Updates and background for this project (Digest)
1.1 Succession may be testate or intestate. Justice Heenan recently explained:
the transmission of the estate of a person on death, whether involving testate or intestate succession, is an inevitable consequence for any person who dies owning real or personal property of any kind. It is the death which effects the transmission of the property although the law provides mechanisms for the deceased, during his or her lifetime, to direct, if he or she should choose to do so, how the estate is to be distributed after death. Similar considerations arise in the case of intestate succession where, whether the omission by the deceased to give directions as to the distribution of his estate after death was intentional or otherwise, the distribution of the estate is determined by the statutory rules for intestate distribution. Again, it is the death of the deceased which effects the transmission of property once its future can no longer be enjoyed by the deceased. The case of intestate distribution perhaps shows this more plainly.1
1.2 Intestacy occurs when the whole or part of the estate of a deceased person is not disposed of by will. Total intestacy arises in circumstances where the whole of the estate of a deceased person is not disposed of by will, for example, where the deceased:
· fails to make a will;
· fails to make a valid will; or
· makes a valid will but all beneficiaries die before the deceased.
1.3 A partial intestacy arises in circumstances where part of the estate of a deceased person is not disposed of effectively by will, for example, where the deceased:
· fails to dispose of the residue of the estate (that is, property that has not otherwise been specifically disposed of) either expressly or impliedly;
· fails to appoint a substitute in the will and some beneficiaries repudiate, or for other reasons cannot take (for example, forfeiture); or
· makes a gift of the residue and part of the gift fails to take effect.
1.4 There was once a distinction between total and partial intestacies for the purposes of administering an estate. Provision is now made so that partially intestate estates are administered, so far as possible, according to the same rules that apply to wholly intestate estates.2
INTESTACY IN CONTEXT
1.5 Intestacy would appear to occur quite frequently in Australia. In 1994, in South Australia, 6.44% of applications for grants were made in circumstances of intestacy. The rate was believed to be 14% in Queensland, just over 10% in Western Australia, and between 6% and 8% in other jurisdictions.3 In 2003 in New South Wales, of the 23,140 matters dealt with in the Probate Division, 6% involved the grant of letters of administration. In 2002, 46,712 deaths were registered, 22,828 matters were dealt with in the Probate Division and 6% of these involved the grant of letters of administration. It is not known how many of the approximately 20,000 estates per year that do not come to the Probate Division are administered informally in intestacy.
1.6 Distribution of an estate, or part of an estate, on intestacy is governed by statutory provision. These rules can be seen as producing the same kind of result as a will would have done if the intestate had had the foresight, the opportunity, the inclination or the ability to produce such a document. The law identifies beneficiaries for the estate from the intestate’s family in an order of preference beginning with those to whom the intestate is most closely related – starting with the intestate’s spouse and issue (children, grandchildren and so on) then parents, siblings, nephews and nieces, grandparents, uncles and aunts, and finally cousins. Such a distribution scheme will generally suit many people who die intestate with substantial estates that need to be administered. These people will often be older, have a surviving spouse who will be in the same age group, and issue who are mature rather than infants and no longer dependent on their parents.4 The intestate’s parents will probably be dead. The private home, where not held in joint tenancy, will still constitute a significant proportion of an intestate’s estate.
1.7 The Law Commission of England and Wales recognised that the rules of intestacy:
should be certain, clear and simple both to understand and to operate. They do not lay down absolute entitlements, because the deceased is always free to make a will leaving his property as he chooses. They operate as a safety net for those who, for one reason or another, have not done this. If the rules can conform to what most people think should happen, so much the better. If they are simple and easy to understand, the more likely it is that people who want their property to go elsewhere will make a will. It is also important to enable estates to be administered quickly and cheaply. The rules should be such that an ordinary layman can easily interpret them and consequently administer them. Also the rules should make it unnecessary for an administrator to have to determine complex or debatable questions of fact.5
1.8 While the aim can be seen as producing the will that the intestate would have made, it is important to note that any system that has to cover all situations adequately will not cover individual cases perfectly. Families may not be close in the sense that the legislation assumes. Relatives who appear biologically closer to the intestate may be further away from the intestate’s favour than those who seem to be biologically distant. Close family members may not get on. A spouse may become estranged.
