Intestacy Laws Overhauled: a new approach in Victoria
On 1 November 2017, significant legislative changes contained in the Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2017 came into effect, and will apply to estates of persons who died after that date.
The changes have significantly overhauled the laws of intestacy, with the aim to ensure that succession laws operate justly and fairly in relation to the way that property is dealt with after a person dies. Intestacy means the person has died without leaving a valid Will and that person can then be referred to as the ‘intestate’.
The previous law
It was previously the case that if an intestate left a partner but no children, the partner was entitled to the whole of the intestate’s residuary estate.
If the intestate left a partner and children:
the partner was entitled to the personal chattels, the first $100,000 of the intestate’s residuary estate and one third of the balance of the estate; and
the child(ren) were entitled to two thirds of the balance.
The new law
One of the key changes is to improve the position of the surviving partner of a person who dies intestate. In fact, under the new law, where a deceased person leaves a partner and children of that relationship, the surviving partner is now entitled to the whole of the deceased person’s estate. However, the position is different in circumstances where the deceased leaves a current partner but the children are from other relationships.
Under the new legislation:
Section 70C – the beneficiary under an intestate estate cannot benefit unless they survive the intestate by 30 days.
Section 70J – if an intestate dies leaving a partner (but no children), the partner receives all of the intestate's residuary estate.
Section 70K – if the intestate dies leaving a partner, and children of that partner, the partner receives all of the intestate’s residuary estate.
Section 70L – if the intestate dies leaving a partner, and children not of that partner, then:
if the intestate’s residuary estate is worth more than the statutory legacy (currently $451,909) then:
the partner receives the personal chattels, the statutory legacy amount (plus interest) and 50% of the balance of the intestate's residuary estate; and
the children of the deceased receive the remaining 50% of the balance of the intestate’s residuary estate.
if the intestate’s residuary estate is worth less than the statutory legacy amount then the partner receives 100% of the intestate’s residuary estate.
Section 70P – an intestate’s surviving partner may elect to acquire property from the intestate’s estate at its value as at the date of the intestate’s death.
Section 70Z – if an intestate dies leaving multiple partners (and no children) the partners are entitled to 100% of the intestate’s residuary estate:
by agreement; or
in accordance with a Distribution Order from the Court (upon application); or
equally.
Section 70ZA – if an intestate leaves more than one surviving partner, and children of one (or more) of those partners, the partners are entitled to 100% of the intestate’s residuary estate:
by agreement; or
by a Distribution Order; or
equally.
Section 70ZB – if an intestate leaves more than one surviving partner, and children who are not children of those partners, then the partners receive:
the personal chattels by agreement, by Distribution Order, or equally; AND
if the intestate residuary estate is worth less than the statutory legacy amount then the partners are entitled to 100% of the intestate’s residuary estate by agreement, by Distribution Order or equally; OR
if the intestate’s residuary estate is worth more than the statutory legacy amount then:
then the amount of the statutory legacy shall be paid to the partners by agreement, by Distribution Order or equally (plus interest);
50% of the balance of the intestate’s residuary estate shall be paid to the partner(s) by agreement, by Distribution Order or equally;
any children of the intestate are entitled to share in the other 50% of the balance of the intestate’s residuary estate (and if more than one, equally).
Section 70ZF – if a intestate dies, and the preceding legislation does not apply, the intestate's residuary estate is to be distributed in accordance with the hierarchy set out below:
Section 70ZG – if the intestate leaves no partner but leaves children, the residuary estate is to be distributed to the surviving children (and if more than one, equally). Note if any of the children predecease the intestate leaving children of their own, then those children (i.e. the intestate’s grandchildren) shall receive the share which their deceased parent would otherwise had received if they had survived.
Section 70ZH – if the intestate leaves no partner and no children, the surviving parents (and if more than one, equally) receive the intestate’s residuary estate.
Section 70ZI – if the intestate leaves no partner, children or parents, the siblings of the intestate (and if more than one, equally) receive the intestate's residuary estate. Note, if any of the siblings predecease the intestate, leaving children of their own (being nieces or nephews of the intestate) then the nieces or nephews (if more than one, equally) shall receive the share of the intestate’s residuary estate that their deceased parent would have otherwise received.
Section 70ZJ – if the intestate leaves no partner, children, parents or siblings, then the grandparents (and if more than one, equally) receive the intestate’s residuary estate.
Section 70ZK – if the intestate leaves no partner, children, parents, siblings or grandparents, the aunts and uncles (and if more than one, equally) receive the intestate's residuary estate. Note, if any aunts/uncles predecease the intestate, leaving children of their own (being cousins of the intestate) then the cousins (if more than one, equally) shall receive the share of the intestate’s residuary estate that their deceased parent would have otherwise received.
Section 70ZL – if there is no person entitled to the Estate of the intestate pursuant to these provisions, then the intestate’s residuary estate passes to and belongs to the Crown.
Here is a summary of the main provisions:
While the new intestacy laws provide increased certainty for a surviving partner, if this is not your desired outcome, and/or if you have a complex family structure, your wishes will be more effectively addressed by a carefully drafted Will.
