When most people think about what an estate is, they picture a house, a bank account, maybe a few investments. It sounds simple enough, but an estate includes much more than that. Misunderstanding what an estate includes – and does not include – is one of the leading causes of confusion, conflict, and costly disputes after someone passes away.
Our 2025 Inheritance State of Play in WA Report found nearly 60% of West Australians face the highly risky prospect of dying without a valid or up-to-date Will. That kind of uncertainty is where most estate disputes begin.
With over $5.4 trillion set to transfer between generations across Australia in the next two decades, getting clear on what an estate really is has never mattered more.
Defining the modern estate: it’s more than just money
Legally speaking, your estate is everything you own in your sole name at the time of your death that can be passed on through your Will. But practically speaking, that definition often falls short.
Many people assume their estate just means their house, car, and bank account. But it can also include shares, personal belongings, digital assets, business interests, unpaid debts owed to you, and even intellectual property. For some, it may also include unexpected value in superannuation and insurance policies they barely knew existed.
Then there’s the distinction most people miss: estate assets versus non-estate assets.
Estate assets vs non-estate assets
One of the most important distinctions in estate planning is between estate assets and non-estate assets.
Estate assets are those that can be distributed through your Will. These might include real estate (held in your sole name), bank accounts, vehicles, and personal property.
Non-estate assets are controlled by other mechanisms. These include superannuation (which is usually paid according to a binding death benefit nomination), assets held in family trusts, assets held by a company, and jointly owned property (which often passes automatically to the surviving co-owner). These do not automatically form part of your estate and must be dealt with separately.
What is a deceased estate (and who handles it?)
A deceased estate is simply the name for everything a person owned at the time of their death that is now being dealt with through the legal process of estate administration.
Once someone passes away, their estate doesn’t automatically go to their loved ones. Instead, it needs to be formally administered by a person or people named in the Will (known as the Executor). If there is no Will, the Court appoints an Administrator to manage the estate under WA’s intestacy laws.
The job of an Executor is often much more complex than people expect. It involves locating the Will, organising a funeral, applying for a Grant of Probate, gathering and valuing assets, paying off debts, finalising tax returns, and ultimately distributing what remains to the rightful beneficiaries. This can take months or even years, especially if the estate includes property, businesses, or overseas assets.
Executors can also find themselves caught in the middle of disputes — particularly when a Will is challenged, or where someone believes they have not received proper provision. It’s not unusual for Executors to be reluctantly drawn into legal proceedings, which adds another layer of responsibility and risk. We’ve explored what this can look like in more detail in our article on what happens when a Will is challenged and you are the Executor.
Getting the right guidance from the outset is critical. It can mean the difference between a smooth administration and one that becomes contested, delayed, and emotionally draining.
What comes out of the estate first?
Before any distributions can happen, an estate must first settle its debts.
This is one of the key legal responsibilities of the Executor. It includes identifying and paying any outstanding debts, loans, credit cards, utility bills, funeral costs, and taxes owed by the deceased. These liabilities are paid out of the estate before any beneficiaries receive their inheritance.
If the estate doesn’t have enough assets to cover its debts, it’s known as an insolvent estate (and there’s a strict legal order in which creditors must be paid). In some cases, beneficiaries may receive nothing at all. This can come as a shock to families who were expecting a meaningful inheritance, only to find most of the estate consumed by liabilities.
Even when there are sufficient assets, the process can be time-consuming. The Executor must often advertise for unknown creditors and liaise with accountants or the ATO to finalise outstanding tax returns and determine whether any capital gains tax or other liabilities apply.
It’s also why accurate asset records and well-drafted Wills matter so much. Poor planning or hidden debts can derail even the best intentions, delay distributions, or expose Executors to personal liability if mistakes are made.
Happens if there’s no Will?
If someone dies without a valid Will, they’re considered intestate, and the estate is distributed according to a strict legal formula set out in the Administration Act 1903 (WA). This law decides who gets what and you don’t get a say in it.
Many people assume everything just goes to their spouse. In reality, that’s rarely the case. For example, if the deceased leaves behind a spouse and children, the estate is divided between them. The spouse doesn’t automatically receive the entire estate, which can leave young families in precarious financial positions. We’ve seen cases where a surviving partner has to sell the family home because they don’t control the assets — their own children do.
On top of this, the person who ends up managing the estate (called the Administrator) may not be who you would have chosen. The law gives priority to the person with the largest entitlement under the intestacy rules, which can sometimes create serious conflict.
Dying without a Will also typically means a more expensive, drawn-out and emotionally charged process for your loved ones, who should not need to be navigating any unnecessary hurdles on top of grieving your loss.
