What Happens to Your Money and Assets Without a Will?

Many people assume that if they die without a Will, their money and belongings will simply go to the people closest to them.

That is not necessarily what happens.

When someone dies without a valid Will, they are said to have died intestate. Instead of following personal wishes that were never formally recorded, the estate is dealt with under the intestacy laws of the relevant Australian state or territory.

Those laws determine who can inherit and in what order.

What happens to the estate?

When there is no executor appointed under a valid Will, an eligible person may need to apply to the relevant Supreme Court for Letters of Administration.

If approved, that person becomes the administrator of the estate.

The administrator's role can include:

• identifying and collecting estate assets

• confirming debts and liabilities

• paying expenses and tax

• identifying the people legally entitled to inherit

• distributing the remaining estate according to the applicable intestacy rules.

This is different from having an executor you selected yourself. Without a Will, the person who ultimately administers your estate may not be the person you would have chosen.

Who inherits when there is no Will?

The exact rules differ across Australia, so there is no single national formula.

Generally, intestacy laws prioritise particular legal and family relationships. A surviving spouse or eligible partner, children and then other relatives may be entitled depending on the circumstances and the law that applies.

The important point is that these rules follow a legal order. They do not simply ask who you were closest to or what you told people you wanted.

That can matter in modern families.

A close friend has no automatic entitlement simply because they played an important role in your life. A charity you supported will not ordinarily receive something because you had always intended to leave it a gift. A stepchild may not automatically inherit from a stepparent under the applicable intestacy rules.

Personal conversations are not a substitute for a valid Will.

Not everything you own necessarily follows the intestacy rules

Another common misconception is that every financial asset automatically falls into the estate.

Some assets can be dealt with differently.

Property owned as joint tenants will generally pass to the surviving joint owner rather than forming part of the deceased person's estate.

Superannuation also does not automatically pass through a Will. The way a super death benefit is paid can depend on any valid beneficiary nomination, the fund's rules and superannuation law. In some circumstances it may be paid to the estate, but this should not simply be assumed.

Assets held through a family or discretionary trust are generally governed by the trust deed and its control arrangements rather than becoming estate assets simply because the deceased was involved with the trust.

That means understanding what you own is only part of estate planning. You also need to understand how you own it.

What intestacy rules cannot record

Intestacy laws exist so there is a process when someone dies without valid instructions.

But they cannot know the personal reasoning behind your wishes.

They cannot record that you want:

• a sentimental possession to go to a particular person.

• a friend or charity to receive a gift.

• a particular person to administer your estate.

• different beneficiaries to receive different forms of support.

• arrangements to be made for a pet.

A valid Will can record many of these choices for assets that form part of your estate.

Look beyond the Will as well

Having a Will is important, but estate planning should also consider assets and arrangements that may sit outside it.

That may mean reviewing:

• superannuation beneficiary nominations

• how jointly owned property is held

• trust and company structures

• business succession arrangements

• who can make decisions for you if you lose capacity.

The aim is to understand what would happen across your whole financial position rather than assuming everything will automatically follow the same path.

Reviewing what you own, how it is held and who you want to benefit can help identify gaps before the law has to make those decisions for you.

moneyGPS can help you take a broader look at your financial position and identify areas that may need attention.

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