TO BEQUEATH, OR NOT?
Posted by Emma Miller on December 8 2020 in News
As we approach the end of 2020, many of us are reflecting on the last difficult 12 months and considering sorting out our affairs. Estate planning is something we like to put off to later, it is just one of those things that we do not want to think about now and end up leaving to the eleventh hour before we sort it out.
Most people don’t think they have enough assets to require a Will, however, under the Administration Act 1979, if your assets exceed the prescribed threshold amount of $15,000, or you own land in New Zealand, letters of administration are required before your assets can be dealt with appropriately.
Letters of administration is an order, granted by the High Court, which confirms the appointment of your administrator (i.e. the person who is authorised to administer your estate). Letters of administration are similar to a probate (which is granted by the High Court for estates which have valid Wills), however, unlike a probate, obtaining letters of administration is not a straightforward process.
For letters of administration to be obtained, your family needs to engage a lawyer to assist with ascertaining the following information:
- Working out the size of the deceased person’s estate and what is required to realise such assets
- Placing an advertisement in the Law Society publications to confirm if the deceased person did have a Will or not
- Looking into the deceased person’s family tree and who in is entitled to apply for letters of administration, and if more than one person is entitled, who will be the person out of all the entitled persons to apply
- Obtaining a status of children search to ascertain either whether the deceased person had a child or if all children have been accounted for.
Undertaking the above steps is a lengthy and expensive task for your family and may cause unnecessary stress and tension between family members.
A Will is not just a document that deals with your assets, it also deals with who you would like to look after your children and pets, funeral arrangements and how you would like your body to be disposed of. Without this guidance from beyond the grave, your family will be making these decisions.
The final matter that most of us think is easily dealt with, is the division of your estate. If you are married or in a de facto relationship, your joint assets will automatically pass to your surviving spouse or partner. However, what happens to your assets which are in your sole name? If you do not have a Will, all your assets in your sole name will need to be distributed in accordance with section 77 of the Administration Act 1979. This does not mean that your spouse or partner will get these assets absolutely, especially if your parents are still alive or if you have children.
Under section 77 of the Administration Act 1979, if you have a spouse or de facto partner and you have children, your spouse or partner will first get the prescribed sum of $155,000 together with one-third share of the remaining estate. The two-third share of the remaining estate will then go to your children and, if more, than one-third equally.
Should you have a spouse or de facto partner and have no children but your parents are still alive, your spouse or partner will first get the prescribed sum of $155,000 together with a two-third share of the remaining estate. The one third share of the remaining estate will go to your parents equally.
Therefore, leaving the distribution of your estate to be dealt with under the Administration Act 1979 may not fit what you intended to have happened with your assets in your sole name. Hence why having a Will is the best option, and all people over the age of 18 years should have one.
If you have any questions, would like to discuss the above further or would like to update or create your Will, please contact us.
Kellie Bright | Special Counsel | Kellie.Bright@shieffangland.co.nz
Joseph Jang | Solicitor | Joseph.Jang@shieffangland.co.nz
Emma Miller | Legal Executive | Emma.Miller@shieffangland.co.nz
This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.