·Please note that this advice is intended to give you a basic idea of intestate succession, wills, enduring powers of attorney and enduring guardianship nominations. It should not be used as a substitute for personalized legal advice.
·At all times assume I refer to New South Wales legislation and where I refer to “the deceased” that the deceased lived and passed away in New South Wales.
What's the difference between Testate and Intestate Succession?
If a valid will exists at the time of your death, lawyers say you died "testate". In that will you will have invariably appointed an Executor and it is your Executor that applies to the Supreme Court after your death for a Grant of Probate, which is just a court order that says everything appears to be in order with the estate and the Executor appears to have been validly appointed and he or she can act on behalf of the deceased and do things necessary to finalise the deceased’s estate.
If you die "intestate" - that is without a will - no Executor is appointed. Anyone willing to finalise your estate and who has an interest in it, also applies to Court, but for Letters of Administration. Letters of Administration have much the same value as a Grant of Probate. The Administrator has to provide similar documents to court as an Executor does to obtain a Letter of Administration, and may in certain circumstances have to pay a sum to court as security he or she will attend to the task properly. An Executor will not be asked to pay such sum.
Why have a will?
The Rules of Intestacy, the rules that apply to the division of your estate after you die and where you have not made a valid will are only a fail-safe. They will not necessarily provide adequately for your family members particularly in non-typical family set-ups or where cultural or religious beliefs would emphasise benefitting family members in a different order to that provided by the Intestate Succession Act. They are also far from ideal where dependant family members, such as minor children, are the beneficiaries. The deceased has no say over who will deal with his or her estate at the end of the day. Although the administrator that is eventually appointed is likely to be a close family member who is assessed as being probably competent to do the job, this person might still be someone you actually wouldn’t like to have deal with your affairs. Moreover, an administrator of a deceased estate may be required to offer up an administrative bond to ensure the estate assets are insured against maladministration. Ultimately the aim of a will is provide for family fairly, according to need and how close members were to you in life, and rules of intestacy cannot take these factors into account. Wills perceived as being unfair have a good chance of causing a family rift and leading to court battles. Though a will is no guarantee beneficiaries will be happy with the distribution, they do lessen that risk.
What does the Administrator or Executor of my estate actually do? Your Executor or Administrator usually has to attend to the funeral arrangements and obtain the death certificate. Thereafter they need to advertise the application for Probate or Administration online. They then will need to correspond with your bank and/or building society, share registries etc and enquire about all assets held by these institutions on behalf of the deceased.
Real estate, if it is to be bought by a family member, needs to be valued; jewelry and collectibles valued; cash in hand found and written up. Correspondence needs to be entered into with any insurers and Superannuation funds to obtain any death benefits. Centrelink and Medicare need to be informed of the deceased's death, cards returned and inquiries made as to any debts the deceased might have had in respect of these bodies. Arrangements need to be made to either continue paying utility providers or to have those utlities cut off. They need to enquire at the ATO as to the deceased's tax liability and a final tax return may need to be completed (which means a visit to the deceased’s accountant and gathering up the relevant documents). Once that is under way, the Executor or Administrator needs to attend to the drafting or completion of relevant court forms, swear to affidavits, make an inventory of all assets and liabilities of the deceased, and file the application at Court. He or she may also have to reply to any queries raised by the Court and locate beneficiaries.
On receipt of the grant of Probate or Letters of Administration, your executor or administrator will have to distribute any assets remaining to beneficiaries, pay off debts, close bank accounts, sell property and so on. What I have said above is just a basic list of tasks an Executor will have to attend to. Things can get more complicated, for example, if the deceased ran a business or farm at the time of his death, the day to day running of that will have to be attended to too.
What sort of person makes a good Executor?
The person needs to be absolutely trustworthy.He or she should be able to communicate effectively, have the energy, good health, willingness and have the time to do the job. He or she should be efficient and able to solve problems, preferably live nearby the deceased and be able to work with figures and know when and how to get help if needed.
Now, for those of you without a Will, do you really want to leave this job to just anybody? What if the matter becomes complicated – like the distribution of assets is disputed by beneficiaries? The person attending to the deceased’s estate needs to be someone who can potentially manage that stress. Consider that that person might already be experiencing high levels of stress in having said goodbye to someone who was very dear to them and might not be able to deal with the added stress of dealing with the deceased's estate.
Finalising a deceased estate takes 3- 6 months on average, but can take much longer. Even years in some cases, and often just because the Executor is not really the right person for the job.
If you are not certain your Executor can fulfil all the criteria I've mentioned earlier, don’t panic. Your executor can appoint others to assist in the task including lawyers and accountants or both. I know many of you are probably suspicious of lawyers charges, but briefly, what you should know is that for lawyers, we have to charge a regulated fee for everything we do up to obtaining the Grant of Probate.
I drafted my own Will/ I bought a Will Kit. Is this ok?
Home-made wills - tend to suffer the problems of being incomplete in their provisions, vagueness and invalid execution. Consequently, the estate may devolve intestate or partially intestate due to invalid or missing provisions or certain beneficiaries may be disqualified from taking an inheritance. Having a part-testate and part-intestate estate really complicates matters and means long delays and probably extra costs for your family.
Will kits - don’t make any alterations and they should be valid, but you still stand the risk of conflicting provisions or perceived unfairness.