1.9 People cannot be forced to make comprehensive wills and may fail to produce a valid will through no fault of their own. It is with this in mind that the rules of intestacy should be standardised and reformed to the extent that will enable them to produce a result that will be fair, albeit necessarily overly objective, in most cases. Any hardship produced by the uniform application of standard rules of intestacy may be alleviated by an application under family provision legislation.6 The rules of intestacy should not be viewed as removing the need for wills, and they should not be seen to be lessening the importance of making a valid will.
Indigenous people
1.10 It is quite common for Indigenous people to die intestate.7 It is questionable whether it is appropriate, or always appropriate, for the general law to apply without qualification in cases where an Indigenous person dies intestate. Indigenous concepts of family and time may well be incompatible with the assumptions underlying the general law. If so, the extent to which different distribution rules can, and should, apply arises. This issue is addressed separately in Chapter 9.
LEGISLATIVE DEFINITION OF “INTESTACY”
Qld...s 5
ACT...s 44(1)
NSW...
NT...s 61(1); Trustee Act 1893 s 75
SA...s 72B(1)
Tas...s 3(1)
Vic...s 5(1)
WA...
NZ...s 2(1)
Eng...s 55(1) |
1.11 Not all jurisdictions include a definition of intestacy in their relevant statutes. A number of Acts define “intestate” as:
a person who dies and either does not leave a will, or leaves a will but does not dispose effectively by will of the whole or part of his or her property.8
Others provide that an “intestate” includes:
a person who leaves a will but dies intestate as to some beneficial interest in his real or personal estate.9
1.12 In the Northern Territory, the Trustee Act 1893 (NT) deems a persons to have died intestate in respect of a “beneficial interest in real estate or land” where that interest is “owing to the failure of the objects of the devise or other circumstances happening before or after the death of such person in whole or in part not effectually disposed of”.10
1.13 Intestacy appears to have an accepted meaning. A legislative definition may, therefore, be unnecessary.
ISSUE 1.1
Should there be a legislative definition of “intestate” or “intestacy”?
ISSUE 1.2
If so, how should it be defined?
MECHANISMS FOR ACHIEVING DISTRIBUTION
1.14 Each jurisdiction has different mechanisms for achieving the distribution of an intestate’s estate. Some of the mechanisms are broadly similar with only minor variations between some jurisdictions, but others are very different. For example, in South Australia and the Australian Capital Territory, the personal representative holds the estate on trust for the persons entitled under the intestacy provisions.11 Some jurisdictions, such as Queensland, rely on the general provisions relating to administration of estates (whether testate or not),12 while others, such as New South Wales and Tasmania, expressly provide for statutory trusts to take effect in intestacy.13 Some jurisdictions include provisions that deal with old distinctions that may no longer be relevant to a modern system of administration of estates.
1.15 The remainder of this chapter needs to be considered in the context of any recommendations the National Committee makes in relation to the general administration of estates and in the light of considerations such as:
· whether there is any need for separate rules dealing with the administration of intestate estates;
· whether such rules should appear among the provisions dealing with intestacy or the administration of estates; and
· whether the mechanisms for the distribution of intestate and testate estates should be assimilated as far as possible.
TITLE AND POWERS OF THE PERSONAL REPRESENTATIVE
Qld...s 38, s 45(2), s 52(1)
ACT...s 45
NSW...s 61B(1), s 61F
NT...s 62
SA...s 72C
Tas...s 44, s 47
Vic...s 53
WA...s 13
NZ...s 78, s 79
Eng...s 47, s 49
|
1.16 In general the intestate estate is held on trust by the personal representative to be distributed to the persons entitled to it. The persons entitled are those who are eligible to receive an interest under the rules of distribution on intestacy.
