LEGALLY SPEAKING: with Schnauer & Co
Don’t die intestate!
Making a will is arguably the most important document that you will create in your lifetime. If you don’t have a will when you die then the assets that you had intended to go to your loved ones may not end up where you had wished them to go.
Without a will your estate will be divided in the way set out in the Administration Act 1955 (“Act”). While the list of beneficiaries provided for in the Act will predominantly be made up of your family members the distribution may not occur in quite the way you would have imagined.
We have recently acted in the estate of a person called John (not his real name) who died without a will. John had previously been married and had two daughters. When the marriage ended John and his ex-wife (who we shall call Jill) entered into a Matrimonial Separation Agreement which was in “full and final” settlement of all of their property relationship issues. As is usual in this type of agreement, it also included a clause that said that neither of them could claim against the estate of the other who had predeceased. John continued to provide for his children, he and Jill went their separate ways but they did not obtain a formal separation order nor did they dissolve their marriage (aka “divorce”).
At the time of his death John was in a de facto relationship with a partner who we shall call Jane. The couple had enjoyed a 14 year relationship but had never married.
On discovering that John had died intestate Jill took legal advice. Even though Jill had received her share of their relationship property when she and John separated (which was 16 years ago!) she placed a claim to yet a further share of John’s estate. Under the Act if a person has died intestate leaving a surviving de facto partner and a wife and there is no divorce or formal separation order then their estate is to be distributed equally between the wife and the de facto partner. Although John and Jill had entered into an agreement for the division of relationship property, under the law this only applies to their relationship rights but it does not affect Jill’s entitlement under the Act to receive a portion of John’s estate. Inadvertently, John had left behind a massive emotional and financial burden for Jane when he died.
In John’s case, because he also had two children, the Act states that his estate is to be distributed as to the first $155,000.00 (plus interest from the date of death until the date of payment) to Jane. Anything that remains after this payment is paid as to 1/3rd to Jill and 2/3rds to John’s children. Not a lot for Jane and most definitely not how John would have wished his estate to be distributed!
Almost two years later and at considerable legal cost Jane has been granted “Letters of Administration” (i.e. to affectively allow her to act as executor) which will allow her to finalise John’s estate.
This is an example of the problems that can occur when you die without a will. Although John’s estate can now be finalised, if he had made a will this situation and the considerable cost could have been avoided.
Nicolette Bodewes, Schnauer and Co Limited.