April 2009

Proposed new intestacy law for New South Wales

Intestacy law in New South Wales will soon change as part of the overall push for the harmonisation of succession laws throughout Australia.  It follows recent changes to the law of wills and family provision law in New South Wales.  Once the new intestacy law is implemented, the final area for change will be the law relating to the administration of estates.

The media release from the NSW Attorney General about the proposed changes was dated 31 March 2009 and noted the result of two surveys.  A Law Reform Commission survey found that 75% of people who have a will leave everything to their spouse and the proposed changes reflect that survey result.  Also, a 2008 survey by the Public Trustee found that 54% of people in New South Wales did not have a will.

The Succession Amendment (Intestacy) Bill 2009 was introduced into the NSW Parliament on 1 April 2009.

The stated objects of the Bill are to:

  • amend the Succession Act 2006 to restate the rules for distribution on intestacy as a  new chapter 4 of the 2006 Act;
  • to repeal the provisions of the Probate and Administration Act 1898 which currently  provide for distribution on intestacy (the 1898 Act intestacy provisions); and
  • to make various changes of a savings, transitional or consequential nature.

The provisions of the Bill are largely based on the model bill that was contained in the New South Wales Law Reform Commission Report 116 Uniform succession laws: intestacy.

Important matters to note from the Bill at this stage include:

  • Definition of intestate in proposed section 102 to mean a person who dies and either does not leave a will or leaves a will but does not dispose effectively by will of  all or part of his or her property.
  • Definition of spouse of an intestate in proposed section 104 is a person married to the intestate or who was a party to a "domestic partnership" with the intestate, immediately before the intestate's death.
  • Definition of domestic partnership in proposed section 105 is a relationship of the intestate (other than marriage) that is a de facto relationship and had been in existence for a continuous period of at least two years, or has resulted in the birth of a child.
  • Entitlement of the surviving spouse will change significantly. Where there is a surviving spouse and issue of children from the relationship with that spouse, the spouse will be entitled to the whole of the estate (proposed section 112).  The position becomes more complicated if there are also children from a prior relationship as the proposed changes recognise the fact that such children may not inherit from the surviving spouse of their natural parent.  The position also becomes more complicated where the intestate leaves multiple spouses.
  • Children from a prior relationship of the intestate will share the remainder of the intestate's estate (if any), after the surviving spouse receives the "personal effects", a "statutory legacy" and one-half of the remainder (if any) of the estate.
  • Multiple spouse provisions (for example, where the intestate is married and also has  a de facto partner) are complicated.  They provide for property to be shared between  those surviving spouses in accordance with a written agreement between them (a "distribution agreement") or in accordance with a Court order (a "distribution order").  The multiple spouse provisions are contained in proposed sections 122 - 126.
  • Statutory legacy entitlement for a surviving spouse who is not entitled to the whole estate will be increased to $350,000 with an automatic indexing provision for increasing the legacy in accordance with changes in the consumer price index (see proposed section 106).
  • Cousins of the intestate were not included as statutory relatives under the 1898 Act intestacy provisions but have been included under the Bill.  It will now be possible for cousins of the intestate to share in the estate if there are no closer statutory relatives living at the date of the intestate's death.
  • Indigenous persons' estates have their own special rules.  There is a definition of "Indigenous person" in proposed section 101 which effectively defines such a person to be of Aboriginal or Torres Strait Islander descent.  The rules are contained in proposed sections 133 - 135 of the Bill.  This significant proposed change is to recognise that it may be inappropriate to apply the general intestacy rules to Indigenous persons, who may have a broader concept of family relationships.  There is provision for the Court, on application by an appropriate person, to make a distribution order under the laws, customs, traditions and practices of the Indigenous person.  If no such application is made, the estate of the Indigenous person will be distributed in accordance with the general intestacy rules.
  • In the absence of the intestate leaving any living statutory relatives entitled to the estate, the State of New South Wales will be entitled to the whole of the estate.  However, the State will have discretion to waive the State's rights in whole or in part in favour of a wider range of claimants which now include an organisation for whom the intestate might reasonably be expected to have made provision.

The detailed provisions of the Bill are highly technical and will significantly alter the practice and procedure in New South Wales relating to distribution of estates on intestacy or partial intestacy.  Bartier Perry will continue to monitor and report on this third area of significant change for the law of succession in New South Wales.

Author: Gerard Basha