1.17 Where the deceased has made a will (and the executor appointed does not refuse to act) the estate will be held in trust by the executor and any part of it that is subject to intestacy will be distributed by the executor according to the rules of intestacy.
Where the deceased has not made a will, or has made a will and the executor refuses to act, the estate will be held in trust by an administrator appointed by the court and the estate or any part of the estate that is subject to intestacy will be distributed by the administrator according to the rules of intestacy.
Distinction between wholly and partially intestate estates
Qld...s 38
ACT...s 45
NSW...s 61B(1), s 61F
NT...s 62
SA...s 72C(1)
Tas...s 44, s 47(a)
Vic..s 52, s 53(a)
WA...s 13(1)
NZ...s 78, s 79
Eng...s 49
|
1.18 All jurisdictions make some provision (express or implied) to the effect that the administrator or executor holds the intestate estate on trust to be distributed according to the rules of distribution. Some jurisdictions make a statement covering both wholly intestate and partially intestate estates. For example, the Australian Capital Territory’s provision states:
The personal representative of an intestate holds, subject to his or her rights, powers and duties for the purposes of administration, the intestate estate on trust for the persons entitled to it in accordance with this division. 14
Most jurisdictions, however, make a distinction between wholly intestate estates and partially intestate estates. There seem to be two reasons for this distinction: a substantive reason and one relating to statutory construction or interpretation.
1.19 The substantive reason for the distinction is to require the issue to bring into account benefits received under the will. This is the situation, for example, in Tasmania and Victoria where general provision is made for dealing with intestate estates15 subject to the bringing into account of any beneficial interests acquired by the issue of the deceased under the will.16 The question of bringing into account beneficial interests acquired under a will is discussed in Chapter 8.17
1.20 New Zealand also follows this pattern,18 but the special provisions relating to partially intestate estates include provisions relating to the nature of the beneficial interest acquired in some cases.19
1.21 Elsewhere the distinction has been made for reasons of statutory construction or interpretation. New South Wales, for example, provides, in respect of wholly intestate estates:
Where a person dies wholly intestate, the real and personal estate of that person shall, subject to the payment of all such funeral and administration expenses, debts and other liabilities as are properly payable out of the estate, be distributed or held in trust in the manner specified in this section…20
And, in respect of partially intestate estates:
Where a person dies having made a will which effectively disposes of only part of the person’s estate, [the division], so far as applicable and subject to the modifications specified in subsection (2), shall apply to and in relation to the part of the person’s estate that is not disposed of by the will as if the last-mentioned part had comprised the whole of the person’s estate. 21
1.22 In Queensland general provision is made for distribution according to the rules of distribution22 but separate provision is still made in relation to partial intestacies:
Beneficially Interested Personal Representative
Qld...
ACT...
NSW...s 61F(3)
NT...
SA...
Tas...s 47(b)
Vic...s 53(b)
WA...s 13(2)
NZ...
Eng...s 49(1)(b)
|
1.23 Some jurisdictions also make special provision in relation to beneficially interested personal representatives.24 In Tasmania, for example, the relevant provision states that:
The personal representative shall, subject to his rights and powers for the purposes of administration, be a trustee for the persons entitled under this Part in respect of the part of the estate not expressly disposed of unless it appears by the will that the personal representative is intended to take such part beneficially.25
1.24 Queensland had a similar provision26 which was not carried over when the Succession Act 1981 (Qld) was enacted. The Queensland Law Reform Commission recommended the removal of the provision in 1978 on the grounds that it “might be construed as meaning that where the spouse or issue of an intestate happen to be his executor they cannot take benefit under a partial intestacy”.27 The provision was originally intended to deal with the historical position that an executor was entitled at law to such personalty of the testator that was undisposed of by will. Equity, however, took the view that an executor would be entitled to the testator’s personalty that was not expressly disposed of, unless a contrary intention could be found on the part of the testator to exclude the executor from the benefit. In such cases the personalty went to those entitled upon intestacy.28 The English Executors Act of 1830,29 upon which the former Queensland provision was based, shifted the burden of proof in such circumstances in favour of those entitled to take on intestacy so that the executor was deemed to hold undisposed of personalty for the persons entitled to take on intestacy unless an express statement could be found in the will that the executor was intended to take the residue beneficially. The Queensland Law Reform Commission concluded that:
WHAT IS AVAILABLE FOR DISTRIBUTION ON INTESTACY?