To learn more about how intestacy laws work and what can go wrong, see our article on what happens if you die without a Will in Australia.
Residuary estate: what’s left (and why it matters so much)
After debts, taxes, and any specific gifts are paid out, what remains in the estate is known as the residuary estate.
It’s often the largest portion of the estate (and surprisingly, the most overlooked). While many people focus on who gets the house, car or a particular family heirloom, it’s the residuary estate where the real value usually sits. This might include the balance of bank accounts, investment portfolios, super paid into the estate, proceeds from asset sales, or whatever else is left after expenses.
If a Will is clear and up to date, the residuary estate is divided according to the instructions it contains. But vague or poorly worded Wills can create real problems.
For example, if a Will makes specific gifts but doesn’t clearly state what should happen to the residue, that portion may fall under intestacy laws (or become the centre of a dispute between family members).
This is one of the key areas where inheritance disputes so often arise. If someone feels they’ve been left out or short-changed, it’s usually the residuary estate they’re targeting in a challenge. A lack of clarity or outdated assumptions can make it easy for a claim to succeed.
It’s also where proper planning can make a huge difference. A Will that clearly deals with both specific gifts and the residuary estate can protect your legacy — and help prevent unnecessary stress or conflict among those left behind.
The hidden costs of misunderstanding the estate
Misunderstanding what makes up an estate isn’t just a technical issue. It’s one of the most common triggers for disputes, delays, and irreparable family breakdowns.
Our 2025 Inheritance State of Play in WA Report revealed just how widespread these misunderstandings are. Around 60% of WA families anticipate some form of inheritance dispute. One in four expect conflict between siblings. Another 16% foresee tension around sentimental assets like the family home. These issues don’t emerge from nowhere — they’re often fuelled by poor communication, outdated Wills, or a lack of clarity about what’s actually in the estate.
Even simple estates can become legal battlegrounds if expectations aren’t managed and documentation isn’t clear. And once litigation starts, it can drain the estate significantly — emotionally and financially. Beneficiaries may wait years to receive what they’re entitled to. Legal fees eat away at the inheritance. Relationships fracture.
We’re seeing these issues more often in all manner of estates. From high-value estates to everyday families. For a deeper look at why inheritance disputes are becoming more common, and what trends are emerging, see our article on the rise and rise of inheritance claims.
Disputes like these are avoidable. Clear documents, a well-considered plan, and early conversations with the right people can make all the difference.
Planning ahead: protecting your estate and legacy
The biggest issues we see in estate disputes often come down to the same root problem: poor or outdated planning.
At the heart of any good plan is a valid, up-to-date Will. But the Will is just the beginning. Many estates now involve Testamentary Trusts, Enduring Powers of Attorney, Powers of Guardianship, and structures like family trusts or SMSFs that sit outside the Will altogether. Knowing how all the pieces fit together is where a proper estate plan comes in.
Blended families, estranged relatives, dependent adult children, multiple properties, business interests — these all add layers of complexity. Add in superannuation and insurance policies, and many people find their estate is far larger than they first thought.
Common assumptions that lead to trouble
We regularly see people relying on assumptions that don’t reflect how estate law actually works. One of the most persistent myths is that your spouse will automatically inherit everything — another is thinking a DIY Will is “good enough”. These misconceptions can leave your loved ones exposed and your wishes unmet.
For a deeper look at these pitfalls, we break down some of the most common and most dangerous estate planning myths here.
A well-structured estate plan does a few key things:
- It makes sure your assets go where you want them to go.
- It reduces the risk of someone contesting your Will.
- It protects vulnerable beneficiaries, like young children or those going through financial difficulty or relationship breakdowns.
- It puts the right people in charge and documents their roles clearly.
It can also help avoid unintended outcomes. Two common flashpoints that we encounter are assuming superannuation is automatically part of your estate, and leaving everything to a partner and cutting out children from a previous relationship without a clear plan in place.
Estate planning isn’t about complexity for complexity’s sake. It’s about making sure what you’ve built ends up in the right hands, at the right time, with as little stress as possible for the people you care about.
What will you really leave behind?
Your estate is more than a list of assets. It’s what you pass on, and how your family moves forward after you’re gone.
Getting it right doesn’t happen by accident. It takes the right documents, the right people, and the right plan tailored to your life. And with so much at stake, the best time to start is always now.
At Solomon Hollett Lawyers, we help Australians put the right plan in place. Real documents, real advice, and real clarity about what happens next. If you’re looking for experienced estate planning lawyers in Perth, we’re here to help you protect what matters most.
