FREQUENTLY ASKED QUESTIONS

Check out our most frequently asked questions:

In New South Wales, “next of kin” for the purpose of inheritance means those relatives who inherit a person’s estate on intestacy.

For people dying after 1 March 2010 the Succession Act sets out a complicated formula for ascertaining their next of kin. Basically the next of kin are restricted to spouses (including de facto spouses) of the deceased person, the person’s children (and remoter issue) and some relatives.

The first group in line are spouses (or, in some cases, spouses and children), then children when there are no spouses and lastly some relatives. Grandchildren and remoter issue may be included.If you do not have a valid Will when you die, you will have died intestate. That means all that you own will pass to your next of kin – or to the State Government of New South Wales if you have no living next of kin.

Assets you own which are not picked up by your Will pass on your death to your next of kin.
There are some exceptions to this, for example

  • assets you own as a joint tenant with another person,
  • your superannuation if that goes directly to a dependent of yours
  • assets in which you only had a life estate
  • you are an indigenous person and a distribution order is made.

Here is a basic table to illustrate who could be your next of kin and how they would share in your estate:

You are survived by Who are your next of kin and what they get
One spouse but no children of yours (unless the spouse is also their mother) The surviving spouse takes all
One spouse and any children (or remoter issue) of yours who are not also issue of that spouse
  1. The surviving spouse takes
    1. your personal effects
    2. a cash legacy of $350,000 adjusted by CPI from December 2005
    3. half the balance

    That spouse may be able to acquire specific assets from the estate for their market value as part of the spouse’s share or by paying for them

  2. The surviving children take half the balance.
    Remoter issue take the share their parent would have taken if the parent has already died.
More than one spouse (eg a person to whom you are legally married and/or one or more de facto spouses) and no issue of yours The surviving spouses take your estate in shares agreed by them or by the Court
More than one spouse and children or remoter issue of yours
  1. The surviving spouses share
      1. your personal effects
      2. the cash legacy
      3. half the rest of your estate

    as agreed between them or ordered by the court

  2. Your children share the rest equally. Any remoter issue of yours take the share of a deceased child of yours or parent of theirs
Your children and/or any remoter issue but no spouse Your children equally share the estate. If one of them did not survive you but his/her children (or remoter issue) did, then those grandchildren of yours take the share of your deceased child or of their parent.
No spouse, no children or remoter issue, but a parent The surviving parents take the whole estate. If only one is alive, that parent takes the entire estate, or, if both are alive, they share it equally.
No spouse, children or remoter issue and no parent Your surviving brothers and sisters equally share the estate, with issue of a deceased brother or sister taking that share
No spouse, no children or remoter issue, no parent, no brother or sister and none of their issue, but a grandparent The surviving grandparent (grandparents) take the whole estate.
No spouse, no children or remoter issue, no parent, no brother or sister or their issue Surviving uncles and aunts equally take the whole estate, with issue of a deceased uncle or aunt taking the deceased uncle’s or aunt’s share.
None of the above The State of New South Wales takes the whole estate

The reference in the table to someone surviving means that the person has survived you for at least 30 days (unless the following note applies)
NOTE: If none of the people described in the table is alive on your death, your assets (apart from the exceptions) will pass to the NSW State Government!

There are exceptions, including:

  • Assets you own as joint tenant with someone else
  • Your superannuation benefits if paid directly to a dependent of yours.
  • Assets in which you only have a life interest and
  • Assets of yours if you are an indigenous person and a distribution order is made.

As you can see, the outcomes set out above may be vastly different from what you want to happen. You can overcome those outcomes in your Will.

Unless you are a licensed public trustee company the only way you can be paid for the time you spend working as an executor is.

  • if the Will specifically provides for that
  • the Court awards commission to you or
  • All of the adult beneficiaries who have legal capacity agree.

Some professional people (for example, accountants, solicitors and financial planners) assume that they are entitled to charge for their time spent as executor on the same basis as they would charge their clients. That is a false assumption, unless the Will clearly spells out that they can do so.

Because you have not appointed any executor, the Supreme Court will appoint an administrator for the estate. In effect, the administrator carries out the functions which an executor would have exercised, had there been a basic Will.

Usually the Court will appoint the person who takes the largest share of the estate to be the administrator.

For example, if you are survived by your spouse as well as children from a previous marriage of yours, the spouse could be appointed. However, the Court has a wide discretion about whom to appoint.

Ultimately where there is a dispute about whom should be appointed the Court will choose someone it considers to be appropriate. The Court will not appoint:

  • A company (other than a licensed public trustee company)
  • Someone under the age of 18 years
  • Someone who lives outside New South Wales.

An executor is appointed by a Will to administer your estate after your death. That involves getting a grant of probate of the Will from the Supreme Court, then collecting all of your assets, paying all your and the estate’s debts, your funeral costs and the testamentary expenses. The testamentary expenses can include the costs of dealing with any claims against the estate and accountants’ fees. The executor’s role includes defending any claims brought against the estate. Those include claims for family provision. The administration can often be quite complex, particularly if you had any business to wind up or assets overseas.

Once the administration is complete, the executor hands over any assets left to specific beneficiaries, to them. Any cash gifts (legacies) are paid. The rest of the estate is paid or transferred to the beneficiaries who are entitled to it.

Strictly speaking an executor is one type of trustee – but the executor’s role is a very limited one.

Often a gift or share of the estate is transferred to a trustee, instead of directly to a beneficiary.

The trustee may need to hold what it received in trust for a long time. If any beneficiary is under the age of 18 years, any share left for that beneficiary must be held in trust until at least the date when the beneficiary turns 18. In many trusts created by a Will there are conditions, such as one requiring a beneficiary to be much older than 18 before becoming entitled to his/her share.

Some trusts last for many years, although the maximum period in NSW is 80 years from the date of the death of the person whose Will it is.

Some trusts are set up for charitable purposes.

While the trust is in existence the trustee has positive duties about investing funds. In many trusts they are given flexible powers.


CONTACT

DIAMOND CONWAY LAWYERS
Level 7, John Hunter Building
9 Hunter Street
Sydney NSW 2000

Phone: +61 2 9222 8000
Fax: +61 2 9222 8008
Email: estatelaw@diamondconway.com.au
DX: 707 Sydney