Qld...s 5, s 34(1)
ACT...s 5(1), s 45
NSW...s 61B(1)
NT...s 6(1), s 62
SA...s 72F
Tas...s 33, s 44(1)
Vic...s 38(4), s 52(1)
WA...s 10(1), s 13(1)
NZ...
Eng...s 33(4)
|
1.25 Most jurisdictions make provision to identify the estate that is available for distribution. In general the estate available for distribution is so much of the estate that has not been disposed of by will (either in whole or in part) less such expenses, debts and liabilities as may be payable by the estate in the course of the administration. The provisions in each jurisdiction vary in some respects but the general outcome would appear to be the same.
1.26 In Queensland separate provision is made for wholly and partially intestate estates. The property available for distribution in a wholly intestate estate is that which remains after payment of all such debts as are properly payable.31 “Debts” is defined as including “funeral, testamentary and administration expenses, debts and other liabilities payable out of the estate of a deceased person”.32 The property available for distribution in a partially intestate estate is that which “is not effectively disposed of by the will”.33
1.27 Similarly in New South Wales a wholly intestate estate that is available for distribution or to be held in trust is “subject to the payment of all such funeral and administration expenses, debts and other liabilities as are properly payable out of the estate”.34 Likewise in Western Australia the intestate estate is to be held in trust, subject to “the payment of all duties and fees and of the debts of the deceased in the ordinary course of administration”.35
1.28 In the Australian Capital Territory and Northern Territory the personal representative holds the intestate estate, “subject to his or her rights, powers and duties for the purposes of administration”.36 The “purposes of administration” are defined as including “the payment in due course of administration of the debts, funeral and testamentary expenses duties and commission, and the costs, charges and expenses of the executor or administrator, and any costs that may be ordered to be paid out of the estate”.37
1.29 South Australia adopts a similar approach, with the value of the intestate estate being the gross value of the estate less the intestate’s debts and liabilities, funeral expenses, testamentary expenses, the costs of administering the estate and, where the intestate is survived by a spouse, the value of the intestate’s personal chattels.38
1.30 As noted below, Tasmania and Victoria establish trusts for sale of the estate of an intestate and make rather more complex provision as to identify the “residuary estate” on intestacy.39
1.31 New Zealand would appear to make no provision to identify the estate that is available for distribution in its intestacy rules.
1.32 The question of what is available for distribution to those entitled to a share in an intestate’s estate is closely linked to questions of the order of the application of assets for the payment of debts of the deceased. For example, in the administration of solvent estates, most jurisdictions make the property of the deceased that is undisposed of by will available first for the payment of debts.40 It should be noted that, in its Discussion Paper on the Administration of Deceased Estates, the National Committee has proposed the merging of property not disposed of by will into the category of “residuary estate” for the purpose of the payment of debts in the administration of a solvent estate.41
IS THERE A NEED TO EMPOWER THE PERSONAL REPRESENTATIVE TO SELL?
Qld...Part 5
ACT...s 41, 50
NSW...Conveyancing Act 1919 s 153(1)(b)
NT...s 80
SA... s 72C(2)
Tas... s 33
Vic... s 38
WA... s 10
NZ... s 27
Eng... s 41
|
1.33 Some jurisdictions make specific provision for the powers of personal representatives in dealing with intestate estates. The majority effectively give the executor an unfettered power of sale – no matter how it is expressed.
