Despite what you may have heard, if you die without a Will, the government does not automatically get your money. The government has however, written the legislation on what will happen to your money if you do die without a Will.
If you die without a Will, the legal profession refers to this as dying intestate. This means that the rules of intestacy apply to your Estate, and your belongings and money will be distributed accordingly.
The rules of intestacy proceed along a strict hierarchy, and the highest person on the list who is still alive 30 days after you pass away will be the person to receive the funds, with some exceptions. In Victoria, the order is as follows:
- Your spouse, de facto partner, domestic partner, or registered caring partner at the time of your death.
- Your children.
- Your grandchildren.
- Your parents.
- Your siblings.
- Your nieces and nephews.
- Your grandparents.
- Your aunts and uncles.
- Your cousins.
- The government.
Things can get a little bit complicated on the list. Here are some examples of that:
- If you are married at the time of your death, then your spouse will be entitled to your estate. Even if you have separated from your spouse and do not live together, unless you are divorced, then they are still entitled to your estate.
- If you have a partner at the time of your death but also have children from another partner you are now separated from, your current partner is entitled to a “statutory legacy”, an amount of money that is updated each financial year. Currently, the statutory legacy is $573,640. If your estate is worth less than the statutory legacy, your current partner is entitled to your entire estate. If your estate is worth more than the statutory legacy, then your current partner will be entitled to the full amount of the statutory legacy, and one-half of the remaining estate. The other half of the estate (after the statutory legacy is paid), will be split between your children who are not the children of your current partner.
- If you have multiple partners at the time of your death, then they are entitled to an equal split of your estate. If you have children with those partners or another person, then the same statutory legacy rules apply on that split. As you can imagine, this can be complicated.
- In addition to the above, if your estate is being distributed between your children or your siblings, further rules apply. If one of your children or siblings passed away before you, but left children of their own, those children are entitled to the share of their parents. The same rules apply to those children as well.
All of the above can be further complicated by the fact that eligible people (which broadly includes your partner, your children, can apply to the Court for a larger share of your Estate, which can substantially alter or completely upend the distribution outlined above.
It is also important to note that this only applies to assets you own in Australia. If you own property or have money overseas, the rules of those countries apply. It is best you investigate yourself about what will happen to your assets in foreign countries.
Likewise, these are the rules that apply to people who live in Victoria at the time of their death. If you live in another state or territory, their laws will apply. The rules of intestacy are similar in all the states and territories, but it is best to make sure how the rules in your state or territory apply to your situation.
The rules of intestacy are complicated and not easy to grasp. If you are not sure about where your money will go when you pass away, we recommend creating a Will so you know and have certainty that your wishes will be carried out. Having a Will also simplifies the process of dealing with your estate for the loved ones you leave behind.
If a family member has passed away without a Will, we recommend obtaining advice on who is entitled to the Estate, and who should make an application to the Court, if one is necessary.
If you have any questions regarding preparing a Will or discussing someone who passed away without a Will, do not hesitate to contact us on 03 9350 6455, or arrange a free 15 minute phone call to discuss your issue with us using the link here.
