Have you ever wondered what will happen to your estate if you die without leaving a Will?
This is known as dying intestate and a surprising number of people assume that in this situation their estate will go to the government or their spouse. In fact, your estate will be distributed in accordance with the Administration Act 1903 (Act) which sets out the different ways that your intestate estate will be distributed depending on who survives you.
Currently, there is a bill making its way through parliament which proposes several long overdue changes to the Act. If the proposed changes go through, they will have a significant impact upon the amount that a person will be entitled to receive from an intestate estate.
Currently, if you die without a Will leaving a spouse and children, the surviving spouse will be entitled to receive:
- All of your household chattels;
- The first $50,000 of your estate; and
- An additional one third of the balance of your estate.
Your children will then be entitled to an equal share of the remaining two thirds of the balance of your estate.
If the proposed changes to the Act go through, your surviving spouse would be entitled to receive:
- All of your household chattels;
- The first $435,000 of your estate; and
- An additional one third of the balance of your estate.
Your children will remain entitled to an equal share of the remaining two thirds of the balance of the estate.
This is just one example and as you can see, the bill proposes a significant jump in the initial figure received by the surviving spouse. The last time this figure was amended was in 1982 (at this time it jumped from $30,000 to $50,000).
To put this into context, in 1982, Perth's annual median house price was $48,225. This meant that if one member of a relationship exclusively owned the matrimonial home, upon their death, the Act potentially provided the surviving spouse with the means to acquire that home.
Compare this with last year where Perth's annual median house price was $480,000. If you consider the same situation, $50,000 only covers a fraction of the value of that home. Amongst other issues, the Act has not kept up with inflation and the proposed changes are sorely needed. While the proposed changes seek to bring the Act in line with modern times, the changes have not yet been made law.
If you do not wish for your estate to be subject to the current formulas, you should consider making a Will as this will allow you to clearly document how you would like your estate to be distributed upon your death.
Do you want to know what would happen to your estate if you were to die without a Will?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.