Wills and succession: intestate succession

Applicable laws

  • Succession (Intestacy) Amendment Act 2009 (NSW):
    • Arose out of New South Wales Law Reform Commission, Uniform Succession Laws, Intestacy, Report No 116 (2007).
    • Inserted a new ch 4 into the Succession Act 2006 (NSW).
    • Repealed pt 2 div 2A of the Probate and Administration Act 1898 (NSW).
      • Pt 2 div 2A dealt with intestate succession, and will continue to apply to persons who died intestate before 1 March 2010.
    • Ch 4 applies to persons who die intestate on or after 1 March 2010.
  • Probate and Administration Act 1898 (NSW) ss 61A–61F apply to persons who died between 1 January 1978 and 1 March 2010.
  • For deaths prior to 1978, see R S Geddes, C J Rowland and P Studdert, Wills, Probate and Administration Law in New South Wales (LBC Information Services, 1996) 433–7.

When intestacy rules can be displaced

  • Intestacy rules can only be displaced by a valid testamentary disposition.
    • Merely declaring that the next of kin is not to benefit is insufficient if there is no other testamentary disposition: Muir v Archdall (1918) 19 SR (NSW) 10.
      • See also In the Estate of McMullen [2014] ACTSC 53.
      • In some circumstances this may amount to a gift by implication to the next person in line after the next of kin.
        • A gift to ‘my remaining relatives’ has been construed to mean those who would take on intestacy: Application of Marais [2009] NSWSC 206.

Intestacy and partial intestacy

  • Intestacy occurs when the deceased fails to effectively dispose of property by will.
  • Total intestacy is the failure to dispose of any and all of the estate.
  • Partial intestacy is the failure to include all property, or of a specific or residuary gift in the will:
    • The intestacy rules apply to partial intestacy: Succession Act 2006 (NSW) s 102.
  • An entitlement to the whole estate means the net estate (that is, after payment of outstanding liabilities): Succession Act 2006 (NSW) s 103.

Survivorship

Succession Act 2006 (NSW)

  • There can be no distribution to a person unless they survive the intestate deceased: s 108(1).
    • ‘Survive’ is defined as:
      • being born before the intestate’s death and living at least 30 days thereafter: s 107(1)(a); or
      • being born after the intestate’s death where gestation in the uterus commenced before death and living at least 30 days after the intestate’s death: s 107(1)(b).
  • The order of death is determined by fact or the seniority rule (see Conveyancing Act 1919 (NSW) s 35): s 107.
    • Resolves the problems associated with near-simultaneous deaths.
    • Removes doubt relating to frozen embryos as next-of-kin, where they are conceived in the lifetime of the intestate but not implanted in the womb until after the death of the intestate.
      • This issue was considered in Re the Estate of K (Unreported, Supreme Court of Tasmania, Slicer J, 26 February 1996).
      • The embryo must be implanted before death, be born alive, and live for at least 30 days after the intestate’s death.

Distribution of the estate

Succession Act 2006 (NSW)

