Approximately half of all Australians don’t have one – a Will!

 

Some people do not make a Will because they think that all of their assets will automatically go to their spouse or partner or children.

Here I provide a recent case study of one of my files which went terribly wrong, all because the deceased did not have a Will.

The names have been changed for privacy reasons

John was a 40 year old male who had been in an on and off de facto relationship with Mary for approximately 6 years.  John and Mary had bought a house together and had a young daughter.  Shortly after John and Mary separated, John decided to name his mother as his Binding Death Nominee (‘BDN’) to his superannuation fund because Mary had developed mental health issues and John wanted to make sure that his daughter was cared for in the event that something happened to him.  Approximately 18 months after John and Mary separated, John was involved in a motor vehicle accident and sadly lost his life.

John did not leave a Will.  The house automatically devolved to Mary.  The trustee of the superannuation fund was not able to payout John’s super to his mother because, under superannuation legislation, John was not able to name his mother as a BDN, something that he wasn’t told by the super fund.  The super fund insisted that they be provided with either a grant of Probate (if the deceased leave a Will) or a grant of Letters of Administration (if the deceased does not leave a Will) before paying out the super monies.

Given that John did not leave a Will his estate had to be administered under the rules of intestacy governed by legislation.  The legislation sets out very clearly the order of the persons eligible who can make the application for Letters of Administration.  After consideration of the persons who could make the application, it became apparent that the first person eligible to make the application was John’s young (8 year old) daughter.  Of course, being 8 years old meant that John’s daughter was too young to make that application.  This meant that Mary could make an application on behalf of their 8 year old daughter that she be granted Letters of Administration until their daughter turned 18 years of age.

However, before Mary could make the application for a grant of Letters of Administration, Mary had to make an application to the Court to be declared as the child’s guardian (notwithstanding that she was the child’s biological mother).  Once the Court declared Mary as the child’s guardian, she could make the application to be granted Letters of Administration.

The superannuation fund was finally satisfied that it could payout John’s super to Mary to hold for the child until she turned 18 years of age.

BUT the legislation also provides that in the event that any assets are held by an administrator (Mary in this case) for a minor (the child of the deceased in this case), the administrator must transfer those assets to the Public Trustee to hold for the minor until he/she attains the age of 18 years.  Mary was now obliged to handover all of the superannuation fund monies to the Public Trustee or to make another application to the Court to be allowed to hold those monies for her minor child until she turns 18 years.

The legal and other associated costs to the estate of Mary having to make three applications was more than $30,000.  The amount paid by the superannuation fund was approximately $180,000.

If John had prepared a Will, he could have named his mother as his executor, his superannuation could have been paid direct to his mother to hold for his minor daughter and his legal and associated costs would have been closer to $5,000 in total.

 

If you would like to know more, please contact one of our friendly staff at Bambrick Legal today:

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