1.34 In New South Wales, the personal representative of the intestate estate has the power to “sell the real estate of the deceased person as to which the deceased person died intestate for the purposes of distribution or division amongst the persons entitled”.42
1.35 The South Australian and New Zealand provisions simply permit the personal representative to “sell, or convert into money, the whole, or any part, of an intestate estate”.43
1.36 Other jurisdictions operate to similar effect, giving personal representatives, in relation to intestate estates, the same powers as personal representatives in relation to testate estates. Examples of such jurisdictions are Queensland,44 Western Australia,45 the Northern Territory46 and England.47
1.37 In contrast to the above jurisdictions, some seek to limit the power of sale to cases where there is a “special reason”, for example, when the proceeds are needed to meet the costs of administration.48 In the Australian Capital Territory and Victoria, this power of sale covers the intestate’s personalty and realty.49
1.38 Tasmania and Victoria seek to regulate the proceeds of the sale further.50 Victoria, for example, first establishes a trust for the sale or conversion of the property of the intestate into money.51 Out of any money arising from such sales or conversions and any ready money of the deceased (not otherwise disposed of by will), the personal representative must meet “all such funeral testamentary and administration expenses debts and other liabilities as are properly payable thereout having regard to the rules of administration” and then “set aside a fund sufficient to provide for any pecuniary legacies bequeathed by the will (if any) of the deceased”.52 The “residuary estate” of the intestate is then identified as:
The residue of the said money and any investments for the time being representing the same, including (but without prejudice to the trust for sale) any part of the estate of the deceased which may be retained unsold and is not required for the administration purposes aforesaid.53
Tasmania makes provision in similar terms.54
FOOTNOTES
1. Re Full Board of the Guardianship and Administration Board (2003) 27 WAR 475 at para 48 (Heenan J).
2. See para 1.18-1.22 below.
3. W A Lee and A A Preece, Lee’s Manual of Queensland Succession Law (5th edition, LBC Information Services, 2001) at 173.
4. While some groups in the community may die intestate at a younger age, for example, Indigenous people (who have lower life expectancies than the general population) and young people who are killed in car accidents, these groups are less likely to have substantial assets to be distributed upon death.
5. England and Wales, Law Commission, Family Law: Distribution on Intestacy (Report 187, 1989) at 7.
6. See the proposals of the National Committee for Uniform Succession Laws relating to family provision: National Committee for Uniform Succession Laws, Report to the Standing Committee of Attorneys General on Family Provision (Queensland Law Reform Commission, Miscellaneous Paper 28, 1997); and National Committee for Uniform Succession Laws, Family Provision: Supplementary Report to the Standing Committee of Attorneys General (Queensland Law Reform Commission, Report 58, 2004).
7. R F Atherton and P Vines, Succession: Families, Property and Death: Text and Cases (2nd ed, LexisNexis Butterworths, Australia, 2003) at 32.
8. Succession Act 1981 (Qld) s 5; Administration and Probate Act 1919 (SA) s 72B(1); Administration and Probate Act 1969 (NT) s 61(1); Administration and Probate Act 1929 (ACT) s 44(1).
9. Administration and Probate Act 1935 (Tas) s 3(1); Administration and Probate Act 1958 (Vic) s 5(1); Administration Act 1969 (NZ) s 2(1); Administration of Estates Act 1925 (Eng) s 55(1).
10. Trustee Act 1893 (NT) s 75.
11. Administration and Probate Act 1919 (SA) s 72C(1); Administration and Probate Act 1929 (ACT) s 45.
12. Succession Act 1981 (Qld) Part 5.
13. Administration and Probate Act 1935 (Tas) s 44.
14. Administration and Probate Act 1929 (ACT) s 45. See also Administration and Probate Act 1969 (NT) s 62; Administration and Probate Act 1919 (SA) s 72C(1); Administration Act 1903 (WA) s 13(1).
