By Samuel Ames - 20 Sep 2018
According to research by Perpetual Guardian last year,
four in ten New Zealanders don't have a Will. It seems the problem
is not unique to New Zealand. Consider: Aretha Franklin, Prince,
Amy Winehouse, who all died in recent times without a Will. Even if
you're not famous, it is our view that it is vital that you have a
Will.
A Will is a document by which you
direct who is to receive your personal assets on your death. Your
Will can be as simple or as detailed as you wish. After your death,
your Will is "probated", meaning that a Court Order recognises that
the Will is accepted as authentic and authorises the named executor
to deal with your Estate, being the assets you own personally.
Even if a person owns very little, it is likely that their
personal assets will exceed the statutory threshold of $15,000 and
therefore their Estate will need to be probated. For instance, many
KiwiSaver providers insist on legal authority (i.e. a copy of
probate) before releasing funds, even if the funds are less than
$15,000. Therefore, it is advisable to have a Will. Having a Will
also means that anything unexpected can be legally dealt with by
the Executor and Trustee you have appointed in your Will.
What happens if you die without a Will?
If you die without a Will, your assets will be distributed
according to certain criteria set out in section 77 of the
Administration Act 1969. A member or members of your immediate
family will apply to the court for Letters of Administration.
Effectively like probate, this document gives the appointed
administrator legal authority to administer your assets. Obtaining
Letters of Administration takes more time and can be expensive.
Public advertisements usually need be placed, to ensure the
deceased did not leave a Will; an official search of public records
needs to be requested at the Births Deaths and Marriages Office and
written consents may need to be obtained from those who could
apply.
If you have a spouse or partner but no living parents or
children, section 77 provides that your partner will receive all of
your assets. For those with a partner and children, the partner is
entitled to personal chattels, $155,000 from the Estate and
one-third of the Estate after payment of all debts and expenses.
The children of the deceased receive two-thirds of the remaining
assets. Where there are no children but a partner and living
parents, the partner receives two-thirds and the deceased's parents
one-third in equal shares.
It is not hard to see why a Will makes good sense. Making a Will
gives you freedom to decide how and to whom your assets are
distributed on your death (as opposed to the criteria of section 77
described above). It can be tailor-made to suit your particular
circumstances and family needs. For instance, you could create an
interest for life for your partner to continue living in the family
home when you are gone, including providing financial assistance
(i.e. a loan) to help cover the cost of them entering a retirement
home later on. A Will can specify your preferences for your funeral
or cremation and it can cover off issues like who will look after
your pets when you die. You can also gift personal items or money
under your Will to members of your family or to charities.
A Will can be updated or changed at any time, provided that you
revoke all previous Wills and codicils. To ensure that your Will
takes care of your changing circumstances and requirements, it
should be updated periodically. We suggest every five years. As you
acquire assets, enter into a long-term relationship or have
children, your needs and even moral obligations (which are
recognised by law) to provide for your family change. If you update
your Will, we recommend replacing it with a new Will rather than
making changes to your existing Will by way of a "codicil". Having
multiple codicils can get complicated and lead to uncertainty.
Many people are not aware also that if a couple marries, their
existing Wills are automatically revoked. This means that anyone
they had previously provided for, will no longer receive anything
unless a new Will is made after the marriage has taken place or the
existing Will states that it is made in contemplation of marriage
to the person that they marry.
Some law firms offer to prepare a Will for free provided that
they are named as an executor; however a "free will" is usually
only offered as part of wider estate planning work. Regardless of
whether you pay for your Will or not, it is advisable to spend the
time (and money) to ensure that your Will is one that you are happy
with and which meets with your wishes.
Contact
Samuel
Ames