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Topic Two – Intestacy
What is Intestacy?
NOTE: New Provisions – Apply to the estate of any person’s date of death on 1 Nov 2017 or after
a. Distribution on intestacy – various scenarios
If [x] died without a valid will, then intestacy occurred, and laws of intestacy determine how a person’s property is to be distributed. All sections here refer to the Administration and Probate Act 1958 unless otherwise stated.
1. ONLY 1 Partner: Deceased survived by A partner and NO children or other issue: Partner takes the entire estate (s 70J)
2. 1 Partner, >1 Child/Issue: Deceased survived by A partner and at least one child or other issue - 1) If all children are children of partner, partner entitled to whole of the residuary estate. (s
70K)
- 2) If child not child of partner and
v 2.1) Estate NOT MORE than statutory legacy ($471,240), partner entitled to whole estate (s 70L(1)(a))
• Increases each year in accordance with Consumer Price Index (s 70M)
• Amount for following financial year is published in the Government Gazette:
(s 70N)
• Initial amount was $451 909 (s.70M) (following NSW); Now 19/20:
$471,240.
v 2.2) Estate MORE than statutory legacy ($471,240), then:
• The partner is entitled to:
§ Personal chattels; Amount of the statutory legacy; Interest on statutory legacy from date of death; Half of the balance of the residuary estate (s 70L(1)(b))
• All of the children of the intestate (including children of the partner) share the other half of the balance of the residuary estate in equal shares. (s 70L(2)) 3. Multiple Partners: Deceased survived by multiple partners
i.e. Partners share the partner share (e.g. 2nd scenario) a. General Distribution
® If NO issues, partners are entitled to the whole of the estate (s 70Z)
® If issue related to a partner, partners entitled to whole of residuary estate (s 70ZA)
® If issue NOT related to partner and estate not worth more than statutory legacy ($471,240), then the partner is entitled to the whole of the estate (s 70ZB(1)(b))
v Increases each year in accordance with Consumer Price Index (s 70M) v Amount for following financial year is published in Gov. Gazette: (s 70N) v Initial amount was $451 909 (s70M) (following NSW); Now 19/20: $471,240.
® If issue NOT related to partner & estate more than stat legacy ($471,240) (s 70ZB(1)(c)):
v Partners are entitled to:
Ø Personal chattels; Amount of statutory legacy; Interest on statutory legacy from date of death; Half of the balance of the residuary estate
v All of the children of the intestate (including children of the partner) share the other half of the balance of the residuary estate in equal shares.
b. Distribution of Partners Shares
i. In accordance with a distribution agreement; or (s 70ZC) v Parties make an agreement on how to split
ii. In accordance with a distribution order; or (s 70ZD)
v Any partner can apply for court order. Court may order a distribution in any way Court considers just and equitable, and can include any conditions considered appropriate.
v s70ZD(2): Unless Court otherwise orders, if a personal rep has given notice under s70ZE(1) an application for a distribution order must be made within 3 months after date of notice
iii. In equal shares in accordance with s 70ZE
4 4. No Partner: Deceased not survived by a partner.
a. If surviving children [or other issue]: All children entitled to share equally (s 70ZG(1))
• If any children predeceased the intestate, then any grandchildren take child’s share per stirpes (if grandchild dead, to their child etc) (s 70ZG(2)). If no other issue, share split among children.
• E.g. 3 kids, 6GC: 2 kids get 1/3, 1 dead kid with 2 GC get 1/6 each
b. If NO surviving issue: Parents to share equally (s 70ZH). If one dead, other takes whole (2) c. If NO surviving issue or parents: Siblings share equally (s 70ZI) If one dead, other take all (2) ® If sibling predeceased, niece/nephew take share by representation equally (s 70ZI(3))
v [stop here, niece/nephew kids won’t get] Not great nieces/nephews. (s 70ZI(3))
d. If no surviving issue, parents, siblings: Grandparents share equally (s 70ZJ) If one left, takes whole (2)
e. If no surviving issue, parent, sibling or grandparents: Aunts and uncles share equally (s 70ZK) If one left, takes whole (2)
® If aunt/uncle predeceased, cousin take share by representation equally (s 70ZK(3) [stop here, cousin kids won’t get]
f. If there is still no one entitled: Then estate passes to Crown (bona vacantia) (s 70ZL)
2. Definitions
• ‘Partner’ of an intestate means the person’s spouse, domestic partner or registered caring partner at the time of the intestate's death. (s 70B)
o Spouse means a person who was married to the person at time of the person's death. (s 3(1)) - When does marriage cease: After divorce order. Separation? Parties don’t cease to
be married by separating. Marriage only ceases after divorce - Ex-Spouse: Ex-spouse has no entitlement under intestacy - Extra notes: refer to 7
o Domestic partner means a registered or unregistered domestic partner of that person; (s 3(1)) - Case: Re Bertine
o Registered caring partner means a person who, at time of death, was in a registered caring relationship with the person per Relationships Act 2008; (s 3(1))
o Registered domestic partner means a person who, at time of death, was in a registered domestic relationship with the person per Relationships Act 2008; (s 3(1))
o Unregistered domestic partner means a person (other than a registered domestic partner of the person) who, although not married to the person— (s 3(1))
a) Living with person at death as couple on genuine domestic basis (gender fine); &
b) Either:
i. Live tgt continuously >2 years before person’s death: Had lived with the person in that manner continuously for a period of at least 2 years immediately before the person's death; or
ii. Parent of that person’s child, <18 at person’s death: Parent of a child of the person, child was under 18 years at the time of the person's death.
