What happens if I don't leave a will?

Briefly, if you haven't left a will, your surviving spouse will receive the whole estate – this includes your married and de facto or domestic partner – unless you have children.  If you have children (natural or adopted, and including children by another relationship) the estate will be divided between your spouse and all the children according to a legal formula.  The formula gives your spouse your matrimonial home and contents, and half the balance of your estate, subject to various rules and limits.

If you have no legal spouse or domestic partner or any direct descendants, your parents will receive the whole estate; otherwise, it goes to brothers and sisters or other relatives, up to and including first cousins.

If there are no entitled relatives, the estate goes to the state government.

These “intestacy rules” mean that even if you are married with dependants, you need a will unless you are content with this “statutory order”. If a husband and wife are killed together, in a car accident for instance, the older person will normally be presumed to have died first. The younger person might then have inherited assets from their spouse - even though they are by then dead - and if they had not made a will, the assets would be distributed per the “statutory order” regardless of your wishes.

Wills and Super - Can you say who'll benefit after you're gone?

Large sums are often payable from a super fund when you die. Many people assume that super will be paid per their will. However, this is only correct by default. Super benefits are paid by the super trustee per the fund rules and your nomination of beneficiaries.  Death benefits are not automatically distributed according to a will, nor even necessarily in accordance with your nomination to the fund.

A death benefit from a super fund cannot be left in the fund, it must be paid out as a lump sum or as a pension. The trustee will distribute per your nomination, and will only be bound by a binding nomination – any other nomination is purely one factor in the trustee’s decision.

When you joined your fund, you probably nominated your preferred beneficiaries. Binding nominations generally need to be updated every three years to stay valid. It is also important to update non-binding nominations regularly. It is amazing the occasions on which we have found that the will maker has nominated an ex spouse or partner to receive super benefits – a sure cause for angst and expense for the current spouse. 

While binding nominations provide certainty, they can produce results the deceased might not have desired - if, for example, they had not been kept up to date, and the deceased had separated, married or had a child.

Trustees usually distribute the benefit directly to the nominated dependants or dependants, rather than the estate.  This can protect those payments from creditors of the estate if it is insolvent.

You should get proper financial and legal advice about your super fund as part of your estate planning. It is a significant asset, and increasingly the main asset in some estates, and failure to fix the problem now can cause confusion and cost when you die. 

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Source: Written by Peter McNamara, Partner of Clark McNamara Lawyers, Sydney