Preparing a Will won’t stop someone making a claim against your Estate, but it is a clear record of who you wanted to give your assets to.
If you die without a Will, you are said to have died ‘intestate’. In NSW, if you die intestate, your Estate will be distributed as follows:
(a) a spouse with no children → your spouse will inherit the whole estate.
(b) a spouse with children → your spouse will inherit the whole estate.
(c) a spouse and children from a different relationship → the estate is divided according to a formula:
(i) your spouse receives a legacy of $350,000 as adjusted by the Consumer Price Index, your personal belongings and one-half of the remainder of your estate;
(ii) all children, including those of the other relationship, receive the remaining part of the estate equally between them.
(d) Children only (no spouse) → all your children will share in your estate equally. If any of your children have died, leaving children (your grandchildren), those grandchildren will share the portion of the estate that their parent would have received.
(e) No spouse or children → your parents will inherit your estate.
(f) No parents → your siblings will inherit your estate. If one or more of your siblings has died then their share will pass to their children (your nieces and nephews).
(g) No siblings, nieces or nephews → your grandparents will inherit your estate.
(h) No grandparents → your aunts and uncles inherit your estate. If one or more of your aunts or uncles has died then their share will pass to their children (your cousins).
(i) No aunts, uncles or cousins → the NSW Government will inherit your whole estate.
Benefits of Preparing a Will
- You can leave your estate in a specific way that reflects your wishes.
- The intestacy rules above may have unintended consequences – for example, the family home may need to be sold to make sure all the beneficiaries get their share.
- You can choose who you want as an executor – to administer your estate and distribute your assets to the people you nominate in your Will.
- Asset protection – you can build in protections for your children from creditors or family law claims from their spouse’s.
- You can minimise the tax burden your beneficiaries might face, for example, by establishing Testamentary Trusts in your Will.
- You can take into account the special needs of disabled or vulnerable beneficiaries (for example, beneficiaries with addiction issues).
- If you don’t have a family, you can leave your estate to friends or charities, instead of it going to the government.