Legal Tip 128: What if Deceased does not have enough money to fully pay gifts in Will

What happens if someone dies and doesn’t have enough money to pay for the gifts they have left in their will.

Example
Dad dies and leaves son $50,000. Dad’s only asset is $50,000 in the bank but the funeral costs amount to $20,000 - who takes priority?
Son's gift will be reduced becase there will not be enough money to.


Under NSW law the funeral costs must be paid first before gifts are made:

Schedule 3 of the Probate and Administration Act 1898
PROBATE AND ADMINISTRATION ACT 1898 - SCHEDULE 3

 

What happens if dad leaves me his unencumbered mansion and my brother the $500k he had in the bank. When dad dies he's spent all the cash but still has the mansion?

 

That was going to be my question too.

What if you leave your 4 kids $250,000 each (total $1mil). But when you die you only have $800k.

When my grandmother died her will split her estate by % rather than dollar amount. So each kid recieved 25% of the estate.

Blacky

 

Your brother will miss out!
but he could make a family provision claim.

 

After expenses they would share what's left.

 

Family Provision Act - each State/Territory should have one.
Ensures that the family of a deceased person receives adequate provision out of his or her estate.

Best piece of legislation ever passed when you have a family like mine...although there are still some changes needed to it, but it's a good place to start

 

In NSW the Succession Act actually incorporates Family Provision Claims. There was a separate Family Provision act, but it was joined up with the Succession act in 2006.

For more info on Family Provision see

See Legal Tip 50: Family Provision Claims Against Estates

I also plan to write about how trusts can be attacked in death under family provision claims.

 

That's great that NSW combined the two. Hopefully makes it easier for potential beneficiaries to work their way around the cumbersome laws

 

I encountered a client where the solicitor managing an estate paid out expenses and then a fixed $ in cash to some beneficiaries entitled to 35% of the estate and then transferred the residual % to the main beneficiary as inspecie shares. Only problem was there was no allowance for the accrued CGT at the date of death (post CGT shares). So 65% wasnt. And there was no final distribution reporting to any beneficiary which would have confirmed the problem.

PI claim