Have you ever wondered what would happen to your assets if you were to die tomorrow?
Even after practising estate law for many years, writing this question still makes us feel a little uneasy. So, we do understand it is a difficult subject to broach. However, it is a very important question so we want to touch on it in this post.
What Does Happen?
When you die without a Will, there are laws in place that will determine who inherits your assets upon your death. These are known as intestacy laws.
For the purposes of this post, we will discuss how intestacy laws apply in Queensland.
What are the laws of intestacy?
The Queensland intestacy laws are outlined in Part 3 of the Succession Act 1981.
How the intestacy laws will apply to you will vary depending on whether you are single, de facto, married or have children. You should seek advice specific to your circumstances.
In most cases, your assets will be divided between your closest relatives (otherwise known as ‘next of kin’).
Below is a diagram that sets out your next of kin in order of priority in Queensland.
What assets will be included?
Intestacy laws will only apply to assets owned by you in your personal name. This usually includes things like real estate, cash in the bank, investments, vehicles and other assets you own at the time of death.
The following assets however may not fall under intestacy laws:
- Jointly owned assets
If you own assets as joint tenants with another person (usually your spouse), then those assets will automatically pass to the other joint owner upon your death. Assets owned jointly usually include the family home, bank accounts and household contents.
- Unit trusts and companies
Assets owned by unit trusts or companies controlled by you will not fall under intestacy laws. The shares or units however may depending on the structure.
- Discretionary trusts
Assets owned by discretionary trusts controlled by you will not fall under intestacy laws because they are owned by the trust. Ownership of the assets will not change but who controls the trusts will.
- Superannuation and insurance
Superannuation and insurance assets are held in a trust by your super / insurance fund. As a result, this means the trustee of your fund and super /insurance laws will govern who inherits them when you die, unless you have a valid nomination.
Please refer to our previous post – Who Gets My Superannuation If I Die? for further information.
Why can the laws of intestacy be problematic?
The major and obvious problem with the intestacy laws is that your assets may not be distributed in the way you want. The law is effectively a one size fits all approach and as we know, every family is different. It may mean relatives benefit when you don’t want them to or other people that you want to inherit miss out.
Other common minefields include:
- People (both de facto and married couples) who have separated but have not yet had a formal property settlement or divorce. This means their ex may receive their assets when they no longer want them to.
- Blended families who don’t address (or know) the fact that the intestacy laws may not suit their family make up. This can result in all sorts of unintended consequences.
- People who have interests in business, companies and trusts who have not considered a succession plan and what would happen in the event of their death. Their families and business associates may then be left to make sense of it all.
To ensure the people you want to inherit your assets actually do, you must create a Will rather than rely on the intestacy laws.
Want To Know More?
The information contained on this site is for general guidance only. No person should act or refrain from acting on the basis of such information. You should seek appropriate professional advice based upon your particular circumstances.