Perhaps the cost of having a Will prepared has put you off doing so, or maybe it is just one of those tasks that you just haven’t got around to doing yet? Beware that there can be significant and distressing consequences of not having an up-to-date Will in place.
What is a Will?
A Will is a legal document that expresses a person’s wishes as to how their assets are to be distributed after their death. A Will also appoints a legal representative to manage the estate assets until the final distribution to beneficiaries has taken place.
Why do I need a Will?
Statistics show that approximately 50% of Australians die without a Will. One of the most common reasons for people not making a Will is because they feel as though their current assets do not warrant one. A person’s assets do not need to be substantial for it to be necessary for them to make a Will. Anyone that has assets, be it a bank account, property, motor vehicle or personal effects, needs a Will. A Will saves time, money and stress for your loved ones and provides you and your family with peace of mind that your wishes will be given effect (to the greatest extent possible).
What happens if I die without a Will?
If you die without a Will, you are considered to have died ‘intestate’. If you die intestate, a person entitled to your estate must make an application to the Court for letters of administration. In these circumstances, your estate will be distributed according to the intestacy provisions contained in the Administration Act 1903 (WA) (“the Act“) – a formula determined by the Government.
The Act is in most cases inconsistent with a deceased person’s wishes and where there is a husband, wife, or de facto partner, it will likely result in financial hardship during an already distressing time. This is largely because these provisions have not been amended since 1982 and are not reflective of asset values today.
The common position is that a husband, wife or de facto partner, generally wishes to leave their entire estate, or at least the matrimonial home, to their surviving spouse. In these circumstances, it is often intended that children will only inherit once both parents have passed away.
The example below illustrates the inadequacy of, and issues associated with, the current intestacy provisions.
Mary dies without a Will and leaves behind a husband and 4 children. She leaves an estate worth $650,000 the value of which is primarily the family home owned in her sole name. According to the Act, Mary’s estate will be divided as follows:
Her husband receives the first $50,000 and all household effects. Of the residue ($600,000), the husband receives one-third ($200,000) and the 4 children receive two-thirds ($400,000) in equal shares – $100,000 each. The family home must be sold to make the distributions to the children and her husband cannot afford to purchase another home with only $250,000.
Had Mary prepared a Will in which the family home was left to her husband, the distressing scenario that her husband finds himself in could have easily been avoided. Many are of the view that the entitlement of a surviving spouse needs to be increased significantly to reflect today’s cost of a modest house. In no other State or Territory in Australia is the entitlement of a surviving spouse on intestacy so low.
Whilst the Administration Amendment Bill 2018 (WA) (“the Bill“) was introduced in June 2018 for the purpose of amending the Act to reflect today’s asset values, it remains before Parliament. Whilst the Bill will see the amount increased from $50,000 to $435,000 where an intestate dies with a surviving spouse and children, the changes are yet to be implemented and it is not certain when they will be. For many Western Australians, their homes are also now worth far more than $435,000. There simply is no better way to ensure that your loved ones are looked after than by having in place a Will reflective of your current wishes. Now is the time to contact Bowen Buchbinder Vilensky to arrange an Estate Planning review with one of our experienced Solicitors.