  • If there is a spouse and no children, the spouse takes the whole estate: s 111.
  • If there is a spouse and children:
    • If all children are the issue of the intestate and the spouse, the spouse takes the whole estate: s 112.
    • If children are not all the issue of the intestate and their spouse:
      • The spouse takes the personal effects, statutory legacy and half the remainder of the estate: s 113.
        • Personal effects are defined in s 101 as any personal property except:
          • property used exclusively for business;
          • coins and notes that are not part of a private collection;
          • property held as security;
          • bullion and similar held for investment and not also held for household or personal use decoration; and
          • land.
        • This simplified the previous law which provided that the spouse was entitled to ‘household chattels’.
          • Antique clocks might be part of the household furniture: Re Crispin’s Will Trusts [1975] Ch 245.
          • Coin or stamp collections would not ordinarily be part of the household: Re Reynold’s Will Trusts [1966] 1 WLR 19.
          • The tests were confusing.
        • Statutory legacy is defined in s 106 as the consumer price index (‘CPI’) adjusted legacy + interest (Royal Bank of Australia cash rate as at the previous 1 January + 2%, if not paid within 1 year of death).
          • CPI adjusted legacy is calculated using R = A × C ÷ D, where:
            • R is the CPI adjusted legacy;
            • A is $350,000;
            • C is the CPI number for the last quarter for which such a number was published before the date on which the intestate died; and
            • D is the CPI number for the December 2005 quarter.
        • Children who are not issue of the spouse and intestate receive half the remainder of the estate (including relevant remote issue not of the spouse and intestate): s 127(2).
        • If the death occurred before 1 March 2010 or after 1 September 2003 the spouse received the whole of the estate if the value less household chattels was under $200,000: Probate and Administration Act 1898 (NSW) s 61A(2).
  • If there are children or issue but no spouse the children or issue take the whole estate: s 127(1).
    • The whole estate passes to the children or issue in equal shares if there is more than one surviving: s 127(3).
    • If a child dies before the intestate but leaves surviving issue, the issue are entitled to equal shares of the presumptive share: s 127(4).
      • The ‘presumptive share’ is the entitlement the child would have received if they had survived the intestate: s 101.
      • This process continues until the issue of the intestate are exhausted: s 127(4).
  • If there is no issue and no spouse the whole estate passes to the intestate’s parents in equal shares if more than one is surviving: s 128.
  • If there is no issue, no spouse and no parents the whole estate passes to the intestate’s siblings (without distinction between full and half siblings) in equal shares if they survive the intestate: s 129(1).
    • If siblings do not survive the intestate, a presumptive share passes to their issue until exhausted: s 129(3).
  • If there is no issue, spouse, parents, siblings or issue of deceased siblings, the grandparents take the whole of the estate in equal shares if more than one surviving: s 130.
  • If there is no issue, spouse, parents, siblings, issue of deceased siblings or grandparents, the estate passes to aunts and uncles (without distinction between full and half blood) in equal shares: s 131.
    • Children of aunts and uncles may take presumptive shares, but more remote issue of aunts and uncles have no entitlement: s 131(3).
  • If all options are exhausted, the Crown/State takes the whole of the estate (‘bona vacantia’): s 136.
    • This may be characterised as a statutory right to take property and attached rights rather than a true bona vacantia: Brown v New South Wales Trustee and Guardian [2012] NSWCA 431 [112].
      • Bona vacantia’ refers to the property vesting in the Crown because it has become ‘ownerless’: Dyke v Walford (1846) 13 ER 557.
    • The Minister may waive the State’s entitlement and give the whole or part of the estate absolutely or upon conditions to dependants of the intestate, persons with a moral claim upon the intestates, or organisations of persons whom the intestate might have been expected to make a provision.
      • Applications for an exercise of this discretion must be made in writing to the Crown Solicitor: s 137.

Spouses

  • At common law, the terms ‘husband’, ‘wife’ and ‘spouse’ referred to lawfully-married persons.
  • Under s 104 of the Succession Act 2006 (NSW) a spouse is, for the purposes of intestacy:
    • a person married to the intestate; or
    • a party to a domestic partnership with the intestate immediately before death.
  • Under s 105 of the Succession Act 2006 (NSW) a domestic partnership is:
    • a registered relationship or interstate registered relationship within the meaning of the Relationships Register Act 2010 (NSW); or
    • a de facto relationship that:
      • has been in existence for a continuous period of at least two years; or
      • has resulted in the birth of a child.
  • Under ss 21C(2)–(3) of the Interpretation Act 1987 (NSW), a person is in a de facto relationship with another person if:
    • they have a relationship as a couple living together; and
    • they are not married to one another or related by family.
  • De facto relationships can exist even if one or both are legally married to or in a registered relationship (including one registered interstate) with someone else.
  • Whether persons are in a ‘relationship as a couple’ is determined by reference to all circumstances, including:
    • the duration;
    • the nature and extent of their common residence;
    • whether a sexual relationship exists;
    • the degree of financial dependence or interdependence;
    • any arrangements of financial support between them;
    • the ownership, use and acquisition of property;
    • the degree of mutual commitment to a shared life;
    • the care and support of children;
    • the performance of household duties; and
    • the reputation and public aspects of the relationship.

Multiple spouses

Wills, Probate and Administration (De Facto Relationships) Amendment Act 1984 (NSW)

  • Applies to the estates of persons who have died between 1 July 1985 and 1 March 2010.
  • Under s 61B(3A), if there is a spouse and a de facto spouse, the de facto spouse takes the share the legal spouse would have taken if:
    • the de facto relationship existed for two continuous years prior to the death; and
    • the intestate did not live with the legal spouse during any part of that period.
  • Under s 61B(3B), if there is a de facto spouse and issue, but no legal spouse:
    • If the de facto relationship existed for two continuous years prior to death, the de facto spouse takes the legal spouse’s share.
    • If the de facto relationship existed for less than two years prior to death:
      • the de facto spouse takes the spouse’s share where the only children are of the de facto relationship; or
      • the de facto spouse takes the spouse’s share where the only issue are grandchildren or remoter issue; or
      • the de facto spouse cannot take the spouse’s share where the children are not children of the de facto relationship.
  • In all other cases, a reference to a spouse includes a reference to a de facto spouse: s 32G(2).

