Estate Administration – with or without a Will

Making sure you have a Will in place is one of the most valuable actions you can take to support and guide your loved ones after you pass away. In your Will, you can decide who is in charge, and instruct exactly how your assets should be dealt with when you die. When you have a Will, the process to administer your estate is generally cheaper and quicker.

Without a Will, your assets are distributed to eligible family members according to the legal framework in the Administration Act 1969 (“Administration Act”), which may not work out how you think. The process is more complicated, takes longer, is generally more expensive and you have no say over who is in charge and who gets what.

What is the process if you die without a Will?

This is called “dying intestate”. If you own assets over $15,000, then an application to the Court for Letters of Administration will be required.

A person with an interest in an estate (i.e a surviving partner or spouse, or children) can apply to administer an intestate estate. The right to make the application is in order of priority under the Administration Act 1969.

Some of the fundamental rules of the Administration Act 1969 are:

1. If you have a husband, wife, civil union or de facto partner, but no living parents or children, the spouse or partner will get all of your estate.
2. If you have a spouse or partner and also children, the spouse or partner will receive all of the personal chattels, the first $155,000 of your estate and 1/3rd of the remaining property. The other 2/3rds will go to your children.
3. If you have a spouse or partner and no children, and living parents, the spouse or partner will receive all the personal chattels, the first $155,000 of your estate and 2/3rds of your remaining property. The remaining 1/3rd will go to the surviving parents.
4. If there are children, but no husband or wife or civil union or de facto partner, your estate will go to your children.

Before an application is made, a search has to be conducted to confirm that no valid Will exists and a search to confirm the status of children entitled to inherit. Consents from interested family members who are not applying (e.g. other children entitled to inherit) also need to be obtained. The process could become even longer and more complicated if there are disagreements about who should apply. All of this slows down what could otherwise be a straightforward process.

How does this differ if you die with a Will?

A Will appoints executors who have the authority to apply to the Court for a Grant of Probate, and then deal with your assets in accordance with the wishes you set out in your Will. Unlike Letters of Administration, there is no need to obtain any searches or consent, and there are no rules around who you have to leave your estate to, although you have a “moral duty” to include children and spouses/partners in some way.

An application for Probate is generally cheaper and quicker. Most importantly, it puts you in control of where your estate goes.

In your Will you can:

• Give away specific chattels i.e  jewellery, watches, cars, artwork, heirlooms, pets (yes, these are chattels)
• Specify gifts such as cash sums, shares
• Decide who will receive the balance of your estate
• Indicate burial wishes
• Nominate a legal guardian for your children if they are minor

What happens in an estate administration?

Assuming you have over $15,000.00 in your sole name (remembering that joint assets pass to the other co-owner automatically), then the administrator must visit a lawyer who will help them apply for a grant of Probate (if you have a valid Will) or Letters of Administration (if you die intestate).

After the Court has approved the application, the administrator must find out what the assets and liabilities of your estate are and, if necessary, have assets valued and sold. Then they must pay any debts and taxes out of the estate funds.

The balance is then paid out to the beneficiaries in terms of either the Will or the Administration Act rules. Generally this does not occur until at least 6 months from the date of the grant. This is because the administrator can be personally liable for distributions made within 6 months, in the event there was a claim on your estate (this could be a debt or it could be a claim by a family member).

The estate could take much longer to distribute if there are a number of assets to be sold and debts to be worked through. If there is a claim on an estate, distribution could take several years.

This article was first published for First Mortgage Trust, October 2024 newsletter.