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When a loved one passes away leaving a significant estate, the estate’s legal personal representative must generally apply to the Supreme Court of NSW before the estate’s asset holders will release the assets to the estate to pay the estate’s debts and distribute the balance to the beneficiaries. When a person passes away with no Will (called intestate), their partner, spouse or next of kin must apply for a grant of a letter of administration.
When a letter of administration is granted, asset holders will release the estate assets to the person the Court appoints as the administrator.
Dying intestate (NSW)
Dying without a Will is known as dying intestate. If your loved one has passed away without a Will, you won’t have any formal instructions to help you determine how to distribute their estate.
An unfortunate consequence of dying intestate is that the deceased‘s testamentary preferences are not respected in distributing the estate, with no provision for those who are not recognised under succession law. The estate is distributed according to intestacy rules set out in the Succession Act 2006.
Possible reasons for a person dying without a Will
Inaction is the most common reason for people dying intestate.
An intestacy may be caused by:-
- the Will-maker losing the original Will;
- a Will signed by a person who lacked the capacity to understand what they were doing;
- inadvertently revoking a Will (e.g. by a subsequent marriage); or
- failing to prepare a Will properly. (e.g. not signing it or not having it correctly witnessed).
What happens to an intestate estate?
The administration of an intestate estate requires someone to take responsibility to see it through (because no executor has been appointed in a Will).
An application must be made that the Supreme Court of NSW appoint an administrator of the estate (an application for a grant of letters of administration on intestacy). An application for a grant of letters of administration may be required where there:
- is no Will; or
- is a Will, but all of the nominated executors are unable to act (e.g. because they have died, or refuse to act, or have lost capacity). The Will remains valid but an administrator must be appointed to administer the estate.
When it is necessary to apply for a grant of letters of administration, usually the person with the greatest entitlement to the estate applies for the grant.
What happens if I die without a Will?
If you pass away without a valid Will, a loved one or your next of kin will need to apply for a grant of letters of administration authorising them to administer your estate in accordance with the applicable formula.
How is an intestate estate distributed?
The distribution of an intestate estate is predetermined by a statutory formula. This formula sets out who benefits from the estate and in what proportions (that is, the order of priority).
A distribution determined in this way can create significant problems. For example, part of the estate might pass to a relative who had little or nothing to do with the deceased, or a surviving spouse may end up having to share a substantial part of the estate with children or stepchildren.
This is why dying without a Will can be problematic, as your estate may not be distributed to the ones most important to you.
What’s the difference between probate and letters of administration?
An application for a grant of probate is made to the court by an executor appointed by a Will. The grant of probate confirms that the Will is valid and that the executor is authorised to deal with the estate’s assets.
An application for a grant of letters of administration is usually made where there is no Will and consequently no appointed executor. A beneficiary of the intestate estate will apply to be authorised to administer the estate.
Dying intestate in NSW means that someone else will decide who inherits your estate. But if you make a Will, you decide how your estate is distributed and you can give your loved ones clear instructions on your preferences and wishes, lessening their burden after your passing.
Are there any disadvantages to the intestacy process?
Dying without a Will creates uncertainty and is more likely to result in a dispute. It can cause delay and additional expense if those left behind argue about whether or not the intestate distribution adequately provides for those people closest to the deceased or who should be appointed as the administrator.
What are Letters of Administration?
The Supreme Court of NSW issues Letters of Administration appointing an administrator of a deceased estate where the executor is unavailable or the deceased died at least partially intestate.
The deceased must have resided in or owned property in New South Wales.
The administrator assumes responsibility for the assets and liabilities of the deceased estate.
An asset holder will generally release assets to the administrator only after sighting a Letter of Administration.
Where a valid will appoints an executor who is unable or unwilling to act, an application is made for a Letter of Administration with the Will Annexed appointing an administrator.
Who can apply for Letters of Administration?
The Probate and Administration Act 1898 sets out the categories of people eligible to apply. The Supreme Court of NSW issues a Letter of Administration to a competent adult who is a potential beneficiary or creditor of the estate, usually a close relative of the deceased.
If the only eligible beneficiary lives overseas, they cannot apply for a Letter of Administration and must appoint a solicitor to apply in their place.
Several potential beneficiaries can apply jointly, or one can apply with the written endorsement of the others. If they cannot agree who should apply, the Court assesses their claims and may make the grant to the deceased’s closest living relative. As an interim measure the Court may appoint a special administrator with limited powers.
If no relative is willing to apply, the Court can appoint the NSW Trustee & Guardian or another interested party.
What are an Administrator's duties?
The administrator manages and protects the deceased estate according to either:
- the deceased’s will; or
- if there is no will, according to the laws of intestacy in the Succession Act 2006 (NSW).
The administrator gathers and values the estate’s assets and discharges it’s debts. They lodge a final tax return for the deceased, establish any discretionary trusts according to the will, and protect the estate.
How long does the process take?
An application for a Letter of Administration may take several months to process. It may be filed with the Court up to six months after the deceased’s death. A late application may be accepted if:
- there is a reasonable excuse for the delay, and
- the parties agree to the appointment of the administrator.
Administration of the estate is usually completed within a year of the deceased’s passing. If the Court considers that there has been unreasonable delay, it may replace the administrator.
Contact us for free telephone advice regarding letters of administration.