Succession Act 2006 (NSW)

  • Applies from 1 March 2010 where the deceased leaves more than one spouse.
  • Where there are no issue, or the only issue are of one spouse, then the whole of the estate is to be shared between the spouses: s 122–123.
  • Where there are issue who are not the issue of a surviving spouse, then the personal effects, statutory legacy, and half the remainder of the estate must be shared according to this section: s 124.
    • The share of each spouse is determined:
      • according to an agreed and entered distribution agreement;
      • by an application to the court for a distribution order; or
      • by an equal share if after three months of service of a notice by the legal personal representative the spouses have take no action.
    • Under a distribution order, the Court may:
      • order distribution between the spouses in a way it considers just and equitable: s 126(3); or
      • allocate the entirety of the property solely to one spouse: s 126(4).
    • A distribution order may include conditions: s 126(5).

Spouse’s right to acquire property

Succession Act 2006 (NSW)

  • Spouses have a right to acquire any property from the estate in lieu of receiving in whole or part a cash distribution.
  • The right applies where there is only spouse: s 114.
  • It is an election to acquire property in specie (in the form specified): s 115.
  • The election requires court approval if:
    • the property forms part of a larger aggregate such as a farmhouse or an antique that is part of a collection; and
    • the election would diminish the value of the remainder or make administration substantial more difficult, such as by making the sale of the remainder more difficult.
  • Election is not permitted if:
    • it would require compliance with specified mandatory provisions relating to the subdivision of land or strata lots unless the spouse pays those costs; or
    • the property has been acquired by a bona fide purchaser for value.
  • The personal representative of the estate must give notice to the spouse of their right to elect within one month of the grant of letters of administration: s 116(1).
    • The notice must state:
      • how the election is to be made;
      • that the election may be subject to court approval and in what circumstances; and
      • that the election must be made within three months of the notice.
    • Notice is not required if the spouse is the (or a) personal representative: s 116(2).
  • Election must be made within three months from the date of notice: s 117(1)(a).
    • If the spouse is the (or a) personal representative, it is three months from the date of grant of letters of administration: s 117(1)(b).
  • The Court may extend the time to make an election if there is sufficient cause, even after the three months has passed, but not once administration is complete: s 117(3).
  • Election must be by written notice identifying the property: s 118(1).
  • Notice must be given to personal representatives and all persons entitled to share in the estate.
  • Election may be revoked by written notice at any time before the property is transferred.
  • The spouse acquires property by payment of the exercise price out of the money they are entitled to from the estate then, if insufficient, from their own funds prior to or on the date of transfer: s 120.
    • The exercise price is the market value of the property: s 119(1).
  • The spouse acquiring property may agree to take over a mortgage, in which case the market value is reduced by the mortgage liability, but the spouse takes subject to the mortgage.
  • Property must be valued by a registered valuer if there is an election, or if the spouse requests one in order to consider an election.
    • The valuation report must be given to the spouse and all persons entitled to share in the estate.
    • Valuation may be waived with the consent of all persons entitled to share in the estate.
  • Under s 121, personal representatives must not dispose of property unless:
    • they are the spouse entitled to elect;
    • no election occurs and the time to make an election has passed;
    • the spouse advises in writing of no intent to make an election;
    • the property is required to pay liabilities; or
    • the property is perishable.
  • A transaction contrary to s 121 is not invalid.

Probate and Administration Act 1898 (NSW)