Both options are not ideal as no legal advice is provided. A badly drafted will can have serious repercussions for family left behind. A lawyer can go over your home-made Will or Will-kit Will with you, but it may work out cheaper just to have it drafted from scratch and therefore it is not recommended you buy a will-kit and then seek out legal assistance in completing it.
Any beneficiary in a will who feels unfairly treated has the right to take the matter to court. A well-crafted Will can minimise this risk.
When should I update my Will?
Your Will should be reviewed by you annually. Ask yourself: Does my will still accord with my wishes and any changed personal circumstances? If not, you will need a new will or at least will have to draft a codicil to your will and have it properly executed.
Triggers for drafting a new Will: There is no exhaustive list, but the death, marriage, divorce or bankruptcy of one of your beneficiaries, the birth of a new family-member or major changes in your own status (marital, financial etc) are some of those triggers. Also, obviously where you change your mind about how you wish to have your assets distributed after your death.
Drawing up of a new will is particularly recommended in the following situations:
1.You have minor or disabled children (mainly to appoint a guardian and create some sort of long term financial provision for them).
2.You have children (including adult children) to different marriages and/or domestic relationships.
3.You have step-children who are or have been dependent on you in the past.
4.You have children who have died, leaving children of their own.
5.You are still technically married, but are separated and in another relationship. Your Will automatically lapses when you divorce. So if divorce is being contemplated, it would be wise to get a new will drafted.
6.You have assets likely to be affected by Capital Gains Tax on your death and you wish to postpone your estate’s tax liability at your death.
7. You wish to benefit your de facto partner in your will but your relationship is less than 2 years and you are not sure your relationship will be considered in law to be a de facto relationship. In other words, you are not sure it will be recognised as such.
I don’t fit into any of the above categories. Will it be ok for me to leave division of my Estate up to the Intestate Succession Rules?
Maybe, but you need to consider the Rules of Intestate Succession. It is really not advisable to leave these matters to chance, particularly if you have not investigated the law thoroughly for yourself.
Can the Intestacy Rules change?
Yes. They do change from time to time, which means you need to keep on top of these Rules if you are not going to bother with a Will. Examples of recent changes are: An important change to the status of de facto relationships. A de facto partner now must show there was a genuine domestic partnership that lasted at least 2 years in order to inherit. Previously there was no conditional time-period for de facto partners to inherit. Another recent change allows first cousins to inherit when previously they could not. Also, now multiple spouses may inherit where previously only one spouse could inherit. There is now no distinction between half- and full-blood relatives. Currently, a dependant who survives the deceased, must survive the deceased by 30 days in order to take an inheritance.
Are there any other reasons I should draft a will?
1.You can appoint an executor that you trust and who you regard as capable, rather than leaving that task of election to others (e.g. a Judge appointed Administrator).
2.If you have business interests you can appoint someone to take charge of them, rather than leaving that decision to a court, which could mean long delays in finalising your estate.
3.Do it right, and you can postpone tax obligations to the benefit of family members. (However, Estate Planning should not be done with the main goal of avoiding tax because of that old truism about death and taxes)
4.You can leave assets to good friends, pets, charities or anyone else you like that is not a family member.
5.You can set conditions on inheritance.
6. You can include in your will directions for burial etc, directions for organ donations etc to medical science.
7. You can leave specific items in your estate to specific beneficiaries.
8. You can create a testamentary trust especially for minor or disabled or dependant adult children.
I don’t have a lot of stuff. Should I still draft a will?
Yes, because you never know when your luck might turn, and besides which, most people who think they own nothing actually do own things of value. Small estates can be administered under a simpler, less expensive system.
Other considerations – whose going to look after you and your assets on your behalf when you no longer can?
Speak to your lawyer about getting an Enduring Guardianship document and an Enduring Power of Attorney drawn up.
Enduring Guardianship Nomination - you elect a person or persons to make decisions about your health and lifestyle when you are no longer able to do so.
Enduring Power of Attorney - you can elect a person or persons to deal with your money and assets when you are no longer able to.
Both can be varied or cancelled at any time, provided you are of sound mind, but not able to be amended once you are incapable of handling your own affairs. You can set limitations and give specific directions to your Attorney or Guardian.
What things should I consider when appointing an Executor and/or Attorney and/or Enduring Guardian?
You are not doing them a favour. You are giving them a job. Make sure your appointee is capable of carrying out the task. Don’t feel pressurised to appoint a certain family member for fear of insulting them. You have to do what is in your own best interest. The persons you select must be trustworthy, you must feel comfortable with them and you must choose someone who is capable of dealing with your affairs and has the time and energy and willingness to do it. If you are unsure or think your Executor will need assistance, a common option is for the will-maker etc to appoint a family member to act together with a lawyer or the NSW Guardian and Trustee.
Probate Legal Fees
1.Solicitor’s fee the work done in obtaining the grant of probate (testate estates) or letters of administration (intestate estates) and second, collecting assets, paying debts distributing the assets of the estate to the beneficiaries. Here, a solicitor cannot charge fees higher than the scales set by Legal Profession Regulation 2005 Schedule.
2.Solicitor’s fee for the work involved in collecting and distributing the estate (post-probate charges) which is based on the hourly charge normally charged by that solicitor, or where agreed, a fixed rate. The solicitor must provide you with a fee estimate.
3.Disbursements i.e. costs incurred by the solicitor on your estate’s behalf. Examples are fees for filing documents at the court for death certificates, and for placing newspaper advertisements.
The NSW Trustee and Guardian take their fees as a percentage of your estate value and the information is available on the Internet.