What happened when Bob died without a Will

If you pass away leaving no will and your main asset, the family home, is in your sole name, this can result in your loved ones not receiving the assets you wish them to have or to be able to lead the life after your passing that you wish them to have and can cause hardship.

Bob’s Story

Bob owned the family home in his sole name and had a bank account in his own name. Bob passed away without executing a valid will. At the time of his death, the family home had a registered valuation of $420,000 and the bank account has a credit balance of $50,000.

Bob had been married to Mary for 48 years. They have lived in the same home their whole married life.

Part of the reason why the home was in Bob’s sole name is that when he bought the house 49 years ago, he used an inheritance from his grandparent’s estate towards the purchase price, which at the time was a substantial deposit.

He never got around to changing the ownership of the family home as he believed it would pass to Mary on his death.

Bob had been the sole wage earner in the house and Mary had not had to work. He paid her an allowance each week so that she didn’t want for anything.

Bob and Mary have two adult children.

What will happen to his assets?

Under the Rules of Succession as prescribed in s77 of the Administration Act 1969, Bob’s estate will be distributed as follows:

Total estate value: $470,000

Mary will receive:

  • the prescribed amount under section 77 of the Administration Act: $155,000
  • one third of the residual estate: $105,000

Mary’s total entitlement will be $260,000

Their adult children will share the remaining $210,000

Unintended consequences

Mary is now in a situation where she needs to pay out her two adult children their share of their father’s estate.This would cause her significant hardship and she may have to sell the family home. Some of the difficulties she faces:

  • As she has not worked she would have no credit rating
  • She would have to raise a mortgage to pay out the children
  • Or ask the children to lend her their 2/3 share so that she can stay in the house
  • Or sell the house and buy a home for a lesser value

If a will had been left by Bob, instructing his wish for entire estate to be left to Mary she would not be in this situation.

Note that Mary is also entitled to make a claim under the Relationship Property Act 1976 for her share of relationship property with Bob but this would only entitle her to half of the relationship property. More about claims against estates under the Relationship Property Act 1976 another day!