Statutory Legacy in NSW: What Happens Without a Will?

What Is a Statutory Legacy?

A statutory legacy is a fixed sum of money that a surviving spouse or de facto partner is entitled to receive when a person dies intestate, meaning without a valid Will. In New South Wales, statutory legacy is governed by the Succession Act 2006 (NSW) and forms part of the intestacy rules that determine how an estate is distributed.

Statutory legacy does not apply in every case. It is triggered in specific family circumstances, usually where the deceased leaves behind:

• A surviving spouse or de facto partner, and
• Children from another relationship

The purpose of the statutory legacy is to provide the surviving spouse or de facto partner with a guaranteed financial entitlement before the remainder of the estate is divided. However, it is important to understand that this is a legislative formula. It does not consider personal intentions, verbal promises, or family dynamics.

Unlike a gift made under a valid Will, a statutory legacy is automatic. It applies because there is no Will directing otherwise.

When Does Statutory Legacy Apply?

Statutory legacy applies only when a person dies without a valid Will in NSW and is survived by both:

1. A spouse or de facto partner, and
2. Children who are not the children of that spouse or de facto partner.

If all children of the deceased are also children of the surviving spouse, the spouse generally inherits the entire estate. In that situation, statutory legacy does not apply.

However, in blended family situations, the law seeks to balance the interests of the surviving spouse or de facto partner and the children from a previous relationship. This is where statutory legacy becomes significant.

For example:

• A person remarries later in life.
• They have adult children from an earlier relationship.
• They pass away without updating their Will.

In these circumstances, the surviving spouse or de facto partner receives the statutory legacy and a share of the remaining estate, while the children share the balance. This division may not reflect what the deceased intended.

How Is the Statutory Legacy Calculated in NSW?

The statutory legacy consists of:

1. A fixed statutory amount set by legislation and indexed according to the Consumer Price Index. This means the amount can change over time.
2. Interest on that amount, calculated from the date of death.
3. A share of the residue of the estate once the statutory amount and interest are paid.

After the statutory legacy is paid, the remainder of the estate, known as the residue, is divided:

• The spouse or de facto partner receives half of the residue.
• The children share the other half equally.

Example;

Assume an estate is valued at $1,000,000 after debts and liabilities.

• The statutory legacy amount is deducted first,
• Interest is calculated,
• The remaining balance is divided between the spouse or de facto partner and the children from the earlier relationship.

If the estate consists largely of property rather than cash, assets may need to be sold to satisfy the statutory entitlement. This can place financial and emotional strain on surviving family members.