  • If the intestate died before 1 March 2010, s 61D allowed the spouse to elect to retain the shared home where:
    • the intestate died leaving a spouse and issue;
    • the value of the estate (excluding household chattels) exceeded the prescribed amount;
    • the intestate held an interest in a dwelling house in NSW; and
    • the intestate and spouse occupied the dwelling house at the time of death as their sole or principal residence.
  • A dwelling house is a building designed principally for use as a separate residence for one person or family, plus curtilage (land around the home): s 61A(2).
    • Curtilage may be up to 2,500 sq m: sch 4 cl 2.
  • Under sch 4, the election:
    • must be in writing: cl 2(1);
    • cannot be revoked without the consent of the Supreme Court: cl 2(2); and
    • must be exercised within 12 months of the grant of letters of administration: cl 3.
  • The spouse can require valuation of the home: sch 4 cl 2(3).
  • Debts and other liabilities have priority: sch 4 cl 3.
  • The spouse did not have a right to the home against a bona fide purchaser for value: sch 4 cl 7.
  • The intestate’s interest can have been a fee simple, a lease, a right to exclusive occupancy, or a tenancy in common (only if held with the surviving spouse): s 61A(2).
    • This does not include a joint tenancy, because the surviving joint tenant takes all.
  • Under s 61B, the effect of taking the shared home is:
    • if the value is greater than or equal to the share the spouse would have received (excluding household chattels) without electing to take the home — the share is fully satisfied;
    • if the value is greater than the spouse’s share — the share of the issue is reduced by the amount of the excess; and
    • if the value is less than the spouse’s share — the share is deemed satisfied to the extent of that value.
  • The share that the spouse would have received without making an election is, for the purposes of s 61B(13), the prescribed amount plus the half-share referred to in s 61B(3)(c), being the share without election less the value of the household chattels.

Issue

  • Issue is the natural offspring of a person, including children, grandchildren, and their issue.
  • Ex nuptial issue:
    • At common law, issue only include ‘legitimate issue’ (those born in lawful wedlock): Re Pritchard (1940) 40 SR (NSW) 443.
      • Ex nuptial issue were filius nullius (‘children of nobody’).
      • The common law position has been abolished by the Children (Equality of Status) Act 1976 (NSW): see Gorey v Griffin [1978] 1 NSWLR 739, 744 (Hutley JA).
    • As of 1 July 1977, ex nuptial children have the same status as those born in wedlock: Children (Equality of Status) Act 1976 (NSW).
      • From 1 September 1998, the Children (Equality of Status) Act (NSW) and the Artificial Conception Act 1984 (NSW) were consolidated by the Status of Children Act 1996 (NSW).
  • Status of Children Act 1996 (NSW):
    • A relationship between a parent and their child must be determined irrespective of whether the parents are married: s 5.
      • This also includes determining a person’s relationship to another person via their parents.
    • From 1 July 1977, a reference in a will to a child or a relationship to a child includes ex nuptial children: s 6.
    • Dispositions prior to 1 July 1977 are determined by common law: s 7.
    • The abolition of the distinction between ex nuptial and legitimate children applies to intestacy from 1 July 1977: s 8.
  • A child born out of wedlock is legitimate if the parents subsequently marry, even if at the time of birth there was a legal impediment to marriage: Marriage Act 1961 (Cth) s 89.
  • A child of a void marriage is legitimate provided at least one parent believed on reasonable grounds that the marriage was valid at the time of conception: Marriage Act 1961 (Cth) s 91.

Adoption

  • For the purposes of intestacy, an adopted child is a child of the intestate, and family relationships that exist as a matter of biological fact that are inconsistent with the relationship created by adoption are to be ignored: Succession Act 2006 (NSW) s 109.
  • An adoption order makes a child the child of the adoptive parents as if they had been born to the parents in lawful wedlock and causes the child to cease to be the child of their natural parents: Adoption Act 2000 (NSW) s 95.
  • Adopted children cannot inherit from their natural parents on intestacy.
  • A testator may distinguish between natural and adopted children in their will: Adoption Act 2000 (NSW) s 98(4).
  • A child is not denied a vested or contingent proprietary right acquired prior to the adoption order: Adoption Act 2000 (NSW) s 97(1).
  • The right to inheritance from the natural or birth parents is preserved if one of the natural parents dies, the survivor remarries, and the new spouse adopts the child: Adoption Act 2000 (NSW) s 95(3).
    • This applies to all dispositions of property by will or intestacy if the person dies after 7 February 1967, subject to s 97(1): s 98(1).
  • For the purposes of the Succession Act 2006 (NSW), adopted persons are related to other children of the adoptive parents where adopted by one or both parents: s 99.

