PROPOSED CHANGES TO THE ADMINISTRATION ACT: What you need to know...
PROPOSED CHANGES TO THE ADMINISTRATION ACT:
WHAT YOU NEED TO KNOW
On 27 June 2018, the State Parliament heard the second reading of the Administration Amendment Bill 2018, which would increase the current amounts of the statutory legacies payable on Intestacy. The proposed changes will have a significant effect on what happens if a person dies without leaving a valid Will.
If you die without leaving a valid Will, your Estate will be distributed in accordance with the Administration Act 1903 (WA). This situation is called an “Intestacy”. The person who has died is then said to have died “Intestate”.
Currently, section 14 of the Administration Act provides for a number of prescribed statutory legacies. For example:-
- If you die leaving a spouse and children, then the first $50,000.00 of your Estate would be given to your spouse and the remainder would be divided so as to provide one third to your spouse and the remaining two thirds to your children.
- If you die leaving a spouse and no children, then the first $75,000.00 of your Estate would be given to your spouse.
These amounts were last calculated in 1982 and are, in today’s economy, grossly inadequate.
Some of the proposed changes are:-
- If you die leaving a spouse and children, then the first $435,000.00 of your Estate would be given to your spouse and the remainder would be divided so as to provide one third to your spouse and the remaining two thirds to your children.
- If you die leaving a spouse and no children, then the first $650,000 of your Estate would be given to your spouse.
The statutory legacies will, in some instances, be increased by 870%.
The statutory legacies have been increased to reflect the cost of living in today’s society, in an attempt to ensure that the surviving spouse or de facto partner can maintain their current standard of living.
However, each person’s circumstances are unique, and it may not be appropriate for your spouse or your children to receive the prescribed amount from your Estate, as set out in the proposed new Administration Act. People may want to exclude their spouse from their Estate if they have separated. They may also want to ensure that they have adequately provided for their children from a previous relationship. Sometimes people want to exclude children from their Estate, because they are estranged, or perhaps because they are suffering from a drug, alcohol or gambling addiction.
Importantly, if you have separated from your spouse and have not yet finalised your family law property settlement and/or you are not yet divorced, there is a risk that your ex-spouse may still be regarded as your spouse under the Administration Act. Under the proposed reforms, the amount he or she would automatically receive from your Estate would be significantly increased, and your children may miss out.
As you can see from the situations described above, there is now, more than ever, a risk that your current Will may not divide your Estate according to your current wishes. An even greater risk exists if you do not have a current, valid Will, and die “Intestate.”
At Butlers, we have experienced lawyers who keep themselves up to date with such changes in the law, and who are willing and able to assist you to either prepare a valid Will, if you do not have one, or update your current Will to ensure that your individual situation and wishes are reflected in that Will. Please contact us at any time on 9386 5200, if we may be able to assist you.