Making a Will is one of those difficult topics. Everyone knows they should put one in place but it is typically a job for a rainy day – something we don’t really like to think about. However, there are several very important reasons why a Will should be put in place and the sooner the better. With estimates by the Commission for Financial Capability suggesting only 50% of New Zealanders have a valid Will; here are some of the key reasons not to put this off any longer.
1. Ensure your assets are distributed in accordance with your wishes
This has to be the most important reason. Under New Zealand law, subject to some important legal considerations, you have the ability to leave your assets to whomever you like in whatever manner, as long as you specify this in a Will. But if you do not put a Will in place then New Zealand’s intestacy laws will decide how your assets must pass on your death. To ensure that your assets pass as you intend, a Will is essential.
2. To provide fully for your spouse/partner
Under the intestacy rules, your spouse/partner may not receive the bulk of your estate in certain situations. Consider, for example, a parent with a spouse and young children. If a Will is not put in place then, while the spouse will receive the deceased’s personal possessions and a lump sum (currently of $155,000), the spouse will only receive a third of the rest of the estate while the children will receive the remaining two-thirds on trust. Where there are minor children involved you may wish for everything to pass to your spouse so this can be undesirable.
3. Provide for step-children
If you want to benefit your step-children, you need to make a Will; otherwise, your step-children will not automatically receive anything from your estate on your death.
4. Marriage/Divorce/De facto partners
Careful consideration is needed at any time you change your relationship status. A marriage or civil union will revoke/cancel any Will made previously unless that Will confirms that it was made in contemplation of the marriage/union and so you may need to prepare a new Will without realising it. On a legal separation, any provisions relating to your ex-partner will automatically be void and so if you still wish for them to receive a benefit from your estate you will need to update your Will. However, the same is not true of de facto partners and entering into a partnership or ending one will not affect your Wills – you will need to update your Will to ensure that you partner does or does not benefit, as appropriate.
5. Appoint a guardian
One important act you can do in your Will is nominate someone to act as guardian of any minor children that survive you meaning you can choose who is responsible for the upbringing of your children.
6. Trust considerations
There are various important trust aspects that can be considered to benefit your family if you make a Will. You can set up a trust in your Will so that your children only receive their inheritance on reaching a certain age to give you comfort they will not spend their inheritance quickly and foolishly if they are not fully mature when you die. Alternatively, if you have a family trust, you can put a Will in place that leaves all of your assets to that trust. Importantly if you hold the power of appointment of your trust, you also can normally hand that over to a person of your choice in your Will, since most trust deeds allow this power to pass either to the executor of your Will or a person that you nominate in your Will. This will give you comfort over the future of the Trust.
By making a Will, you have the ability to choose the person(s) that you think is the best person to administer your estate. You can also include provisions in the Will to ensure they will be paid for the work done in this role. If you don’t have a Will in place again the law will dictate who will have the responsibility for handling your affairs and it may not be the person you would choose.
If you have a family trust and you haven’t completed your gifting programme any debt the trust still owes to you will form part of your personal estate, which will need to be repaid on your death. Assets from the trust may need to be sold to pay the estate back, which is unlikely to be your desired intention. However, if you make a Will you can complete any outstanding gifting to the Trust by making provision for this in your Will.
9. Cost effective and straightforward
If there is no Will in place the administrator of your estate will have to apply to the Court for Letters of Administration and, given the complexities of the intestacy laws, this can be a slower and more costly process. Having a Will in place allows your executors to make an application for a Grant of Probate, which is much more straightforward and cost effective.
10. Avoid conflict
By making a Will, you are giving your family the clearest indication of your wishes, which should avoid any conflict that could be caused if the law is allowed to dictate who benefits from your estate.
Disclaimer – this article prepared by Bethan Boscher (a Solicitor of Morrison Kent, Auckland) is intended to provide a general overview of the area of law only. It is not exhaustive, does not purport to cover all details and should therefore not be relied upon exclusively or be construed as personal advice.