As lawyers we see some horror stories when it comes to passing on. Completing your will is the best way to prevent more heart ache for your loved ones.
It is a shocking fact that only around half of all adult New Zealanders have a will.
Without making your wishes known in a will, the government will determine how to distribute your estate. How the government’s formula works may shock you.
A formal process must be followed, and your family will need to deal with the courts who will apply a strict formula, distributing the estate to spouses, partners, children and/or parents and siblings in various shares.
If no relatives exist, the Crown takes the lot.
If the deceased has a spouse or partner and no children, the formula decrees that deceased’s parents receive a share of the estate. That often upsets the partner or spouse.
If the deceased has a spouse or partner and children, the formula decrees the spouse receives the personal effects, $155,000 and a third of anything left. The children will receive the remaining two thirds, divided equally between them. The spouse or partner may be shocked to find out they do not inherit the entire estate.
It’s a harrowing thought but if you have kids under 18 you will want to appoint a testamentary guardian that will step into your shoes and help raise your children. If the other parent is also a guardian and is still alive, then the testamentary guardian will share guardianship with the other parent.
Also, if you have been living in a de facto relationship and your partner dies without a will, the survivor can apply for a division of relationship property under the Property (Relationships) Act.
A will simplifies such matters, but at the same time, the Act can still override a will if it is contrary to the principles of equal sharing of relationship property (being the key intention of the Act).
If you do not want your partner to walk away with half of your estate, we recommend you enter into an agreement which “contracts out” of the equal sharing principles of the Act, and provides the couple with a private agreement determining the division of their property upon separation or death.
At the end of the day, we would all like to think that all families deal with passing on harmoniously, the fact is that they don’t. Letting your wishes be known is a good incentive to complete a will.
Once you have a will you need to review it regularly to ensure the content continues to reflect your wishes. You need to keep it up to date with changing circumstances, especially relationships.
In the case of marriage, for instance, only divorce stops your spouse from having a claim to your estate. So people who are separated but not divorced are often surprised to find their ex could inherit unless they change their will.
Also if a de facto partner is named in the will, they still stand to inherit even after the couple has split up. That is because unlike marriage, there was no divorce to trigger their exclusion and the claim is treated like a gift.
For these reasons and so many others, if you don’t have a will, you definitely need one. The cost for a will is not as bad as you may think, starting from $250 for an individual or $400 for a couple (both estimates including GST).
If you would like to meet at home or work to discuss your asset plan get in touch with Claire Gibson on 07 9497879 or email firstname.lastname@example.org.