March 2010

Wills & Estates Law Update - new intestacy laws & new forms for intended distribution

New Intestacy Laws Commenced 1 March 2010

New intestacy laws have been introduced in New South Wales as part of the overall push for the harmonisation of succession laws throughout Australia. The new laws follow changes to the law of wills and family provision law in New South Wales. The final area for change will be the law relating to the administration of estates.

The Succession Amendment (Intestacy) Act 2009 commenced operation on 1 March 2010. It implemented the model bill by introducing the new intestacy laws as Chapter 4 of the Succession Act 2006 and it repealed the former intestacy laws in the Probate and Administration Act 1898.

Transitional Provisions

The new intestacy provisions in Chapter 4 of the Succession Act 2006:

  • apply to the distribution of an intestate estate of a person who dies on or after 1 March 2010; and
  • they do not apply to the distribution of an intestate estate of a person who died before 1 March 2010, the law in force at the date of death will apply.

Important Matters

Important matters to note from the new intestacy laws include:

  • Definition of intestate in 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 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 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 has changed 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 (section 112). The position becomes more complicated if there are also children from a prior relationship as the changes in this area 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 was married and also had 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 sections 122 ? 126.
  • Statutory legacy entitlement for a surviving spouse who is not entitled to the whole estate has been increased to $350,000 with an automatic indexing provision for increasing the legacy in accordance with changes in the consumer price index (see section 106).
  • Cousins of the intestate were not included as statutory relatives under the former intestacy provisions but have now been included under the new laws. 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 section 101 which effectively defines such a person to be of Aboriginal or Torres Strait Islander descent. The special rules are contained in sections 133 ? 135. This significant 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 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 laws.
  • 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.
  • Court Rules. There will be new Court rules to deal with the commencement of the new intestacy laws but they have not been finalised as yet.

There have been and continue to be wide ranging changes to succession law in New South Wales. In dealing with any deceased estate, the critical starting point is to look at the date of death and make sure the correct law is applied.

Notice of Intended Distribution of Estate ? New Form 114

The NSW Supreme Court has issued a new form of notice of intended distribution of estate. The purpose of the notice is to give protection to legal representatives who distribute the property in a deceased estate. The new form of notice should now be used even though it does not resolve all the previous problems of the interpretation and application of section 93 of the Succession Act 2006.

This publication is intended as a source of information only. No reader should act on any matter without first obtaining professional advice.

Gerard Basha