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WILLS & ESTATES

 I consider Wills to be the most important document that you will ever sign.  It’s important to get it right and to do that, you need to know the right questions to ask yourself.  This webinar will assist in ensuring you have the right Will for your unique situation.  This webinar will also talk about what happens once the person has died.  How to administer their estate and who is responsible for that job.  This webinar will assist those in this situation to ensure they abide by New Zealand laws and fulfil their loved one’s wishes. 

THE BUILDING BLOCKS OF WILLS

These are the fundamental elements that make up a will in New Zealand.

Revocation of previous Wills

Revocation of previous wills which means cancelling any previous wills. When circumstances change, it’s essential to update your will accordingly and it’s crucial to include a revocation clause to avoid confusion.  It’s also important to remember if you have a will in different country, a blanket revocation clause will also cancel that Will.  If you want the Will overseas to remain for your assets in that country, then you will need to make that clear in your will.

Executor(s) and Trustee(s)

Your Will must appoint at least one executor. An executor is the person responsible for carrying out your wishes as stated in the will. It’s essential to choose responsible and trustworthy individuals for these roles and I always recommend choosing at least two so you have a back up plan should one not be able or willing to do it.

Gifts

Gifts are specific items or assets that you leave to certain individuals or organizations.  If you are leaving a specific gift, it needs to be very clear.  For example, “my engagement ring to my daughter, Sally”.  Not, “my ring to my daughter” if you have several rings and more than one daughter.

Residuary Estate

The residuary estate includes all your remaining assets that haven’t been specifically mentioned as gifts in your will. The residuary estate is distributed among the beneficiaries according to your instructions, e.g. “the balance of my estate to my children in equal shares” or “10% of the balance of my estate to Sally, 50% to Nelly and 40% to Shelly

Executor/Trustee Powers

It is recommended to include a clause that details the executor’s powers in managing the estate such as the authority to make decisions, pay debts, sell assets, and distribute assets according to your will.

Marriage Contemplated

If you are in a de facto relationship, I recommend including a clause that confirms your Will remains valid even if you get married (even if you think you will never get married).  That’s because your Will is no longer valid when you marry.  Most people don’t realise this and it can be pretty heart breaking for family members when they realise their loved one has died without a valid Will.  We’ll talk about what happens when there is no Will later.

THE FORMALITIES OF WILLS

Now that we’ve covered the building blocks of wills, let’s move on to our second topic: the formalities of wills.

Witnessing Requirements

To ensure your will is legally binding, it must be witnessed by at least two people who are not beneficiaries.  If a person named as a beneficiary witnesses the signing of the will, they, and their spouse or de facto partner, will usually lose any entitlement under the will.  The witnesses must also sign the Will in front of the will-maker.

Initialing and Signing

When you sign your will, you’ll need to initial each page to show that all the pages belong together. Your signature should be made in the presence of the witnesses.

OPTIONAL PROVISIONS

The following are optional provisions that you can include in your will.

 Funeral Instructions

Funeral instructions provide guidance to your family and loved ones about how you’d like your funeral to be conducted. It’s a way to express your personal wishes even after you’re gone.  However, by the time family members read your Will, it is usually too late.  Also, your wishes are not binding and your family can do whatever they want once you have passed away.  Therefore, I recommend that you let your family members know your wishes while you are alive and not worry too much about putting it in your Will.

Conditional Gifts

Conditional gifts are gifts that come with specific conditions. For example, you may leave a gift to someone only if they achieve a certain goal or meet certain criteria. It’s important to ensure that the conditions are clear and legally enforceable.  This can be things like, “Upon Bruce Smith getting his black belt within the next 12 months, he gets my car”.

Life Interests

Including life interests in your will grants someone the right to use or enjoy a specific property during their lifetime. This is useful for couples of second marriages and have their own children from their first marriages. These couples want to make sure that their own children have an inheritance but also want to make sure the spouse has a place to live when they have passed away.  A life interest allows the surviving spouse to live in the property and when they have passed, the property can then go to the children.

Family Trusts

If you have a family trust, I recommend seeking legal advice regarding the consequences of this because property in your trust do not belong to you, it belongs to the trust and therefore does not form part of your estate.  It is important to consider who you would like to be trustees of your trust in your place which can be included in your Will.

PROBATE

What is it?

“Probate” means “to prove”.  Essentially it is proving the Will is the last wishes of the deceased and the person named as executor has been proved to be the rightful administrator of the Will.

