When a person dies, a number of things may happen to their estate. If they have created a valid will before their death, the executor nominated in the will can apply to the Supreme Court for a grant of probate to administer their estate.
If the deceased did not make a valid will before their death, they die as an intestate. The rules of intestacy in NSW are set out in the Succession Act 2006. In these circumstances, rather than the deceased’s executor applying for probate, the Supreme Court of New South Wales will issue letters of administration, which allow an administrator (which will usually be the deceased’s spouse or next of kin) to distribute assets in the manner prescribed by the intestacy rules.
If a person dies before making a will that is valid under the Succession Act 2006 (and the Supreme Court of New South Wales has not accepted an invalid will), the person dies as an intestate. This means their assets will be distributed amongst their surviving relatives in accordance with the rules in the Succession Act 2006.
The rules are very prescriptive, and it is important to note that they remain subject to any person seeking a family provision order from the estate.
The main rules for the distribution of intestate estates in New South Wales are as follows:
- If you die as an intestate and were married or in a domestic or de facto relationship at the time immediately before your death, then your spouse has priority over your other relatives for a share of your assets.
- If you leave a spouse but no children, your spouse is entitled to the whole of your estate.
- If you leave a spouse and have children with that spouse (but no children from a previous spouse), then the spouse is entitled to the whole of your estate.
- If you leave a spouse and have children with a former spouse, then your current spouse is entitled to your personal effects, a statutory legacy which is calculated based on the consumer price index, and half of whatever is remaining. The children are entitled to the other half.
- If you leave only one spouse, that spouse may be granted the right to acquire property from your estate.
- If you leave children but do not leave a spouse, the children are entitled to your estate in equal shares.
- Other relatives such as your parents, siblings and grandparents will generally be entitled to a share of your estate if you did not have a spouse or children at the time you died.
- If no persons are entitled to a share of your estate under these rules, all of your assets will become the property of the New South Wales government.
If you are an Indigenous Australian and you die as an intestate, your assets can be divided in accordance with the laws, customs, traditions and practices of your Indigenous community.
An application for such distribution can be made by the administrator of your estate, or by a person who would be entitled to part of your estate if it was distributed in accordance with your community’s customs.
If the Supreme Court of New South Wales authorises the distribution, then the customs of your community for distribution will override the intestacy rules described above.
When you die as an intestate, the Supreme Court of New South Wales will grant letters of administration to a person for the purposes of administering your estate and distributing your assets. When the letters of administration are granted, all of your assets vest in the administrator.
Only certain people are entitled to be granted letters of administration. Firstly, letters of administration will be granted to your spouse or next of kin, or both conjointly. If you do not have a spouse or next of kin, letters of administration will be granted to another person the Supreme Court considers fit. A minor cannot be granted letters of administration.
In the case of small estates (ie estates of less than $15,000), a Registrar can grant letters of administration.
Before an administrator distributes an intestate’s assets, they must give notice of an intended time at which they intend to distribute the assets. That time cannot be less than six months after the death of the intestate.
The purpose of distributing a notice is to give people (eg the intestate’s creditors) an opportunity to inform the administrator of their claims over the assets. If the administrator then distributes the assets, they are protected from any claims not made to them during the notice period.
The administrator can also make a maintenance provision for a person who survives the intestate and was maintained by them.