Updates and background for this project (Digest)
DISTRIBUTION ACCORDING TO FIXED LISTS
The Statute of Distributions
2.1 The rules governing the distribution of an intestate estate have their origins in the English Statute of Distributions of 1670.1
2.2 Distribution under this statute was complex, at least so far as it involved distributing to the next of kin. Once the “surplusage” of the personal estate was determined, a surviving husband would take the whole of his deceased wife’s remaining estate. A widow, however, would take one third of her husband’s estate if he left issue, the remainder passing to the children, with the share of any child who predeceased their father going to their descendants; but a widow would take one half if her husband left no issue, the other half passing, in such cases to the next of kin of the deceased who were in “equal degree”.
2.3 Degrees of relationship were determined in accordance with the civil law progression, that is, essentially the order established late in the development of Roman Law,2 by counting up the number of generations from the intestate to the nearest ancestor held in common with the claimant and then counting down the number of generations from the nearest common ancestor until the claimant was reached. Relatives who were separated from the intestate by a smaller number of steps, those who were of a higher degree, took to the exclusion of those of a lower degree, that is who were separated from the intestate by a greater number of steps. Those who were the same distance, or number of steps, from the intestate took equally.3
2.4 Subject to the spouse and descendents exercising their rights, the father of the intestate was next in line, then the mother, brothers and sisters – on an equal footing (although the children of brothers and sisters could take their deceased parent’s share, grandchildren could not), grandparents (in the absence of brothers and sisters), nieces and nephews, and so on.4
2.5 Although the Crown was ultimately entitled to take the personal estate if no other relatives were entitled,5 the extent of the civil law list of distribution and the fact that executors could take as against the Crown, suggests that this was not common.
Modern provisions
Qld... Schedule 2
ACT... Schedule 6
NSW... s 61B
NT... Schedule 6
SA... s 72G, s 72H, s 72I, s 72J
Tas... s 44-45
Vic... s 51-52, s 55
WA... s 14
NZ... s 77
Eng... s 46
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2.6 The provisions outlined above have been subject to reforms over the years, resulting in the regimes that apply today. The level of complexity has been reduced to an extent, at least in so far as identifying next of kin goes. All Australian jurisdictions now provide fixed lists which must be followed in determining the distribution of an intestate’s estate. Although these lists vary, the general progression can be summarised as below. Each category will be discussed in more detail later in this Issues Paper:
1. The intestate’s estate will go wholly to the surviving spouse or de facto partner if the intestate has left no issue.6
2. If one or more issue and spouse or de facto partner survive, the spouse or de facto partner is entitled to a prescribed amount (plus interest), the personal chattels and a proportion of the remaining estate. The issue are entitled to the rest.7
3. If a spouse and a de facto survive the intestate, the spouse’s entitlement must be divided between them or rest wholly with one at the expense of the other.8
4. If one or more issue, but no spouse or de facto partner, survives the intestate those issue are entitled to the whole of the intestate estate.9
5. If a parent, or parents, of the intestate survives, but no spouse, de facto partner or issue, they are entitled to the whole of the intestate estate (if both parents survive the estate is divided equally between them).10
6. If the intestate is not survived by any of the above but is survived by next of kin, then the intestate estate will go to them according to the relevant list.11
7. If the intestate is not survived by any of the above the intestate estate shall be deemed to be bona vacantia and the Crown will be entitled to it (or to deal with it as it sees fit).12
Provisions relating to persons who, at the death of the intestate, are minors
Qld...
ACT... s 46
NSW...
NT... s 63
SA...
Tas... s 46
Vic... s 54
WA... s 17
NZ... s 78
Eng... s 47
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2.7 Some jurisdictions make separate provision for those who have not yet attained the age of 18 and are entitled to receive a share of an intestate estate upon distribution. In these cases we are dealing with children or minors whether they are issue of the deceased or not (for example, they could also be collateral relatives or the issue of collateral relatives).
