Intestacy – Dying without a Will
Intestacy is a way of saying ‘died with no will’. An intestate is a person who died without a will. There are rules that govern intestacy, set out in the Intestacy Act 2010 (Tas). The laws can be complicated, and simple. The complicated part is ‘statutory legacy’, which is the amount determined to go to the spouse where there are other beneficiaries entitled under the Act. There are also categories of beneficiary with an intestate estate, ranging from multiple spouses, to children from multiple spouses, to family members.
Spouse’s statutory Legacy
A spouse’s statutory legacy is based on the equation:
R = A x (C/D).
R is the CPI adjusted legacy, A is $350,000, C is the Consumer Price index, current at the time of the intestate’s death, and D is the consumer price index number for the December 2009 quarter. The CPI is the All Groups Consumer Price Index number, available from the Australian Bureau of Statistics.
An example of the equation at work
Betty dies, intestate, on May 1st, 2011 and her husband Bob survives her. Betty had two children to a previous husband (now deceased). Bob is entitled, under section 14 of the Intestacy Act to Betty’s personal effects, a statutory legacy and one-half of the remaining estate (if any).
The Consumer Price Index number for the December 2009 quarter was: 169.5
The Consumer Price Index current at May 1st 2011 was: 176.8
Bob is entitled to R. To know what R is we take A – $350,000, and multiply it by 176.8/169.5.
176.8/169.5 is 176.8 divided by 169.5, which is 1.04 (rounded to two decimal points). So R = 350,000 x 1.04, which is $365,73.75.
If the estate is not sufficient, then the statutory legacy will abate to what is payable from the estate. The spouse’s statutory legacy makes it clear that the spouse has priority in the intestacy laws.
Only One Surviving Spouse
Section 12 of the Intestacy Act states that ‘if an intestate leaves a spouse but no issue (i.e. children), the spouse is entitled to the whole of the intestate estate. This is also true where the issue are all also children of the spouse (s13). If an intestate estate is large enough, the spouse receives all the intestate’s personal effects, the statutory legacy, and one-half of the remainder (s14). The other half of the remainder can be divided amongst other potential beneficiaries.
More than one spouse: de facto partners and other relationships
A spouse under the Act doesn’t just mean a wife or husband. It can refer to a significant relationship, or a registered personal relationship, which can include a carer. Significant relationships are relationships such as a de facto relationship. So, a person could conceivably be married and in a significant relationship at the same time. Section 6 gives three types of relationship that qualify as ‘spouse’ for the purposes of the Act. These are where the person was:
- Married to the intestate immediately before the intestate’s death;
- Party to a registered personal relationship within the meaning of the Relationships Act 2003 (Tas); or
- Immediately before the intestate’s death was a party to a significant relationship within the meaning of the Relationships Act 2003 of at least two years duration, or had resulted in the birth of a child.
If two or more of these relationships exist, then a different set of rules to ‘one surviving spouse’ applies. The whole of the intestate estate will be divided between the surviving spouses according to rules contained in Part 2, Division 3, sections 23 – 27 of the Intestacy Act. These rules are:
- Section 25: each spouse is entitled to a share of personal effects, a statutory legacy, and a share in one-half of the remaining (if any) estate
- Section 26: such entitlements can be determined by one of three means: a written agreement between the spouses, a court order or an equal division of property made by a personal representative of the intestate.
The court can make a distribution order on terms it deems ‘just and equitable’, including allocating the whole of the property to one spouse to the exclusion of other/s (s27).
Children, where there are no surviving spouses, are entitled to the whole of the intestate estate (s28(1)). Where a spouse or spouses (including ex) survive, and children survive, any remaining estate goes to the intestate’s children (s28(2)). Entitlement invests in equal shares where there is more than one child (s28(3)). Children who predecease an intestate and leave children of their own still receive a share that is then divided equally amongst these children, and if one of these children predeceased the intestate, and had children of their own, those children would receive the share of their parent in equal parts, and so on (s28(4)).
Family: statutory order for next of kin
The hierarchy of inheritance at this point, goes from one spouse – two or more spouses – children – parents (s29) – brothers and sisters (s30) – grandparents (s31) – aunts and uncles (s32) – cousins (s33).
If there are no surviving spouses or children, the entitlement of the parents is in equal shares (s29). If no spouse, children, or parent survives, the estate vests in brothers and sisters in equal shares (s30). If none of these parties survive the intestate, the estate goes to grandparents, in equal shares (s31), and if no grandparents survive, aunts and uncles are the next in the hierarchy of entitlement, also in equal shares (s32(1)). If aunts and uncles predeceased the intestate, then their children are entitled to their deceased parent/s’s presumptive share, to be distributed equally (s32(3)).
Relatives may be able to participate in the distribution of the intestate estate, in separate capacities, for example, if they are the child of a deceased maternal aunt and a paternal uncle, they may be entitled to the estate in both capacities – a cousin twice over (s33). Whether this would entitle them to more than one share may depend on a court ordered disposition.