- In determining if persons were unregistered domestic partners, all circumstances of relationship to be taken into account, including any one or more of the matters referred to in s 35(2) of Relationships Act 2008 as relevant in a case. (s 3(3)); (s 35(2) RA)
a) The degree of mutual commitment to a shared life;
b) The duration of the relationship;
c) The nature and extent of common residence;
d) Whether or not a sexual relationship exists;
e) Degree of financial dependence and any arrangements for financial support; (e.g. joint bank account, buy property tgt)
f) The ownership, use and acquisition of property;
g) The care and support of children;
h) The reputation and public aspects of the relationship. (e.g. Friends know they are a couple)
- Courts take broad view: Marriage not necessarily definitive (Re Sigg) - Same sex rs: Includes same sex relationships
- Living together: Courts don’t take narrow, formal or pedantic view about ‘living
5 together’ (Dow; Sigg) i.e. they don’t need to be living in the same house
® Can be living together and not be domestic partners and vice versa
® Lying to Centrelink not likely fatal but can effect credibility/report Centrelink, risk being reported to Centrelink (and face penalties)
• ‘Children’ are not defined in the Act. Consider Status of Children Act, which deals with:
o Artificial insemination, surrogacy arrangements, adoption and posthumous use of gametes and provides various presumptions as to who are and are not parents.
o Step-children: Doesn’t cover step-children. BUT may make family provision claim – topic 10 (reason: Reading sections collectively, suggests that step-child has no entitlement on intestacy)
• ‘Parent’ unless inconsistent with the context or subject-matter - parent of a child includes a person who has day to day care and control of the child and with whom the child is ordinarily resident; (s 3(1))
o i.e. Parent is still a parent. NOT BIOLOGICAL, can still be parent if take care of child
• ‘Half-brothers and sisters’ no longer defined in the Act since s 52(1)(f)(vii) repealed, but as National Committee for Uniform Succession Laws state it codified common law, likely still applies:
o No difference between males and females or relationship of whole blood and of the half blood - Most likely step brothers/sisters/uncles/aunts would be entitled to share on an intestacy
• ‘Personal chattels’ unless inconsistent with context/subject-matter: meanscarriages horses stable furniture and effects (not for business purposes) motor cars and accessories (not for business purposes) garden effects domestic animals plate plated articles linen china glass books pictures prints furniture jewellery articles of household or personal use or ornament musical and scientific instruments and apparatus wines liquors and consumable stores BUT does not include chattels used at death of intestate for business purposes nor money or securities for money; (s 5(1))
o i.e. Doesn’t include assets for business purposes
o Re Foord (not Intestacy but about chattels): Use of the article and physical character is relevant. Whether article was used and cherished is relevant
o Consider simplified NSW definition which wasn’t discussed in VLRC report.
Personal effects of an intestate means the intestate’s tangible personal property except the following:
(a) property used exclusively for business purposes,
(b) banknotes or coins (unless forming a collection made in pursuit of a hobby or for some other non-commercial purpose),
(c) property held as a pledge or other form of security, (d) property (such as gold bullion or uncut diamonds):
(i) in which the intestate has invested as a hedge against inflation or adverse currency movements, and
(ii) which is not an object of household, or personal, use, decoration or adornment,
(e) an interest in land (whether freehold or leasehold).
