Wed. Aug 10th, 2022

Arranging your own death may seem confrontational, but having a proper plan in place can make a big difference in a difficult time.

Whether you are dealing with the death of a family member or a loved one or thinking about your own property planning, it is important to understand how the process works.

We spoke to two property planning attorneys to find out what happens when someone dies, with or without a will.

If someone dies and they have a will, what happens?

When someone prepares their will, they must name one or more executors to take responsibility for managing their property.

Often people name their spouse or child as an executor. You can also appoint a professional (such as a lawyer or accountant) or a public administrator to perform the role for a fee.

Some people may choose to appoint more executors.

A common arrangement is that a testator appoints their children as joint trustees to ensure that they each have a say in the process.

Kimberley Martin, a Hobart-based property planning lawyer, says executors have important responsibilities.

“Their first responsibility, of course, is to arrange burial and disposal of the person’s body,” she says.

“By law, an executor has that duty in the first place.

This means finding records of property ownership, invested investments and all other assets along with any debts the deceased may have had.

This can be complicated and time consuming, and many executors can seek the help of a lawyer to help navigate the process.

Apply for change and distribute the estate

Once all the deceased’s assets and liabilities have been identified, the executor will request the court to change – a legal document confirming the will is valid.

“Once you’ve got your shift, you can move on to summoning the assets,” Martin says.

“So once you decide what’s on the bank accounts, sell the properties, you can do whatever it takes to get those assets transferred to the recipients.”

There may be other financial and tax issues that need to be considered, such as completing any outstanding tax returns.

“Once you’ve done all these questions, you can continue to distribute the assets to the recipients,” says Martin.

Does that sound complicated? It may well be.

Even with a will, Ms. Martin says it often takes 12 to 18 months to complete properties. It may be longer shorter than that depending on the circumstances.

Challenges a will

If someone is dissatisfied with being left out of a will, or if they think they are entitled to a larger share of the assets, they can challenge the will.

Phillip McGowan, an accredited property law specialist based in Sydney, says that wills are usually challenged in two main ways.

“One is to argue that the will is not valid,” he explains.

“Perhaps the testator is suffering from dementia at the time he or she made the will. [You may argue] an earlier will five years ago was in fact the last valid will. “

The second common challenge is what is known as a family insurance claim.

“That is, ‘I did not get a large enough share out of the estate, and I should have gotten a share,'” McGowan says.

For example, if someone dies with two children and leaves all the assets to one, the other sibling may decide to file a family insurance claim.

What happens when someone dies without a will?

When someone dies without a will, their assets are handled according to the laws of intacy. Usually, the deceased’s spouse or de facto spouse will have the primary right to the assets.

Instead of applying for probate, the primary recipient, often the spouse or de facto spouse, must apply to the court for letters of administration.

This is a legal document that allows the applicant to collect assets, pay debts and distribute the estate to the beneficiaries in accordance with the laws of inaction.

“You must apply to the court [for letters of administration], Says Mrs. Martin.

“You have to say who you are, how you fit into the law to file the application, and then the court will assess that application.”

It is important to note that intestacy laws are different in each state and area.

There is a fixed formula that determines how assets are broken down and this can cause unwanted results.

For example, foreign or distant family members may be entitled to a share of the estate.

What about super?

Unlike cash or real estate, super does not automatically form part of a person’s property when they die.

Any funds or other benefits (eg life insurance) are distributed in accordance with the Pension Fund Act by the person’s super fund – not the executor of the will.

Since super is often a major asset, it is important to understand the potential issues if you are an executor or forming your own property plan.

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