15. Administration and Probate Act 1935 (Tas) s 44. See also Administration and Probate Act 1958 (Vic) s 52.
16. Administration and Probate Act 1935 (Tas) s 47(a). See also Administration and Probate Act 1958 (Vic) s 53(a).
17. See para 8.19-8.25.
18. Administration Act 1969 (NZ) s 78 and s 79.
19. Administration Act 1969 (NZ) s 79(2)-(4).
20. Wills, Probate and Administration Act 1898 (NSW) s 61B(1).
21. Wills, Probate and Administration Act 1898 (NSW) s 61F(1). See also Administration of Estates Act 1925 (Eng) s 49(1).
22. The Queensland Act states that “the personal representative of a deceased person shall be under a duty to … distribute the estate of the deceased, subject to the administration thereof, as soon as may be”: Succession Act 1981 (Qld) s 52(1)(d).
23. Succession Act 1981 (Qld) s 38.
24. Wills, Probate and Administration Act 1898 (NSW) s 61F(3); Administration and Probate Act 1935 (Tas) s 47(b); Administration and Probate Act 1958 (Vic) s 53(b); Administration Act 1903 (WA) s 13(2); Administration of Estates Act 1925 (Eng) s 49(1)(b).
25. Administration and Probate Act 1935 (Tas) s 47(b).
26. Succession Act 1867 (Qld) s 34(2).
27. Queensland Law Reform Commission, The Law Relating to Succession (Report 22, 1978) at 23.
28. W A Lee, “Queensland Intestacy Rules 1968” (1970) 7 University of Queensland Law Journal 74 at 83.
29. 11 George IV and 1 William IV c 40.
30. Queensland Law Reform Commission, The Law Relating to Succession (Report 22, 1978) at 23-24.
31. Succession Act 1981 (Qld) s 34(1) definition of “residuary estate”.
32. Succession Act 1981 (Qld) s 5 definition of “debts”.
33. Succession Act 1981 (Qld) s 34(1) definition of “residuary estate”.
34. Wills, Probate and Administration Act 1898 (NSW) s 61B(1).
35. Administration Act 1903 (WA) s 10(1).
36. Administration and Probate Act 1929 (ACT) s 45; Administration and Probate Act 1969 (NT) s 62.
37. Administration and Probate Act 1929 (ACT) s 5(1) definition of “purposes of administration”; Administration and Probate Act 1969 (NT) s 6(1) definition of “purposes of administration”.
38. Administration and Probate Act 1919 (SA) s 72F.
39. Administration and Probate Act 1958 (Vic) s 38; Administration and Probate Act 1935 (Tas) s 33(4). See para 1.38 below. See also Administration of Estates Act 1925 (Eng) s 33(4).
40. See New South Wales Law Reform Commission, Uniform Succession Laws: Administration of Estates of Deceased Persons (DP 42, 1999) para 15.34-15.55; Queensland Law Reform Commission, Administration of Estates of Deceased Persons (Discussion Paper, MP 37, 1999) at 198-208.
41. New South Wales Law Reform Commission, Uniform Succession Laws: Administration of Estates of Deceased Persons (DP 42, 1999) para 15.54; Queensland Law Reform Commission, Administration of Estates of Deceased Persons (Discussion Paper, MP 37, 1999) at 207.
42. Conveyancing Act 1919 (NSW) s 153(1)(b).
43. Administration and Probate Act 1919 (SA) s 72C(2); Administration Act 1969 (NZ) s 27(1).
44. See Succession Act 1981 (Qld) Part 5.
45. See Administration Act 1903 (WA) s 10.
46. See Administration and Probate Act 1969 (NT) s 80.
47. See Administration of Estates Act 1925 (Eng) s 41.
48. Administration and Probate Act 1929 (ACT) s 41, s 50; Administration and Probate Act 1935 (Tas) s 33; Administration and Probate Act 1958 (Vic) s 38.
49. Administration and Probate Act 1929 (ACT) s 41; Administration and Probate Act 1958 (Vic) s 38.
50. Administration and Probate Act 1958 (Vic) s 38; Administration and Probate Act 1935 (Tas) s 33.
