Trusts / Asset Planning

Who do you want to control your Estate?

It is estimated that only about half of New Zealand adults have a will. Even where there is a will in place, it may no longer be valid (a will is revoked on marriage or civil union) or relevant to the will-maker's current circumstances. Our busy lives mean many people delay signing and/or updating their will. The consequences of dying without a valid will are often not appreciated.

Family dynamics are much more complicated in our modern world. Blended families, that is where at least one of the partners has a child not biologically related to the other partner, are common. People are re-partnering later in their lives. These factors result in complicated and more frequent family disputes upon the death of a loved one. These can be minimised where there is a valid will and appropriate estate planning.

If you die without a will (intestate) the process to obtain a grant to administer your estate ("letters of administration") is often significantly longer and more costly. The process of applying for Probate (proving the validity of a will in Court) of a will is reasonably straightforward. The administrator of your estate is the executor that you have appointed in your will.

If you have a valid will and your assets are less than $15,000 at the time of your death, then a copy of your will is normally sufficient for the named executor (without Probate being required) to close your bank accounts and/or transfer shares and other investments to the beneficiaries named in that will.

In some instances, if you don’t have a valid will, very small estates may require letters of administration. For example, if your sole asset is a Kiwisaver account, as is often the case with younger people, letters of administration may be required. Some Kiwisaver providers will not release the funds unless an administrator has been appointed.

If you die without a will you do not choose who administers your estate. The person appointed to administer your estate is normally the person highest in the order of priority as set out in the High Court Rules. For example, a surviving spouse / civil union partner / de facto partner entitled to benefit on intestacy has the first priority. This means that if you haven’t formally finalised a separation with your ex partner, then he or she will have first priority to apply to administer your estate, other members of your family, such as your children or parents will need to obtain the consent from your ex partner to apply.

Even if you have finalised a separation with your ex partner, if you and your ex partner have minor children, then your ex partner as the children’s personal representative (their natural guardian) may have the right to apply to administer your estate.

Yes, your former partner could potentially administer your estate and inherit.

If you die without a will you do not decide who inherits your estate. The Administration Act 1969 sets out how an intestate estate is to be distributed. Possible scenarios are:

(i)         You die with a partner and no children but with living parents. Your estate is distributed with your partner receiving the personal chattels, the prescribed amount (currently $155,000 + interest), and two thirds of the residue of the estate. Your parents receive in equal shares the remaining one third of the estate.

(ii)        You die with a partner and children. Your partner receives the personal chattels and the prescribed amount but your partner now receives a one third share of the residue and the remaining two thirds is held for your children until they come of age (20).

This may not be what you want. If you are in a relationship with a new partner before your separation with your ex partner has been resolved, both partners may share in the "partner's” share under the Administration Act.

(iii)       If you die with children but no partner your children receive the whole of your estate. Your ex partner, if they are also the parents of your children who are under the age of 20, will administer and control your children's inheritance. The estate will be held in your former partner's name as the administrator of the estate. Your ex partner can make the decisions about how the estate will be distributed and used for your childrens' benefit.

Do you want your ex partner to control your estate?

We all hope that our families will deal with our death harmoniously. The reality is that if you die without a will it can lead to arguments and disputes at a time when your loved ones should be grieving. Experience tells us that it is unwise to think that those who could claim part of your estate will not do so!

We strongly recommend taking the time to make a will that is comprehensive, accurate and which takes into account all matters that can be reasonably foreseen.

It is important to review your will periodically (we suggest every 5 years) to make sure that your will is still relevant to your needs. Also, if there are any major changes in your circumstances, for example if you enter or leave a marriage, civil union / de facto relationship or a child or grandchild is born into the family, then it is a good idea to review your will.

Remember that if you marry, or enter into a civil union, your old will is automatically revoked unless you have expressly made your will in contemplation of that marriage or civil union. If your marriage/ civil union is dissolved, any gifts or appointment in favour of your ex partner in your will are treated as if the ex-partner has died.

It is too easy to leave your will and estate planning to another day, but consider the potentially undesirable consequences if you die before that day arrives.

Alison Gilbert

Partner

Tel: +64 9 379 9350

DDI: +64 9 979 2253w

Email:  

Paula Keuning

Senior Solicitor

Tel: +64 9 379 9350

DDI: +64 9 979 2183

Email:

 Polina Kozlova

Solicitor

Tel: +64 9 379 9350

DDI: +64 9 979 2223

Email:

 

 

DISCLAIMER

 This information is intended to be general in nature. You are strongly recommended to seek your own legal advice in relation to the matters dealt with here.

© Brookfields Lawyers 2019 – All Rights Reserved

 

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