bank accounts for privacy reasons. It’s then the responsibility of the executor of the will or the estate to go and find everything.”
Are you one of the 10 million Aussies without a valid will? If that’s a ‘yes’, now’s a great time to rectify that. Herlihy says making a list of all your assets and investments is a good place to start.
“You need a list of where everything is, so the executor can go and split everything up,” he says. “And remember that if you haven’t left a valid will, you are leaving the decision-making process to someone else, most likely the government.”
Things to know: The information in this publication is general information and factual only. It does not constitute any recommendation or advice. It is an overview only and it should not be considered a comprehensive statement on any matter or relied upon as such. You should consider obtaining your own independent professional advice. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.