Is probate always required?

No, only if the estate assets are more than $15,000.  If the assets are less than $15,000 then the executor can deal directly with the institutions which will have their own policies but usually require the death certificate, a copy of the Will, the executor’s ID and proof of address and the executor will usually need to sign a form to obtain the funds.

How do you get it?

An application needs to be filed in the High Court in Wellington.  The original Will is required so if you are holding onto an original Will, make sure to keep it safe.  Don’t remove any staples because the court may consider it has been tampered with and probate may not be granted.

What happens once we have it?

Once probate is granted, you can then administer the estate.  That would mean notifying banks, debts MUST be paid first.  I recommend that an advert in the local paper to ensure all creditors are notified so that the administrator is not personally liable should a creditor not be paid.  If the notice says that you give creditors one month to notify the administrator and then the estate will be distributed, the administrator will be protected from any claims.  Once debts are paid, the administrator can then distribute the estate in accordance with the Will.

Do I have to be an executor if I am named as one in the Will?

No, you can renounce that right provided you haven’t already started administering the estate.  For example, if you have directed the bank to pay the funeral invoice, you could not then decide you no longer want to be the executor because you have already begun administering the estate.  If you renounce as executor and there are no back up executors, then one or more of the residuary beneficiaries will need to apply.

What if the Executor has passed away?

Similar to an executor renouncing, if there is a back up executor, then they will obtain probate but if there is no back up, then one or more beneficiaries need to apply.

Waiting 6 months to distribute

I always recommend waiting 6 months from the date of probate being granted before distributing the estate.  All the bills can be paid but waiting 6 months protects the administrator should any claims be brought against the estate.  We will talk about the different claims that can be brought but if the administrator distributes and then a claim is brought before 6 months, then the administrator could be personally liable.  There is one case where the two executors were held personally liable for $300,000 and they didn’t receive any benefit from the estate so the funds all came from them personally.

WHERE THINGS CAN GO WRONG?

Damage to the Will.  If the Will looks tampered with, probate may not be granted so the original Will needs to be kept safe. 

Lost/destroyed Will.  The High Court will not grant probate of a copy of a Will.  It must be the original.  If the original has been lost, the High Court will consider that there is no Will unless there is evidence that the Will was lost after the person died.  For example, if I posted the original Will to the executor and it got lost on the way, then the High Court will accept an affidavit from me confirming the original Will existed post death. 

Ambiguity –  names/beneficiaries/gifts.  If the names of the people are not clear, that can be a problem.  For example, if you left all your assets to “George” but both your husband and son are called George.  Best to clarify by saying, “my husband George”.  If the beneficiaries aren’t clear.  For example, “my children” will mean all your biological children but will not include step-children or whangai unless you name them specifically.  Gifts such as “my ring” when there are two rings can be confusing. 

NO WILL

Letters of Administration

When there is no Will, a closest family member will need to apply for what’s called Letters of Administration to be able to administer the estate.  This is only needed if the assets are more than $15,000.  This is a much longer and more complicated process which is why I always recommend people get their wills done and keep them updated.

Priority on intestacy

Under the Administration Act, there is a priority as to who can apply for letters of administration and who are the beneficiaries.  It also determines the share of each beneficiary.  For example, the spouse has first priority to apply for letters of administration and obtains all the personal chattels, the first $155,000 and 1/3^rd of the balance.  The children obtain the rest.  If there are no children, then the parents will receive a share.

CLAIMS

Property (Relationships) Act

A spouse or de facto partner can bring a claim against the estate for an equal share of the relationship property which includes the family home even if it was purchased prior to the relationship and is in the sole name of the deceased.  The spouse/partner has 6 months from the date that administration is granted to bring a claim. 

Family Protection Act

A spouse or de facto partner can also bring a claim under the Family Protection Act where they have not been provided proper maintenance and support under the Will or intestacy rules if there is no Will.  Children (even adult children) can also bring a claim.  The court will only award what is sufficient to rectify the breach which is usually between 10-20% of the estate depending on the circumstances.  The family member has 12 months to bring a claim.

Testamentary Promises Act

If the will-maker made a promise during their life-time to name you in their Will in consideration of services you provided but they failed to do so, you can bring a claim against the estate under the Testamentary Promises Act.  Evidence is required to show the will-maker made the promise such as emails or text messages and also the services provided must go above and beyond.  For example, a daughter of the deceased who took her mum grocery shopping every week is not considered above and beyond and not likely to succeed in the claim.