Life Begins At.....
Issue link: http://ebook.aprs.com.au/i/47118
WILLS AND BEQUESTS What happens if you die without a will? If you die without a will, you are considered to have died intestate. If you die intestate, your estate will be distributed according to the intestacy rules contained in the relevant legislation (usually the legislation in effect in the State or Territory where your assets are located). If you die intestate, it is possible that your estate may not be distributed the way you had desired or anticipated. It is common, for instance, for couples to benefi t their surviving spouse before any distribution of their estate is made to their children. This may not happen if you die intestate. It is also possible, particularly in light of the evolving concept of 'family' that people who you would anticipate would benefi t from your estate, do not. Example Take for instance, Bill (55) and Jan (52). They are married and live at the Gold Coast. They have three adult sons, Tom (20), Fred (22) and Harry (23). Bill dies unexpectedly in a car accident travelling from the Gold Coast to Brisbane. He does not have a will. Bill owns their main residence in his sole name. He also holds a term deposit in his sole name valued at $150,000. Pursuant to the intestacy rules in Queensland (contained in the Succession Act 1981 (Qld)), Bill's estate will be distributed as follows: (a) the fi rst $150,000 and household chattels to Jan; (b) the balance of his estate as follows: a. 1/3 to Jan; and b. 2/3 equally among Tom, Fred and Harry. This could potentially result in Jan residing in a home in which her sons have a signifi cant interest. Perhaps this is not what Bill and Jan had desired. (N.B. this scenario does not take into account any successful claims against Bill's estate that would affect the distribution of his estate.) Example Take for instance, Jim (23) and Judy (24). They have been dating for 12 months. They recently became engaged and moved in together. Judy has a child, John (3) from a previous relationship. Jim is very fond of John, and treats him as his child. Judy is three months pregnant with Jim's child. Jim doesn't have many assets but he does have a life insurance policy valued at $500,000. Jim has directed his life insurance provider to pay the proceeds of his life insurance policy, on his death, to the personal representatives of his estate. Jim dies unexpectedly. Jim's parents Trudy and Rick both survive Jim. Pursuant to the intestacy rules in Queensland Jim's estate will be distributed as follows: (a) 100% to Jim's unborn child, if that child is born alive and survives for 30 days; (b) if Jim's unborn child is not born alive and does not survive for 30 days, then equally between Jim's parents. Because Jim and Judy have not been residing together for a continuous period of 2 years, Judy may not be not considered Jim's spouse for the purpose of the intestacy rules in Queensland. Further, Judy's child, Tom, may not be considered Jim's child for the purpose of the intestacy rules in Queensland. (N.B. this scenario does not take into account any successful claims against Jim's estate that would affect the distribution of his estate.) By dying intestate, you miss the opportunity to structure the distribution of your estate with reference to tax minimisation and asset protection for your benefi ciaries. Take the example of Bill and Jan. If, at the time of Bill's death, their son Fred was a bankrupt, or involved in a property settlement on breakdown of his marriage, the part of Bill's estate to which Fred became entitled, might be claimed by the trustee in bankruptcy, or included in Fred's matrimonial pool of assets for the purpose of the property settlement with his ex-spouse. This outcome may not have occurred if Bill had signed a will with relevant provisions to protect the inheritance of his benefi ciaries from these risks. THE RETIREE SUMMER 43