Important things you need to consider and act on | PART 2 of 2
March 2023 | Nicola Sharp and Ashley Lovelock
Following on from our previous article, there are common issues we face in our client and estate dealings and questions that arise that we want to cover and answer for you to help ensure you and your assets are fully protected and your wishes are legally documented …
What happens if I die without a Will?
In simple terms:
1. If you die leaving a spouse (Spouse B) and a child or children with Spouse B only, Spouse B is entitled to the whole of the estate.
1. If you die leaving a spouse (Spouse B) and a child or children from a previous relationship (and as the case may be, also a child or children with Spouse B),
(A) Spouse B will receive:
(1) your personal effects;
(2) a statutory legacy of approximately $490,000 (as at July 2021) adjusted by the Consumer Price Index (plus interest if the statutory legacy is not paid within one year from the deceased’s date of death);
(3) half of everything else that is left over (residue of the estate); and
(4) a right to elect to acquire property from the estate.
(B) Your child or children will receive:
(1) equal shares of the residue of the estate. If a child dies leaving children (i.e. your grandchildren), they will be entitled to receive the share of their deceased parent.
2. If you die with more than one spouse (and you have no children), your spouses are entitled to equal shares of the estate. There may be more than one spouse if you were married at the time of your death and also had a de facto spouse.
3. If you die with more than one spouse (and a child or children with one or more of your surviving spouses), your spouses are entitled to equal shares of the estate.
4. If you die leaving no spouse but are survived by a child or children, they are entitled to equal shares of the estate. Again, if a child has died leaving children (i.e. your grandchildren) they will be entitled to receive the share of their deceased parent.
So what is a “spouse”?
A spouse is a person:
· who was married to the deceased immediately before the deceased’s death, or
· who was in a de facto relationship with the deceased immediately before the deceased’s death that had been in existed for a continuous period of 2 years or resulted in the birth of a child; or
· who was in a registered relationship with the deceased immediately before the deceased’s death in accordance with legislation.
What is a “child”?
A child is a biological child of the deceased and includes any adopted children but does not include step children.
What happens in the event of a separation?
From a Family Law perspective, the Family Law Act 1975 (Cth) governs what may occur in a distribution of property and assets after separation. If there is no agreement between the parties, the Federal Circuit and Family Court of Australia (FCFCOA) will make orders which they see as “just and equitable” based on the circumstances. In doing so, they look to a number of factors:
1. How long the marriage lasted;
2. What are the financial and non-financial contributions of the parties to the assets of the marriage; and
3. What are the future needs of each of the parties, for example, if one party is primarily caring for the children, health, earning capacity.
Accordingly, if there is no agreement you risk a claim being made in the FCFCOA which may result in property which you had from your first marriage passing to your former partner, ultimately reducing the inheritance your children from your first marriage would have received.
What is the effect of divorce (or annulment) on a Will?
If you get divorced (or your marriage is annulled):
1. a gift to your former spouse made by a Will is revoked; and
2. an appointment of your former spouse as an executor, trustee, advisory trustee or guardian made by the Will is revoked, and
3. a grant made by the Will of a power of appointment exercisable by, or in favour of, your former spouse, is also revoked.
If your Will includes a contrary intention to the above, the provision will remain. For example, if you get divorced but leave a gift in your Will of $5,000 to your former spouse stating that it is to be gifted even if you are divorced at the time of your death, the gift stands.
What is the effect of marriage on a Will?
Generally, if you get married (or if you remarry), the Will you make before you were married is revoked.
If you intend for the gift in the will to be honored, you should make your Will in contemplation of marriage and this needs to be expressly stated.
We have not covered all of the possible circumstances above. If you would like more information about your personal circumstances, please contact Harris Freidman Lawyers.
Do you have a Financial Agreement in place?
Is your Will and Estate Plan current and compliant with the timing of life events – relationship, marriage, and/or separation?
You really should speak with Nicola Sharp and Ashley Lovelock to ensure you and your assets are best protected and that your wishes for your estate are lawfully documented – 02 9231 2466, nsharp@hflawyers.com.au and alovelock@hflawyers.com.au.