Artificial conception

  • Under Status of Children Act 1996 (NSW) s 14:
    • if a married woman undergoes a successful fertilisation procedure, the husband is irrefutably presumed to be the father even if he did not supply the sperm but only consented;
    • if a married woman undergoes a successful fertilisation procedure, the woman is irrefutably presumed to be the mother even if she did not supply the ovum; and
    • if a woman becomes pregnant as a result of a fertilisation procedure using sperm or ovum from a donor, the donor is irrefutably presumed not to be a parent.
  • Surrogacy agreements are nullified by Status of Children Act 1996 (NSW) s 14, but the Adoption Act 2000 (NSW) may be used to give effect to a surrogacy agreement by making an adoption order: Application of A and B [2000] NSWSC 640 (7 July 2000).
  • Non-commercial surrogacy arrangements are dealt with by the Surrogacy Act 2010 (NSW):
    • Under pt 3 the Supreme Court may make a parentage order in favour of the persons intended to be parents under the surrogacy agreement.
    • A parentage order makes the intended parents the legal parents, and cancels any property rights of the child to the birth parents: ss 39–40.
  • Uniform Civil Procedure Rules 2005 (NSW) pt 56A specifies how applications for a parentage order are made, how they are dealt with, what evidence is required, etc, consistent with the Surrogacy Act 2010 (NSW).
    • This is modelled on Universal Civil Procedure Rules 2005 (NSW) pt 56, which deals with matters under the Adoption Act 2000 (NSW).
  • Biological relationships inconsistent with a parentage order are to be disregarded for the purposes of intestacy: Succession Act 2006 (NSW) s 109A.

Consideration of Indigenous culture in varying distribution

Succession Act 2006 (NSW)

  • The Court may approve a scheme of distribution that is in accordance with the laws, customs, traditions and practices of the Indigenous community or group to which the intestate belonged: s 133.
  • The approved scheme may displace the intestacy rules in whole or in part: s 135.
  • An application can only be made by the personal representative or a person who would benefit under such a scheme.
  • It must be just and equitable to make the order.

Forfeiture rule

  • A beneficiary under a will or the next-of-kin on intestacy may be prevented from inheriting from the deceased if they unlawfully killed the deceased.
    • This principle as been expressed ‘a man shall not slay his benefactor and thereby take his bounty’: Re Estate of Hall; Hall v Knight [1914] P 1, 7 (Hamilton LJ).
  • The rule applies in cases of:
    • inheritance under a will: Troja v Troja (1994) 33 NSWLR 269;
    • intestacy: Re Tucker (1920) 21 SR (NSW) 175;
    • joint tenancy where one joint tenant kills another: Re Thorp and the Real Property Act (1961) 80 WN (NSW) 61; Rasmanis v Jurewitsch (1970) 70 SR (NSW) 407;
    • claims under the Family Provision Act 1982 (NSW): Troja v Troja (1994) 33 NSWLR 152; Re Royce [1985] Ch 85, affd [1986] Ch 180;
    • unlawful killing bringing about an enforceable legal right in the perpetrator (such as cases of claims under insurance policies): Cleaver v Mutual Fund Life Association [1892] 1 QB 147; and
    • claims under the Family Law Act 1975 (Cth): Homsy v Yassa (1994) FLC 92–442.
  • The forfeiture rule is not limited to murder: Estate of Crippen [1911] P 108.
    • It has also been applied to:
      • manslaughter and manslaughter by diminished responsibility: Troja v Troja (1994) 33 NSWLR 269;
      • lesser crimes such as dangerous driving causing death; and
      • assisted suicide: Public Trustee of Queensland v Public Trustee of Queensland [2014] QSC 47.
    • It does not matter if the killing was motivated by a desire to:
      • inherit: Gonzales v Clariades (2003) 58 NSWLR 211; or
      • alleviate the suffering of the deceased: Re Dellow’s Will Trusts; Lloyds Bank Ltd v Institute of Cancer Research [1964] 1 WLR 451.
  • Proof of unlawful killing is on the civil standard of balance of probabilities, not the criminal standard of beyond reasonable doubt: Helton v Allen (1940) 63 CLR 691.
    • The Court will be conscious of the gravity of the allegation and satisfactory proof of the facts: Re Estate of Thomson [2015] QSC 29 [29]–[30].
  • The forfeiture rule will not be applied where the unlawful killing was committed in circumstances amounting to insanity: Re Plaister; Perpetual Trustee Co v Crawshaw (1934) 34 SR (NSW) 547.
  • The forfeiture rule applies to all those who must claim through the person responsible for the death: Beresford v Royal Insurance Co Ltd [1938] AC 586.
  • To mitigate the harshness of strict application of the forfeiture rule, the Court has discretion to modify the rule: Forfeiture Act 1995 (NSW) s 5.
    • This discretion does not apply in regard to murder: s 4.
    • Examples of modification:
      • Manslaughter due to strained relationship, with no intention to profit, significant care of the deceased, and advanced age of deceased: Leneghan-Britton v Taylor (1998) 100 A Crim R 565.
      • Benefits that do not flow directly from a homicide but which are accelerated are denied for the period of acceleration: Batey v Potts (2004) 61 NSWLR 274.