Estates

A person who dies without leaving a will is said to have died intestate and the estate passes to the next of kin according to a special statutory order that is set out below. A deceased person who dies without a will is referred to as ‘the intestate’.

Intestacy also occurs when the deceased leaves a will that only distributes part of the estate (in which case the deceased is said to have died partially intestate) or where a will is made but is for some reason ineffective. The most common form of intestacy is where no will is made. Where there is an intestacy, letters of administration, not probate, must be applied for.

Part 1A of the A&P Act sets out the intestacy provisions that apply in Victoria. In the intestacy sections of the A&P, the ‘partner’ of a person who dies means the deceased person’s spouse or domestic partner at the date of death. The following section and the table at the end of this chapter contains a summary of the intestacy provisions that apply for deaths that occurred after 1 November 2017. For deaths that occurred prior to 1 November 2017 specialist legal advice is recommended.

If the intestate dies leaving a partner but no child or children, the surviving partner takes the entire estate (s 70J A&P Act).

If there is a surviving partner and children only of the relationship between the partner and the intestate, the surviving partner takes the entire estate (s 70K A&P Act).

If there is one surviving partner and children, not only of the relationship with the surviving partner, but other children of the intestate, the partner takes (s 70L A&P Act): a a statutory legacy of $451,909, indexed to CPI

from 1 July 2018 (currently $539,100 until 30

June 2023) (s 70M A&P Act); b personal chattels of the intestate; c interest on the statutory legacy calculated at the

legacy interest rate (s 3 A&P Act) from the date

of death; d one-half of the balance of the estate over

those amounts; e the children of the intestate share equally the

other half of the residuary estate. Division 5 of Part 1A (ss 70Z–70ZE) details who is entitled to an intestate estate where the intestate had more than one partner at the time of death and children to those partners and other partners. Essentially the estate is shared between the different partners and the children, according to the statutory formula.

The ranking of more remote next of kin who are entitled to an intestate estate is set out in the table at the end of this chapter. However, no next of kin more remote than a first cousin can now take an interest in an intestate estate. If there is no next of kin who is more closely related than a first cousin, the estate passes entirely to the State of Victoria.

The next of kin must survive the intestate by 30 days in order to take on intestacy. Upon the making of the grant of letters of administration upon intestacy, the assets of the intestate are held on trust by the administrator. The administrator has discretion as to whether assets should be sold or transferred to the beneficiaries and may postpone the sale of assets where appropriate.

This is a complex area of law, especially where there is more than one partner, or where the intestate had no immediate family. In these cases, it is recommended that legal advice be obtained.

On many occasions, members of the deceased’s family do not know whether the deceased left a will or, if so, where it can be found. If the will is not with the deceased’s personal papers, checks should be made with the deceased’s bank, solicitor, accountant or a likely trustee company. Advertisements should be placed in a daily newspaper and in the Law Institute Journal (at www.liv.asn.au).

The main disadvantage of intestacy is that the deceased has no control over the distribution of their estate. The estate must be strictly distributed among the deceased’s nearest blood relatives, as defined in Part 1A of the A&P Act, whether they were close to the deceased or not. The estate must be divided in specific fixed proportions depending on the blood or domestic relationship between the deceased and their family members. As can be seen from the table at the end of this chapter, the statutory order is fixed, and no special account can be taken of particular wishes of the deceased, or the needs or claims of family members.

Note that: 1 Since 8 November 2001, inheritance rights in

respect to intestate estates have been given to

domestic partners. Section 3 of the A&P Act

states that a ‘domestic partner’ of a person who dies means a registered domestic partner or an unregistered domestic of that person. A registered domestic partner is a person who was in a registered domestic relationship with the person within the meaning of the Relationships Act 2008 (Vic) at the time of their death. An unregistered domestic partner of a person who dies means a person who, although not married, was living with the person as a couple on a genuine domestic basis, irrespective of gender, and either: a had lived with the person continuously for a

period of two years immediately before the

person’s death; or b is the parent of a child under 18 with the

person at the time of the person’s death.

The Relationships Act 2008 (Vic) (s 35(2)) sets out the factors to be considered in evaluating whether a domestic relationship exists. In many cases, a de facto or same-sex partner will rank as the spouse of an intestate partner. Legal advice should be taken as to whether the A&P Act applies in any specific case. 2 ‘Children’ include illegitimate children where a person dies after the commencement of the Status of Children Act 1974 (Vic) (‘SoC Act’) (i.e. after 1 March 1975) provided that paternity has been expressly or impliedly admitted or has been established against the father in his lifetime or the parents of the child were married to each other at the time of its conception or at some subsequent time (s 7 SoC Act). An additional disadvantage of intestacy is that confusion can arise over who should apply for administration. The court has a very wide discretion as to whom it will grant administration, but in most cases whoever has the largest share in the estate is considered the most suitable. If another applicant applies early and is able to take out administration immediately, that applicant may succeed.

As with an application for probate, an advertisement indicating an intention to apply for letters of administration after the expiration of 14 days is published on the Probate Office’s Online Advertising System website (www.supremecourt.vic.gov.au/wills- and-probate).

As with probate applications, all applications for letters of administration must be lodged online through the Supreme Court’s website known as RedCrest Probate. The following documents must be lodged electronically: 1 affidavit in support of the application sworn by

the person applying for administration together

with a full death certificate and a list of the

deceased’s assets and liabilities; 2 affidavit of publication and searches are now

made and filed by the Probate Office; 3 surety’s guarantee or insurance bond (if required); 4 originating motion; 5 order for letters of administration. When the order for letters of administration is made, the court will advise by email of the grant.

As a condition of granting letters of administration to an applicant, the court, or Registrar of Probates, may require one or more sureties or an insurance bond.

These sureties are to guarantee that the administrator or the insurance company will make good, in an amount not exceeding the amount of the deceased’s property as sworn, any loss that any person interested in the administration of the estate may suffer as a result of a breach by the administrator of his or her duties (s 57 A&P Act). The question of whether sureties are required or not is governed by the A&P Rules.

Order 7.01 of the A&P Rules provides that a guarantee under section 57 of the A&P Act is not required except where it is proposed to grant administration: 1 to a creditor of the deceased or the legal

representative of such a creditor; 2 to a person having no immediate beneficial

interest in the deceased’s estate; 3 to an attorney under power of a person entitled to

a grant of administration; 4 to the use and benefit of a minor or of a person

incapable of managing their own affairs; 5 to any person who appears to the court or the

Registrar to be resident outside Victoria; 6 where a grant of administration relates to a

grant to collect and preserve the deceased’s

assets (ad colligendum bona) or to bring or defend

a proceeding (ad litem); 7 under sections 20, 22 or 24 of the A&P Act; 8 where the court or Registrar considers that there

are special circumstances making it desirable to

require a surety or sureties. During the application for a grant of letters of administration, an application can be made to the Registrar to dispense with a surety.

The procedure for the payment of debts is the same as where the deceased left a will (see ‘Estates’, above). The notice to claimants can refer to the administrator, rather than the executor, or otherwise refer to the LPR.