By Polina Kozlova - 19 Aug 2022
Dying without a will is far more expensive than paying a lawyer
to have your will sorted. All that is required to administer an
estate of a person who died leaving a will is to apply to a High
Court for probate of the will. Dying without a will involves an
application for intestacy, which is more complicated and costly
than a probate application.
Cost
Intestacy involves a search for a will and if the deceased is a
male, also a paternity search. If a person dies leaving a
spouse/partner, the surviving spouse/partner is required to obtain
independent advice on his/her entitlement under intestacy
provisions and potential claims against the estate under the
Property (Relationships) Act 1976. Until such advice from an
independent lawyer has been obtained, the application for letters
of administration on intestacy cannot be submitted to the court.
Obtaining such independent advice prior to lodging an application
is not a requirement for a probate application (when a person dies
leaving a will).
Because of these additional steps, it takes at least three weeks
longer to get the intestacy application ready to be sent to the
court as opposed to a probate application.
Time delays mean family members may not be able to access your
assets for a significant period of time.
Unpredictability/Surprise Element
A lot of people are not aware of intestacy provisions that are
provided for in the Administration Act 1969. Many people assume
their assets will automatically go to their partner/spouse.
Instead, your partner/spouse will receive the first $155K
(this amount is prescribed by the legislation and subject to
change) + 1/3 of your estate and your children will receive
2/3.
This is particularly important for blended families. If your
asset pool is modest, any children from a first relationship, may
be left with nothing. And, on the other hand, if your estate is
large, your children may end up receiving more than your
partner/spouse (which may not be what you intend).
If you die leaving no children or parents, your partner/spouse
takes all of your estate.
If you die leaving no children but leaving parents, your
partner/spouse takes $155K + 2/3, with your parents receiving the
remaining 1/3. This often comes as a surprise.
Cross Border Issues
This is where having a will becomes even more important. Issues
often arise with succession involving assets in different countries
or assets located in one country and the deceased having lived and
died in another country.
For example, if you live and die in Italy (and have acquired a
habitual residence there) while most of your assets are in New
Zealand, it is likely that all of your moveable assets (i.e. bank
accounts, shares, KiwiSaver etc) will be distributed under Italy's
laws. Not only may this be very different from what you intended,
it can also be very costly. An application for letters of
administration to the New Zealand High Court will be required
(since the assets are located in NZ) which is more complicated to
begin with.
However, because a person died overseas and overseas law applies
to moveable assets situated worldwide, the New Zealand court will
require an affidavit from a lawyer practicing in the country where
the deceased person died as well. This requires multiple
lawyers from different jurisdictions to be involved and can quickly
become very expensive.
This additional cost and stress for those you leave behind can
easily be avoided by making a Will in New Zealand before heading
overseas.
Guardian
If you have young children, it is really important that you
nominate someone to be their guardian in the event that you and
your partner/spouse die. If you don't do that, you have no
certainty over who will look after your young children and be
involved in important decisions relating to their upbringing.
Trusts and Wills
A lot of people who have a trust believe that they don't need a
will because their assets are owned by the trust. Although it is
true that most valuable assets will be owned by the trust, some
(inevitably) will still be in your name - for example, KiwiSaver,
personal bank accounts, vehicles, jewellery etc.
It is still important to have a will even if most of your assets
are owned by a trust.
Separation when Married
Most people are not aware of the fact that if you are married
and you have separated, your spouse stands to inherit your assets
until the moment you have a marriage dissolution order (which takes
two years to obtain). Should you die or your spouse die
within that period (from the date of separation until the date the
dissolution is granted) the survivor and/or the children (depending
on the terms of the will if any or otherwise depending on intestacy
provisions) will inherit the estate.
The only way to avoid this is to update your will (or make a
will if you don't have one) as soon as you separate from your
spouse.
Contact
To find out more about making a will contact Polina or any
member of our Wills and Estates team.