Intestacies can cause a range of practical issues for the individuals left behind to deal with the deceased’s affairs. For example, intestate estates are generally more costly than dealing with an estate governed by a valid Will and usually take much longer to administer.
Perhaps most importantly, the distribution of the assets in accordance with the rules of intestacy may sit in stark contrast to that which the deceased may have wanted.
The laws of intestacy are governed by legislation in each State – in Queensland, the Succession Act 1981 (Qld) (Succession Act) provides how an intestate estate is to be administered.
The Succession Act allows an intestate estate to be administered by a spouse, or another party entitled to benefit from your estate. This could be your next of kin, a creditor, an estranged child or even an estranged spouse. The Public Trustee may also apply to administer an intestate estate.
The courts generally give priority to a spouse or next of kin, but a delay in acting or an inability or unwillingness to act may result in a creditor or other unwanted party making an earlier application to administer an intestate estate.
The Succession Act sets out rules for who is entitled to receive the assets of an intestate estate and provides the share of the estate each entitled person may receive. Priority is given to spouses and children, and then to next of kin.
A spouse, for the purpose of the Succession Act, includes an estranged spouse as well as a de facto spouse. If you are separated but not divorced, your estranged spouse will have an entitlement to your estate.
A de facto spouse means a person with whom you have lived for at least two years (ending on the date of death) as a couple on a genuine domestic basis, to whom you are not married or related. The sexual orientation of the parties is irrelevant.
The Succession Act specifically contemplates a person having more than one spouse: for example, an estranged spouse and a de facto spouse. Both of these spouses would be entitled to make a claim against your estate.
The following table summarises how the Succession Act provides for the distribution of an intestate estate.
As the table reveals, dying without a Will might result in your assets being distributed to people you would not choose as your beneficiaries, and in a fixed and inflexible manner.
The administration of an intestate estate is automatically delayed to enable creditors to provide proof of debts and allow time for other people to establish their entitlement to a share of the estate.
Some delays are forced by law – e.g. a transmission of land application for an estate valued below $300,000 cannot be lodged with Titles Queensland (Titles Qld) until six months after the death of the owner of land. If there is a valid Will in place, no such delay is imposed.
Other delays arise as a consequence of the cautionary approach taken by dealing with intestate estates. Some institutions insist on a grant of administration being shown before allowing assets to be distributed or transferred. In particular, banks will often only release funds held in a deceased’s bank account if a bank account contains less than $50,000 and a Will and death certificate are provided. Without a Will, a bank requires the provision of a grant of administration.
In the absence of a grant of administration, no person has legal standing to deal with the assets of the deceased person.
Organisations are generally hesitant to deal with a deceased person’s assets without first sighting a grant of administration, due to their potential exposure to liability.
The following are examples of the various institutions that typically will not deal with assets without a grant of administration – banks, public companies dealing with shares held by the estate, Titles Qld, life insurance companies, superannuation funds and retirement homes or aged care accommodation.
This summary covers legal and technical issues in a general way. It is intended for information purposes only and should not be regarded as legal advice.
Further advice should be obtained before acting on any issue mentioned in this summary.