2.8 First, these jurisdictions provide that a person who is entitled to the whole, or a share, of the intestate estate, is under 18 and not married, is entitled to take beneficially upon reaching 18 or marrying.13
2.9 Secondly, these jurisdictions make provision for circumstances where a minor dies who would otherwise be entitled to a share on distribution. The Northern Territory and Australian Capital Territory provide that if the person otherwise entitled dies unmarried before they turn 18, then the intestacy provisions take effect as if the person had died before the intestate.14 In Tasmania and England the same effect is achieved by stating that the estate is held in trust for any children “who attain the age of 18 years or marry”.15
2.10 Thirdly, the relevant provisions state that they do not affect any law that authorises expenditure for the maintenance, advancement or benefit of a minor out of property held on trust for him or her.16 The Australian Capital Territory and Northern Territory both add that any amount expended from the estate for the maintenance, advancement or benefit of a minor shall be deemed, upon the death of that minor, before they marry or turn 18, to have reduced the amount of the intestate estate available for distribution by the amount expended.17 Tasmania, New Zealand and England all add that minors who have married before they turn 18 shall “be entitled to give valid receipts for the income” of their share or interest.18
2.11 An advantage of such a provision is that, should an entitled person die unmarried and intestate in their infancy, the entitlement will pass to a blood relative of the intestate, rather than to the surviving parent of the infant who has no such connection to the original intestate. However, to omit such a provision, means vesting occurs as soon as the intestate dies, allowing vested interests to be quickly identified.19
2.12 Western Australia has a provision so that, when an infant is entitled on distribution to a share worth less than $10,000, that infant, or a person on their behalf, may apply to the Court to authorise the executor or administrator to expend all or part of the share for the infant’s “maintenance, advancement or education”. This provision is stated to be in addition to any power the executor or administrator may otherwise have to undertake expenditure on behalf of an infant.20 Likewise, in Victoria, if the estate that remains to be distributed is less than $1,000 and no partner but only a child or children have survived the intestate, the administrator may pay the entitlement of any of the children to “to any person having the care and control of such child or children without seeing to the application thereof and without incurring any liability in respect of such payment”.21
2.13 All other jurisdictions make no specific provision relating to persons who are minors at the death of the intestate, apparently relying on the law relating to trusts.
2.14 While allowance is sometimes made for children to take their share if they marry before they turn 18, consideration should also be given to allowing children to take their share before they turn 18 where they have not married but have, nevertheless, parented children of their own.
ISSUE 2.1
What provision (if any) should be made for minors who are entitled to part or all of an intestate estate?
ISSUE 2.2
Should minors take their share of an intestate estate unconditionally (that is without having to turn 18 or marry - but subject to the property being held for them until they turn 18 or marry)?
ISSUE 2.3
If not, and the minor dies before turning 18 or marrying, should the property available for distribution be reduced by the amount spent on them before their death?
ISSUE 2.4
If a minor’s share in the intestate estate does not pass to him/her because the minor dies before reaching majority should the share pass to surviving issue of the minor?
ISSUE 2.5
What special provision, if any, should be made to accommodate minor issue of the intestate when the estate available for distribution is small?
Use and enjoyment of chattels
Qld
ACT
NSW
NT
SA
Tas s 46(1)(d)
Vic
WA
NZ s 78(1)(c)
Eng s 47(1)(iv)
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2.15 In some jurisdictions a specific provision is included that states that a minor who has a vested or contingent interest in any personal chattels may be permitted, by the administrator, to have the use and enjoyment of the chattels in such a manner and subject to such conditions, if any, as the administrator may consider reasonable, and without being liable to account for any consequential loss.22
Business Estates
2.16 The Trustee Companies Act 1968 (Qld) provides that where administration is granted to a trustee company and the estate or part of it is employed in a business or undertaking, and one or more of those entitled on intestacy is a minor, the trustee company may (subject to the court’s approval) postpone the sale and conversion of the property into money and the trustee company may carry on the business during the minority of the person so entitled.23
DISCLAIMED INTERESTS
2.17 A question also arises about what may happen if a person entitled to take in intestacy disclaims that interest. There exists no statutory provision for such a situation. The common law position was explained by Justice Walton:
Disclaimer is a refusal to accept an interest. As the old Years Books had it, nobody can put an estate into another in spite of his teeth … Now what effect does that [disclaimer] have? It seems to me that it leaves the executor of the will still holding the interest attempted to be disposed of under the statute, and still holding it as part of the estate of the deceased.24
2.18 If those entitled to an interest in the intestate estate disclaim that interest, the estate will be distributed as though the person disclaiming had predeceased the intestate. Their interest will not pass to the Crown by bona vacantia unless no other entitled people can be ascertained. This is because the intestate estate does not automatically vest in those who are entitled to a share in it. Rather the estate vests in the administrator and an entitled party may disclaim their interest before any distribution has been made.
