Does the Crown get your cash if you die without a Will?

Ever wondered what happens if you die without a Will? Do your assets end up with your spouse, your children, or somewhere else? We often hear people say that the State gets your assets if you die without a Will. Thankfully that is not that case in most situations, with each State and Territory having a set of laws (generally called intestacy laws) dealing with the circumstance.

Victorian changes – 1 November 2017

New intestacy laws were introduced in Victoria on 1 November. These new laws have resulted in some significant changes in how an estate is distributed where there is no Will.

In general, assets will usually pass to a spouse, or spouse and children, depending on the circumstances. Our snapshot provides a quick summary of these new laws.

The concept of a statutory legacy to a spouse has also been introduced. Provided the estate has sufficient funds, the spouse receives a minimum amount of $451,909 (indexed annually) from the estate, which is a significant increase on the previous $100,000 figure.

How the new laws operate

Some practical examples of the new laws are set out below:

Example one – spouse with no children

All of the assets in the estate will pass to the surviving spouse.

Example two – spouse with children from relationship with deceased

All of the assets in the estate will pass to the surviving spouse.

This is a change from the previous laws, which would have resulted in:

1. the spouse receiving $100,000, the personal effects and 1/3 of the remaining estate
2. the children receiving 2/3 of the remaining estate

Example three – spouse and children from the deceased’s previous relationship

In this case:

1. the spouse receives the statutory legacy of $451,909 and ½ of the remaining estate
2. the children receive ½ of the remaining estate

Example four – more than one spouse, with one spouse having children from their relationship with the deceased

In this case, the assets are divided equally between the spouses. As the children are children of one of the spouses, they do not receive a share.

This distribution can also be altered through a distribution agreement (between the spouses) or a distribution order (through the Court).

Example five – no spouse, multiple children

The children receive an equal share of the estate.

The takeaway

The new laws provide a better outcome in many situations, including having all assets pass to a surviving spouse where only the spouse and children from that relationship are surviving.

However, as these laws provide a statutory formula, the outcome may not always be what the deceased wanted. The laws also do not provide for structures to be put in place, such as superannuation proceeds trusts and testamentary trusts, which can make a real difference in the administration of a deceased estate. For these reasons and many others, it is always best to make sure a properly prepared estate plan is in place. This also makes sure the Crown doesn’t get your cash!