The assets of a person who does not leave a will are distributed according to the law. In South Australia, the following distributions apply to surviving members of the family according to Section 72 of the Administration and Probate Act 1919.
Intestacy is the legal term that refers to someone who dies without a legal will.
We have highlighted 3 of the most common situations that people may find themselves in when dealing with Intestacy and what the law stipulates about the distribution of assets owned by the deceased.
1. Surviving Spouse but no children
All assets are distributed to the spouse or domestic partner.
A husband or wife is a lawful spouse. A person may be determined by Court to be a domestic partner if he or she has been living in a close relationship for three years (or has a child from the relationship)
2. Surviving Spouse and Children
If the total estate is less than $100,000, the whole estate passes to the surviving spouse or domestic partner.
If the total estate is more than $100,000, the spouse or domestic partner is entitled to the following:
a) Personal Property (including furniture, effects and car)
b) $100,000 and half the remaining balance
c) Where the family home is in the sole name of the deceased, the surviving spouse has the right to purchase the home
Children are entitled to the balanced of the estate. The share of any child under the age of majority (ie under 18 years) must be given to the Public Trustee to manage under trust.
For example a person dies without a will and is survived by a spouse and 2 children. The assets comprise of a family home worth $400,000 owned by the deceased solely, $50,000 in investments as well as a motor vehicle and personal effects.
The distribution would be:
1) To the spouse – motor vehicle and personal effects $275,000 (comprising $100,000 plus half the balance which is $175,000)
2) To the children - $175,000 divided equally between them
On paper this sounds benign, but let’s examine this situation in more detail. The key question here is how would the children’s share of the estate be funded? They could receive the term deposit, but then would the house have to be sold in order to provide funds for the children.
The surviving spouse has the right to purchase the house, but how would that be funded. The surviving spouse may not be employed and therefore potentially unable to secure a loan.
The death of a spouse without a will can result in the surviving spouse having to sell the family home to pay the children’s entitlements under intestacy laws.
- Surviving Children only – no spouse
Distribution is in equal shares to the children (if a child has died and has had children, then those children take their parent’s share in equal proportion)
What about assets in joint names?
Joint Tenants
When property is owned as joint tenants, it generally passes automatically to the survivor upon the death of the other joint owner. As a result, joint property does not form part of a person’s estate. It cannot be disposed of by a Will or under intestacy laws.
Tenants in Common
When property is owned as tenants in common, the deceased person’s share of the property does not automatically pass to the surviving owner. The deceased’s share of the property is distributed according to the terms of his or her Will. If there is no Will, the deceased person’s share of the property is distributed according to the intestacy laws.
Note: Advice contained in this article is general in nature and does not consider your personal situation or needs. Please do not act on this advice until its appropriateness has been determined by a qualified adviser. While the taxation implications of this strategy have been considered, we are not, nor do we purport to be registered tax agents. We strongly recommend you seek detailed tax advice from an appropriately qualified tax agent before proceeding. The information provided is current as at October 2011.