Estates

A person who dies without leaving a will is said to have died intestate, and the estate passes to the next of kin according to a special statutory order that is set out below.

This also occurs when the deceased leaves a will that only distributes part of the estate (in which case the deceased is said to have died partially intestate) or where a will is made but is for some reason ineffective. The most common form of intestacy is where no will is made. Where there is an intestacy, letters of administration, not probate, must be applied for.

The Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2017 (Vic) has changed the statutory order of inheritance for deaths after 1 November 2017 (see pt 1A Administration and Probate Act 1958 (Vic) (‘A&P Act’)).

For deaths before 1 November 2017, the order of the distribution of inheritance remains unchanged, as set out in the table below.

Note: * ‘Issue’ means children, grandchildren and/or great-grandchildren.

The major changes for deaths after 1 November 2017 are broadly as follows.

If a person dies intestate leaving a spouse but no child(ren), the surviving spouse, as defined by the A&P Act (s 70J), takes the entire estate.

Division 5, Part 1A of the A&P Act (ss 90Z–ZE) details who is entitled to an intestate estate where the deceased had more than one spouse or domestic partner at the time of death. If there is a surviving spouse and children only of the relationship with the deceased, the deceased’s spouse takes the entire estate (s 70K A&P Act). If there is a surviving spouse and children, not only of the relationship with the surviving spouse but other children of the deceased by other persons than the deceased’s spouse, (s 90L A&P Act)

The spouse takes:

1. a statutory legacy of $451 909 (indexed to CPI from 1 July 2019) (s 70M A&P Act);
2. personal chattels;
3. interest on the statutory legacy as provided by the A&P Act;
4. one-half of the balance of the estate over those amounts.

All the children of the deceased, whether by the deceased’s spouse or otherwise, share equally the other half of the residuary estate.

The ranking of more remote next of kin who are entitled to an intestate estate has not altered from the previous scheme in force for deaths before 1 November 2017. However, no next of kin more remote than a first cousin can now take an interest in an intestate estate where the intestate died after 1 November 2017. If there is no next of kin who is more closely related than a first cousin, the estate passes entirely to the State of Victoria.

For deaths after 1 November 2017, the next of kin must survive the deceased by 30 days. For deaths after 1 November 2017, intestate estates are not held upon trust for sale.

This is a complex area of law, especially where there is more than one domestic partner, or where the deceased has no immediate family. In these cases, it is recommended that legal advice be obtained.

On many occasions members of the deceased’s family do not know whether the deceased left a will or, if so, where it can be found.

If the will is not with the deceased’s personal papers, checks should be made with the deceased’s bank, solicitor, accountant or a likely trustee company. Advertisements should be placed in a daily newspaper and in the Law Institute Journal.

The main disadvantage of intestacy is that the deceased has no control over the distribution of their estate.

The estate must be strictly distributed among the deceased’s nearest blood relatives, as defined in section 70 of the A&P Act, whether they were close to the testator or not. The estate must be divided in specific fixed proportions depending on the blood or domestic relationship between the deceased and their family members. The table above explains the distribution of an intestate’s estate prior to 1 November 2017, to the appropriate next of kin. As can be seen, this statutory order is fixed, and no special account can be taken of particular wishes of the deceased, or the needs or claims of family members.

Note that:

1. Since 8 November 2001, inheritance rights in respect to intestate estates have been given to domestic partners (s 51A A&P Act). Section 3 of the A&P Act defines a ‘domestic partner’ as a person who, although not married, is living with a person as a couple on a genuine domestic basis, irrespective of gender, and either:

1. is registered as a domestic partner under the Relationships Act 2008 (Vic) (‘Relationships Act’);
2. lived with the person continuously for a period of two years immediately before the person’s death; or
3. is the parent of a child under 18 with the deceased at the time of the person’s death.

The Relationships Act (s 35(2)) and the Family Law Act 1975 (Cth) (s 4AA) set out the factors to be considered in evaluating whether a domestic relationship exists. In many cases, a de facto or same-sex partner will rank as the spouse of an intestate partner and in some cases will displace the entitlements of a spouse (s 51A A&P Act). Legal advice should be taken as to whether the A&P Act applies in any specific case.

2. ‘Children’ include illegitimate children where a person dies after the commencement of the Status of Children Act 1974 (Vic) (‘SoC Act’) (i.e. after 1 March 1975) provided that paternity has been expressly or impliedly admitted or has been established against the father in his lifetime or the parents of the child were married to each other at the time of its conception or at some subsequent time (s 7 SoC Act).

An additional disadvantage of intestacy is that confusion can arise over who should apply for administration. The court has a very wide discretion as to whom it will grant administration, but in most cases whoever has the largest share in the estate is considered the most suitable. If another applicant applies early and is able to take out administration immediately, that applicant may succeed.

The provisions of Part IA of the A&P Act (ss 70A–70ZL) stipulate how the assets of the deceased person who died after 1 November 2017 shall be administered. For example, the assets of an intestate deceased who died before 1 November 2017 are held in trust for sale by the A&P Act and must be sold. This requirement may not be appropriate in many circumstances. For deaths after 1 November 2017, the administrator has a discretion as to whether assets should be sold or transferred to the beneficiaries and the estate is no longer required to be held on trust for sale.

As with an application for probate, an advertisement indicating an intention to apply for letters of administration after the expiration of 14 days is published on the Probate Office’s Online Advertising System.

As with probate applications, after 1 July 2020, all applications for letters of administration must be lodged online through the Supreme Court’s website. 

The following documents must be lodged electronically at the Probate Office in accordance with the current directions set out on the Supreme Court’s website:

1. affidavit in support of the application sworn by the person applying for administration together with a full death certificate and a list of the deceased’s assets;
2. affidavit of publication and searches are now made and filed by the Probate Office;
3. surety’s guarantee or insurance bond (if required);
4. originating motion;
5. order for letters of administration.

When the order for letters of administration is made, the court will advise by email of the grant.

As a condition of granting letters of administration to an applicant, the court, or registrar of probates, may require one or more sureties or an insurance bond.

These sureties are to guarantee that they or the insurance company will make good, in an amount not exceeding the amount of the deceased’s property as sworn, any loss that any person interested in the administration of the estate may suffer as a result of a breach by the administrator of duties (s 57 A&P Act). The question whether sureties are required or not is governed by the A&P Rules.

Order 7.01 provides that a guarantee under section 57 of the A&P Act is not required except where it is proposed to grant administration:

1. to a creditor of the deceased or the legal representative of such a creditor;
2. to a person having no immediate beneficial interest in the deceased’s estate;
3. to the lawyer of a person entitled to a grant of administration;
4. to the use and benefit of a minor or of a person incapable of managing their own affairs;
5. to any person who appears to the court or the registrar to be resident outside Victoria;
6. where a grant of administration relates to a grant to collect and preserve the deceased’s assets (ad colligendum bona) or to bring or defend a proceeding (ad litem);
7. under sections 20, 22 or 24 of the A&P Act;
8. where the court or registrar considers that there are special circumstances making it desirable to require a surety or sureties; or
9. where application can be made to the registrar to dispense with a surety.

The procedure is the same as where the deceased left a will. The notice to claimants refers to the administrator rather than the executor.