Dying without a legally proper will could leave your children out in the financial cold, after recent changes to the NSW succession law.
Under a law, passed in June, the entire estate of a person who dies without a will is automatically handed over to that person’s spouse or partner and could leave estranged children with nothing.
“Without a will the NSW government has said this is what’s going to happen in relation to the distribution of the estate,” said Owen Griffiths, an estate planning specialist for Prosperity Advisers.
“The main people who can get caught are people who dilly-dally with their will.
“About 50 per cent of people die without a will.”
The new law, called the Succession Amendment (Intestacy) Bill 2009, repeals the inheritance act of 1901 that had provided almost exclusively for the children or grandchildren of a dead estate owner.
In March, the NSW Law Reform Commission published a survey that found that 75 per cent of people who had a spouse and children choose to leave the whole of their property to their surviving spouse.
Mr Griffith said in cases where one parent has fallen out with one or several of their children, the new law could result in children being ignored in the distribution of an estate.
“Take, for example, two parents living in a wealthy suburb with their three children having moved out of home,” he said.
“Mum is close to the children but dad has had a falling out with the two eldest, which resulted in both leaving home.
“This conflict has led to neither parent completing wills despite mum wanting to distribute her assets evenly between the children.”
“She dies unexpectedly and the entire estate is left to dad, who chooses to disinherit the children.”
The NSW Law Reform Commission survey, which examined 650 deceased estates that were filed in the NSW Supreme Court’s probate registry in September 2004, found that 82 per cent of people who were survived by children but no spouse gave everything to their children.
Thirty three per cent of people without spouse or descendants gave their property to their brothers and sisters, while 25 per cent gave their property to their nieces and nephews.
The research also found that people with a greater estate value were more likely to be careful about where those assets were distributed following death.
Mr Griffiths said it was important for all Australians to have valid wills regardless of their life circumstances.
“Not having a will can generate a number of unnecessary and avoidable issues and it is equally important that those with wills ensure they are valid and up to date, particularly with changes such as these coming into effect.”
Failure to take note of the changes could lead to family divisions and it is vital that people resolve the details and ensure they are understood by all family members, Mr Griffiths said.