Where There’s a Will, There’s a Way – Dying Without a will in New Zealand and unintended effects of not updating your will

Consequences of dying without a will

We are often asked: What happens if I die without a valid will?

We all think about our wills, but we often put it to the side and say, “I’ll sort that out later”. But, what if “later” is too late?

We often also hear, “I can’t afford to do my will right now”. But can your family afford for you not to have a valid will?

As morbid as the topic of wills can be, a will is probably one of the most important documents you will have in your life. And equally, it’s just as important to keep your will current and up to date as life changes.

You may be surprised to hear that in New Zealand, if you die without a valid will, you are considered to have died intestate. This also means that your estate will be distributed according to the rules contained in the Administration Act 1969, rather than your personal wishes which could have unintended consequences.

Under the Administration Act, your estate will generally, be distributed in the following hierarchy:

• If you have a surviving spouse/partner and surviving children:
  • Your spouse/partner receives your personal belongings (personal chattels), $155,000.00, and a 1/3 share of the balance of your estate; and
  • Your surviving children share the remainder, being a 2/3 share of the estate (less the $155,000.00 as mentioned above);
• If you have a surviving spouse/partner, but no children (or no surviving children):
  • Your spouse/partner would be entitled to your personal chattels, $155,000.00, and a 2/3 share of the balance of the estate; and
  • Your surviving parent(s) would receive a 1/3 share (equally) of the balance of your estate (less the $155,000.00 as noted above).
• If you have no spouse/partner, but you have surviving children:
  • Your children would inherit the entirety of your estate to be shared equally.
• If you have no spouse/partner or children:
  • The estate passes in a set order to:
    • Parents;
    • Siblings;
    • Grandparents;
    • Aunts and uncles; and
    • More distant relatives in certain circumstances.
• If you have no eligible relatives:
  • Your estate would ultimately pass to the Crown.

Because there is no will to name an executor, someone (usually a family member) must apply to the High Court for Letters of Administration. Letters of Administration grants to the named executor legal authority to collect assets, pay debts, and distribute the estate in line with the Act.

Where you have a blended family, estate administration becomes more complex. While stepchildren are not currently included as beneficiaries on intestacy, they may have a claim against the estate under the Family Protection Act. In such instance, the court will look at a number of factors, including their relationship with you, the age of the claimant, and whether they were financially dependent on you.

Why is it so important to have a will?

• You choose who inherits specific assets;
• You choose your executor;
• In blended family situations, not having a will can produce outcomes that are unintended;
• The administration process can be more complex and expensive to navigate because distribution is determined by statutory rules rather than your wishes.

Have a will? Have life circumstances changed?

Added to this, did you know that if you get married or enter into a civil union, your will is revoked unless it was made “in contemplation of marriage”? And, if you divorce and your will wasn’t updated at the time as part of finalising that process, then your will remains valid, but it is read as though your former spouse or civil union partner died before you.

We also mention that for couples in a de facto relationship who later separate, this does not change or revoke the will. The Wills Act 2007 makes a clear legislative distinction by applying the automatic revocation and nullity rules to legally formalised relationships, such as marriage and civil unions, but not to de facto relationships. As a result, if a will-maker has named their de facto partner as a beneficiary or executor, these appointments or dispositions will remain valid even after the relationship ends, until such time as the will is updated.

 

In summary

Making a will saves not only administration costs, but also unintended consequences of how your estate will be distributed post death without a will in place.

We recommend reviewing your will every five (5) years, or whenever you have a major life event like getting married, entering into a civil union, ending a de facto relationship, divorce, separation, having a child, or just updating to add or remove beneficiaries in your will as your circumstances change. Afterall, a will is a living document that should evolve with you as your life changes.

 

If you would like to discuss making or updating your current will, or if you would like advice in relation to anything we have raised in this article, please reach out to Grant, Manawa or Michelle at: admin@harristate.co.nz