1 November law change: new intestacy laws grant automatic inheritance to surviving partners  

From

Rachael Grabovic

A significant change to an almost 60-year-old Victorian inheritance law is about to take effect.

Partners will no longer share the inheritance (on the passing of a partner) with their children when their partner passes away without a will.

Rigby Cooke Lawyers’ Special Counsel and wills & estates specialist Rachael Grabovic said the long-awaited amendment comes into effect on 1 November 2017, addressing the significant financial insecurity and angst surviving partners have faced under the current Victorian law.

“Currently, if a person dies intestate (without a will), their partner is entitled to the personal chattels, the first $100,000 of the estate and one third of the balance of the estate, with the remainder going to the child or children,” Ms Grabovic said.

“For surviving partners with mortgages over jointly-owned property, the survivor often couldn’t cover the repayment of the mortgage with their share of the estate, which caused much strain and additional turmoil at an already distressing time.

“The new law provides that where the intestate leaves a partner and children, or grandchildren or more remote lineal descendants of that particular relationship, the surviving partner is entitled to the whole of the intestate’s estate.

“Although I always recommend that a person prepares a will to clarify his or her testamentary wishes and intentions, the sweeping nature of this new law makes doing so even more important, particularly for anyone wishing for their estate to be administered differently upon their passing.”

The new law also takes into account the differences in family structures that weren’t so prevalent some sixty years ago.

“If a person leaves a current partner but children that are from another relationship, the partner is only entitled to the whole of the estate if it is worth less than the partner’s statutory legacy, which is currently set at $451,909,” said Ms Grabovic.

“If the value of the estate is greater than the statutory legacy then the surviving partner is entitled to the personal chattels, the statutory legacy (plus any interest accrued on that amount) and one half of the remaining balance of the estate.

“In this case, the children of the deceased are entitled to the remaining balance of the intestate’s estate, and if more than one, in equal shares.”

“Where the intestate leaves more than one current partner, the partners can enter into a distribution agreement. If the partners cannot reach agreement, then they can seek a distribution order from the Supreme Court of Victoria. “

The new law is part of the Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2017 which updates The Administration and Probate Act 1958.

Potential scenario – current law vs new law

Thomas – a husband to Sandra and father to sixteen year old Joshua – died unexpectedly and without a will. Thomas had purchased the family home prior to the relationship and it was registered in his sole name. Sandra assumed that she was entitled to Thomas’ estate (essentially the family home, valued at $1.2M with a mortgage of $600,000, bank accounts valued at $200,000 and superannuation of $300,000) and that she would continue to live there, using the balance of the estate to discharge the mortgage.

Under the previous law, Thomas’ son Joshua is entitled to more than two thirds of the estate after his mother received the first $100,000. His share is to be held in trust for him until he turns 18 years of age. As there is insufficient funds to discharge the mortgage Sandra is forced to sell the family home to buy a modest unit further away from the city because she could not afford to cover the full mortgage payment with her share of the estate and she would have to payout her son within two years.

Under the new law, a person in Sandra’s position would be entitled to the whole of her partner’s estate. Sandra would not have to sell the family home, and could continue to live in the family home and provide stability for Joshua.

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