2.19 This has been followed in New South Wales25 and in South Australia26 , where Justice Legoe said, “…the interest does not go to the Crown bona vacantia, but devolves upon other members of that beneficiary class as if the … disclaiming person were non-existent”.27
2.20 In New Zealand successors on intestacy have a statutory right to disclaim their entitlement. The successor must have reached majority and be of sound mind to exercise the right. The disclaimer must relate to the whole of the successor’s entitlement and must be made within one year of the date on which administration of the intestate estate is first granted. The successor cannot have enjoyed or disposed of any part of his or her interest, accepted valuable consideration for the disclaimer, provide who is to be entitled to the disclaimed interest, nor be bankrupt when the disclaimer is made. The effect of a valid disclaimer is as if the successor had died immediately before the intestate, survived by as many issue as were alive at the time of the intestate’s death.28 The advantage of this provision over the common law is that the position of the issue of the person disclaiming is clarified.
2.21 It should be noted that disclaimed interests in an intestate estate may amount to “deprived assets” and may be counted as assets of the person disclaiming for the purpose of determining his or her eligibility for Commonwealth social security benefits.29
FOOTNOTES
1. 22 & 23 Charles II c 10 s 5-7 as amended in 1685 by 1 James II c 17 s 7.
2. See J A C Thomas, Textbook of Roman Law (North Holland Publishing Co, Amsterdam, 1976) at 524-525; R W Lee, The Elements of Roman Law (4th ed, Sweet and Maxwell, London, 1956) at 263-264. See also Mentney v Petty (1722) Prec Ch 593 at 594; 24 ER 266 at 266; and W Blackstone, Commentaries on the Laws of England (9th ed, 1783) at 504.
3. I J Hardingham, M A Neave and H A J Ford, Wills and Intestacy in Australia and New Zealand (2nd ed, Law Book Company, Sydney, 1989) at 352.
4. I J Hardingham, M A Neave and H A J Ford, Wills and Intestacy in Australia and New Zealand (2nd ed, Law Book Company, Sydney, 1989) at 353.
5. See Halsbury’s Laws of England (Butterworth & Co, London, 1910) vol 11 at para 55-64. See para 7.1 below.
6. See para 3.21-3.27.
7. See para 3.28-3.59.
8. See para 3.60-3.73.
9. See para 5.33-5.34.
10. See para 5.35.
11. See para 6.1-6.25.
12. See para 7.1-7.11.
13. Administration and Probate Act 1929 (ACT) s 46(1); Administration and Probate Act 1969 (NT) s 63(1). Tasmania, New Zealand and England make provision to the same effect, but make a distinction between issue of the intestate and other minor relatives: Administration and Probate Act 1935 (Tas) s 46(3); Administration Act 1969 (NZ) s 78(1); Administration of Estates Act 1925 (Eng) s 47.
14. Administration and Probate Act 1929 (ACT) s 46(2); Administration and Probate Act 1969 (NT) s 63(2). See also Administration Act 1969 (NZ) s 78(2).
15. Administration and Probate Act 1935 (Tas) s 46(1)(a); Administration of Estates Act 1925 (Eng) s 47. New Zealand uses “attain full age or marry under that age”: Administration Act 1969 (NZ) s 78(1)(a).
16. Administration and Probate Act 1935 (Tas) s 46(1)(b); Administration of Estates Act 1925 (Eng) s 47(1)(ii); Administration and Probate Act 1929 (ACT) s 46(3); Administration and Probate Act 1969 (NT) s 63(3).
17. Administration and Probate Act 1929 (ACT) s 46(3); and Administration and Probate Act 1969 (NT) s 63(3).
18. Administration and Probate Act 1935 (Tas) s 46(1)(b); Administration Act 1969 (NZ) s 78(1)(b); and Administration of Estates Act 1925 (Eng) s 47(1)(ii).
19. I J Hardingham, M A Neave and H A J Ford, Wills and Intestacy in Australia and New Zealand (2nd ed, Law Book Company, Sydney, 1989) at 363.
20. Administration Act 1903 (WA) s 17.
21. Administration and Probate Act 1958 (Vic) s 54.
22. Administration and Probate Act 1935 (Tas) s 46(1)(d); Administration Act 1969 (NZ) s 78(1)(c); and Administration of Estates Act 1925 (Eng) s 47(1)(iv).
23. Trustee Companies Act 1968 (Qld) s 29(1).
24. Re Scott (deceased); Widdows v Friends of the Clergy Corporation (1975) 1 WLR 1260 at 1271 (Walton J).
25. Rex v Skinner [1972] 1 NSWLR 307.
26. In the Estate of Simmons (deceased) (1990) 56 SASR 1.
27. In the Estate of Simmons (deceased) (1990) 56 SASR 1 at 14 (Legoe J).
28. Administration Act 1969 (NZ) s 81.
29. See Social Security Act 1991 (Cth) s 9(4) and Part 3.12 Div 2.