3. Survivorship
Must survive intestate >30 days: Person is not entitled to participate in distribution of an intestate's estate under this Part unless the person survives the intestate for at least 30 days. (s 70C(1)) This applies to all deaths after 1 November 2017.
• Effect
o A person referred to in (1) is taken to have predeceased the intestate. (s 70C(2))
o Going to Crown? Doesn’t apply if application would result in intestate's estate passing to the Crown (s 70C(3))
– i.e. if only relative dies within 30 days of A’s death. If property will next go to the Crown, the this ‘person’ can inherit
• Unborn Children
o Child or issue living at death of [x] includes a child en ventre sa mere at the death. (s 5(2)) – Note – Not adopted yet: National Committee & VLRC Report recommended
unborn children need to survive for at least 30 days after birth to be entitled to a distribution - not accepted. Unclear whether need to survive 30 days from death, born alive or 30 days from birth since no amendments made to Victorian Act to clarify
– Note: NSW legislation (s107 Succession Act (NSW))requires period of gestation in the uterus that commenced before the intestate’s death and survives the intestate for at least 30 days after birth.
o It appears that a later born child would be entitled to an interest on the intestacy of the father.
6 (Estate of the Late K – Tas SC)
– BUT Query whether per current VIC law the child:
• Only need to survive 30 days from Father’s death;
• Only needs to be born alive; or
• Needs ot survive for 30 days from birth
4. Partners Right to Elect to Acquire Property
• Notice of Right and Partner’s Rights:
o Personal representative must, within 30 days of grant of administration, give partner a written notice informing the partner of the partner's right to make a partner's property election. (s 70Q)
o Partner may elect to acquire property from estate by making partner’s property election (s 70P) – Requirements: In writing and with reasonable particularity and with notice to other
parties (i.e. personal representative, beneficiaries and registrar) (s 70S)
o Election must be made within 3 months of the grant of administration (if grant is made to the partner) or 3 months of the notice. (s 70R(1))
– The Court may extend the time for making a partner’s property election if considered just and the administration of the estate has not completed (s 70R(2)) o Personal representative must obtain valuation of property in certain circ. (s 70V) – refer to
obligations
o A partner can revoke a property election before the property is transferred (s 70T)
o Provisions for how the purchase price will be satisfied (s 70W) and when property transferred (s 70X) – refer below
o A partner will need to apply to the court for authorisation in certain circumstances (s 70U) E.g. Elderly couple got family home, holiday home and a car. Some other property with sentimental value that’s not a chattel. Husband dies without will, property all in husband’s home. Wife want to keep family and holiday home. Husband got another child, children wants to keep holiday house and got dispute. Assets have to split between wife and other child. Child apply to be personal representative, child must notify wife of the right to acquire the holiday house and wife has 3 months to make that election. After election, then got provision on how to satisfy purchase price. Children prevented from selling holiday house, until wife makes an election
• Obligations on Personal Representative:
o PR must obtain valuation of property if the partner makes a property election or asks personal reprobative for a valuation to decide whether to make election (s 70V)
– Must give a copy of the valuation to the partner and each beneficiary (s 70V(2)) – Requirement for a personal representative to obtain a valuation is waived if all the
beneficiaries (including the partner) entitled to a share in the intestate's estate consent in writing to the requirement being waived. (s 70V(3))
o PR of an intestate must not dispose of property from the intestate's estate (except to a partner who has made a partner's property election) unless: (s 70Y(2))
a) The personal representative is the partner entitled to make the election; or
b) The time for exercising the election has elapsed and no election has been made; or c) Election requires the Court to make an acquisition authorisation order but—
i. The acquisition authorisation order has been refused; or
ii. The application for an acquisition authorisation order has been withdrawn; or d) Partner has given written notice to personal representative that the partner does not
propose to exercise the right to make a partner's property election from the estate; or e) Sale required for funeral & administration expenses, debt/other liabilities of estate; or f) Property is perishable or likely to decrease rapidly in value.
o Despite s70X(1), PR must not transfer interest to the partner if: (s 70X(2))
a) Partner's property election requires Court to make acquisition authorisation order and:
i. The acquisition authorisation order has been refused; or
ii. The application for an acquisition authorisation order has been withdrawn; or iii. An application for an acquisition authorisation order has not been made; or iv. Application for acquisition authorisation order made but not determined; or b) The partner has revoked the partner's property election.
• How price to be satisfied:
o If partner makes property election the price for which the partner acquires the property (being the valuation or other agreed amount under section 70P) is to be satisfied: (s 70W(1))
