By Jasmine Cario
Estate Planning can be a stressful matter and is often something that we postpone, especially in circumstances where relationships between family members have broken down or when faced with potentially difficult decisions.
In answering the question, “What is the point of making a Will if it can be contested?”, you must consider the following:
- What happens if you die without a Will?;
- Why is preparing a Will so important?;
- What is involved in claiming on an estate?
If you die without a Will, you have no say on how your estate is to be divided after you die and you have no choice in who becomes your “Legal Personal Representative” after your death (the person/people who administer your estate).
A Will is important to state your testamentary intentions and gives you a voice after you die. In a Will you state who you wish to administer your estate and how your estate is to be divided.
For a claim to be made on your estate, a person must first establish that they are an “eligible person”. That person must prove that the deceased failed to adequately provide for their proper maintenance, education and advancement in life. The Court also considers the circumstances of all other beneficiaries of your Will and affected parties.
Just because someone may be eligible to claim on your estate, does not mean they will claim, nor does it mean their claim will be successful.
What happens if I die without a Will?
If you die intestate (without a Will), an Administrator will be appointed by the Supreme Court of New South Wales and the law determines who will inherit your assets. The Administrator/s appointed will usually be a beneficiary of your estate.
Part 4 of the Succession Act 2006 (NSW) governs the laws of intestacy. The legislation provides a list of categories of relatives who will inherit the estate in an order set by the legislation. To determine who inherits from an intestate estate, we start at the top of that list working our way down each category (in order) until there are people who have survived the deceased in one of the eligible categories.
We provide the following examples:
Example one: if the deceased is survived by a spouse and children who are also the children of that spouse, the spouse will receive the whole of the estate.
Example two: if the deceased is survived by a spouse and children, but the children are children from a previous relationship, a statutory formula calculates a lump sum payment to the spouse and if there is anything left over in the estate after that lump sum is paid to the deceased’s spouse, the residue is divided as to 50% to the deceased’s spouse and 50% to the deceased’s children equally.
Example three: if the deceased is not survived by a spouse or by children, the legislation provides that the deceased’s parent/s are entitled to the estate, but if the deceased is not survived by a parent, then the deceased’s sibling/s are entitled to the estate and so on.
If a family member of yours dies intestate or if you do not currently have a Will, we strongly advise you to contact our office to obtain legal advice specific to you.
Why is preparing a Will so important?
In your Will, you have testamentary freedom to gift your assets as you wish. You may choose to leave a person out of your Will for several reasons, including the breakdown of a relationship, addiction, wanting to provide for one person more than another or simply because one of your loved ones have a higher need than the others.
Whilst a claim can be made by certain people (detailed below), a Will is the only way to state your testamentary intentions and to be heard after you die.
When creating a Will, you also nominate an Executor. An Executor is the person who is responsible for administering your estate, ensuring the wishes in your Will are fulfilled and to defend any claim on your estate. Your executor acts as your “Legal Personal Representative” after you die. Without a Will, there is no Executor, and therefore, the Court appoints an Administrator to administer your estate.
In some circumstances, it will be impossible to prevent a challenge against your estate. However, there are additional steps which may be taken to reinforce your wishes and make it difficult for a claim to succeed.
What is involved in claiming on an estate?
The law aims to distribute assets in accordance with the deceased’s wishes but on the other hand also enables claims to be made by “eligible persons”. The claim against an estate is called a Family Provision Application.
Those who are “eligible persons” are clearly defined at Section 57 of the Succession Act 2006 (NSW) as:
A) a person who was the spouse of the deceased person at the time of the deceased person’s death;
B) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person’s death;
C) a child of the deceased person;
D) a former spouse of the deceased person;
E) a person:
- (i) who was, at any particular time, wholly or partly dependent on the deceased person, and
- (ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member
F) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person’s death.
The “eligible persons” defined above may make a claim on your estate if you leave them out of your Will entirely but may also make a claim on your estate if the gift to them was inadequate for their proper maintenance, education and advancement in life. Only those defined above may claim on an estate, however, this does not mean the claim would be successful.
Before a Court determines if an “eligible persons” claim has merit, the Court considers many factors identified in Section 60 of the Succession Act 2006 (NSW). Weight is given to your Will and any Affidavit prepared by you explaining your Will and why you prepared your Will in the way you did.
If you are concerned about leaving an eligible person in your life out of your Will, talk to us at Hansons for complete advice in relation to your estate planning needs and ways to protect your assets and your testamentary intentions.