Most of us have not considered what happens to our assets when we pass away. This becomes more complex when our assets are not in the place we reside. Many of us have overseas assets either back home, where we are from or in our spouse’s home country or in some place we fell in love with on holiday.
The intestacy laws (laws in place for those without a Will) can be brutal and so matter of fact that they cause distress to the loved ones we leave behind. Each country has its own separate laws and they are not the same as the next country.
Countries tend to be split into Common Law jurisdictions, which gives you the complete freedom of who to leave your assets to or Civil Law jurisdictions which are stricter on who can inherit… they focus on heirs and tend to have fixed rules which would most certainly have to include your children, whether minor or not.
Australia’s rules are under Common Law and have slightly different rules per state. The rules include de facto spouse which does not just mean a married person, per se but also a carer or permanent partner, or someone you have had a child with (you only have to be living together one year unmarried.) You could still be married to one person and living with another person. Both are entitled under the rules in Australia.
The hierarchy of inheritance at this point, goes from one spouse –> two or more spouses -> children –> parents –> brothers and sisters –> grandparents –> aunts and uncles –> cousins. If you have none of these then there is a huge risk that the Government keep your assets as they have no one to give them to.
If you want your assets to go to certain people when you pass away you must write this down, preferably in a Will. Please do not make assumptions about what happens to your assets when you die … the following story is not only tragic but frustratingly rectifiable if simple steps had been taken.
(Names have been changed for confidential reasons)
John, from Australia passed away in Hong Kong without a Will. He left a non-Australian wife and a sibling, his parents had already passed away some time ago. Throughout his marriage he always told everyone that if he passed away, everything should be split between his wife and sister … he signed certain documents but not all of them and as mentioned above, did not have a Will either in HK or Australia.
When he passed away, he had certain things in HK and certain assets back in Australia, the main one being his superannuation scheme. He had some insurance also with a company back in Australia. Although he requested that these assets be split between his sister and wife, under Australian rules, the sister was not entitled to the Superannuation as she is not on the list of authorised beneficiaries. He did not adjust his other assets to compensate.
He also did not nominate a beneficiary to his insurance in Australia and as a default, his wife inherited everything back in Australia – A$400,000. Leaving the sister nasty letters from wife’s lawyers with a measly offer of A$10,000 to cover the funeral expenses (that the sister only arranged.) The wife also took all of the family jewellery.
In Hong Kong, if you have no children siblings are entitled to 50% of the estate on anything above HK1,000,000 to be shared with the spouse. John had a small life insurance policy which was nominated to both the spouse and sister – A$30,000 each.
The sister is appealing to the Australian courts as there is evidence to show that John wanted his assets split between the two people but under the rules of Australia, the courts have to pay accordingly. The wife is not talking to the sister-in-law and has most of the cash on the estate even though this is not what John intended.
The moral of this tale is that we cannot make assumptions about distribution of our estate without some written evidence. The Laws of Intestacy were written in all jurisdictions years ago and do not reflect on modern life or modern relationships.
These instructions can be clear through your Will and/or Family Trust.
Next week - Part 2 : UK and Europe
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