A significant amendment to a nearly 60-year-old Victorian inheritance law will take effect on November 1. After that date, if a partner passes away intestate (i.e. without a will), the surviving partner will no longer have to share the inheritance with their children.
Rachael Grabovic, special counsel and wills and estate specialist at Melbourne-based Rigby Cooke Lawyers, said the amendment addresses the significant financial insecurity and angst surviving partners face under current Victorian law.
“Currently, if a person dies intestate … 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,” 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.”
Under the new law, if the intestate leaves behind a partner and children, or grandchildren or more remote lineal descendants of that particular relationship, the surviving partner is still 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,” Grabovic said.
The new intestacy law also takes into account the differences in family structures that weren’t so prevalent sixty years ago.
“If a person leaves a current partner but [has] 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,” Grabovic explained.
“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.”
If the intestate leaves behind more than one current partner, the partners can enter into a distribution agreement. If the partners cannot reach an agreement, then they can seek a distribution order from the Supreme Court of Victoria.
While surviving partners benefit immensely from the new law, there are no benefits for the children of the deceased. “The amendment is to provide greater protection and security to the surviving partner,” Grabovic said. “Under the current system it can create great angst for the surviving parent knowing that a portion of her or his home or a majority of the assets they manage are owned by their children, and at any time once the children turn 18 … they could effectively force a sale of the home leaving the surviving parent homeless.”
“The new intestacy provisions fall in line with what most married couples set out in their wills: That is, 100 per cent should go to the surviving spouse with the estate passing to their children upon the death of both parents. If a person wants their children to benefit, or would like to ensure greater certainty as to who will benefit from their estate on their death, it is always recommended that they prepare a legally valid will.”
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