Surviving partners will no longer share the inheritance with their children when their loved ones pass away without a will, after new laws came into effect today.
The change to the Victorian legislation aims to address the significant financial insecurity and angst surviving partners have faced under the current law.
Wills and estate specialist with law firm Rigby Cooke Lawyers Rachael Grabovic says the laws will ease the pressure on surviving partners.
“Currently, if a person dies intestate (without a will), their partner is entitled to the personal chattels, the first $100,000 of the estate and one third of the balance of the estate, with the remainder going to the child or children,” Ms Grabovic said.
“For surviving partners with mortgages over jointly-owned property, the survivor often couldn’t cover the repayment of the mortgage with their share of the estate, which caused much strain and additional turmoil at an already distressing time.
“The new law provides that where the intestate leaves a partner and children, or grandchildren or more remote lineal descendants of that particular relationship, the surviving partner is entitled to the whole of the intestate’s estate.
“The sweeping nature of this new law makes … (preparing a will) even more important, particularly for anyone wishing for their estate to be administered differently upon their passing.”
The new law also takes into account the differences in family structures that weren’t so prevalent 60 years ago, when the current legislation was written.
Potential scenario – current law vs new law
Thomas – husband to Sandra and father to 16-year-old Joshua – died unexpectedly and without a will. Thomas had purchased the family home prior to the relationship and it was registered in his name. Sandra assumed that she was entitled to Thomas’ estate (essentially the family home, valued at $1.2 million with a mortgage of $600,000, bank accounts valued at $200,000 and superannuation of $300,000) and that she would continue to live there, using the balance of the estate to discharge the mortgage.
Under the previous law, Thomas’ son Joshua is entitled to more than two thirds of the estate after his mother receives the first $100,000. His share is to be held in trust for him until he turns 18 years of age. As there are insufficient funds to discharge the mortgage, Sandra is forced to sell the family home to buy a modest unit further away from the city because she cannot afford to cover the full mortgage payment with her share of the estate, and she has to pay out her son within two years.
Under the new law, however a person in Sandra’s position is entitled to the whole of her partner’s estate. Sandra would not have to sell the family home, and could continue to live in the family home and provide stability for Joshua.
What do you think of the law change? Have you already written your will? Does this new law encourage you to write a new will?