Why Have a Will? What happens when you die without one
According to research by Perpetual Guardian last year, four in ten New Zealanders don't have a Will. It seems the problem is not unique to New Zealand. Consider: Aretha Franklin, Prince, Amy Winehouse, who all died in recent times without a Will. Even if you're not famous, it is our view that it is vital that you have a Will.
A Will is a document by which you direct who is to receive your personal assets on your death. Your Will can be as simple or as detailed as you wish. After your death, your Will is "probated", meaning that a Court Order recognises that the Will is accepted as authentic and authorises the named executor to deal with your Estate, being the assets you own personally
Even if a person owns very little, it is likely that their personal assets will exceed the statutory threshold of $15,000 and therefore their Estate will need to be probated. For instance, many KiwiSaver providers insist on legal authority (i.e. a copy of probate) before releasing funds, even if the funds are less than $15,000. Therefore, it is advisable to have a Will. Having a Will also means that anything unexpected can be legally dealt with by the Executor and Trustee you have appointed in your Will.
What happens if you die without a Will?
If you die without a Will, your assets will be distributed according to the criteria set out in section 77 of the Administration Act 1969. A member or members of your immediate family will apply to the court for Letters of Administration. Effectively like probate, this document gives the appointed administrator legal authority to administer your assets. Obtaining Letters of Administration takes more time and can be expensive. Public advertisements usually need be placed, to ensure the deceased did not leave a Will; an official search of public records needs to be requested at the Births Deaths and Marriages Office and written consents may need to be obtained from those who have equal entitlement to apply.
If you have a spouse or partner but no living parents or children, section 77 provides that your partner will receive all of your assets. For those with a partner and children, the partner is entitled to personal chattels, $155,000 from the Estate and one-third of the Estate after payment of all debts and expenses. The children of the deceased receive two-thirds of the remaining assets. Where there are no children but a partner and living parents, the partner receives two-thirds and the deceased's parents one-third in equal shares.
It is not hard to see why having a Will makes good sense. Making a Will gives you freedom to decide how and to whom your assets are distributed on your death. It can be tailor-made to suit your particular circumstances and family needs. For instance, you could create an interest for life for your partner to continue living in the family home when you are gone, including providing financial assistance (i.e. a loan) to help cover the cost of them entering a retirement home later on. If you are part of a blended family (i.e. you or your partner have children from a previous relationship and you have children of your own together) a Will needs special attention. There can be a risk that a child’s inheritance becomes relationship property if the surviving partner re-partners.
Your Will can also specify your funeral or cremation wishes and it can deal with issues like who will look after your pets when you die. You can also gift personal items or money under your Will to members of your family or to charities.
A Will can be updated or changed at any time, provided that you revoke all previous Wills and codicils. To ensure that your Will takes care of your changing circumstances and requirements, it should be updated periodically. We suggest every five years. As you acquire assets, enter into a long-term relationship or have children, your needs and even moral obligations to provide for your family (which are recognised by law) change. If you update your Will, we recommend replacing it with a new Will rather than making changes to your existing Will by way of a "codicil". Having multiple codicils can get complicated and lead to uncertainty.
Many people are not aware also that if a couple marries, their existing Wills are automatically revoked. This means that anyone they had previously provided for, will no longer receive anything unless a new Will is made after the marriage has taken place or the existing Will states that it is made in contemplation of marriage to the person that they marry. If you separate from your partner, you should also make a new Will as this is not automatically revoked in that situation.
Some law firms offer to prepare a Will for free provided that they are named as an executor; however a "free will" is usually only offered as part of wider estate planning work. Regardless of whether you pay for your Will or not, it is advisable to spend the time (and money) to ensure that your Will is one that you are happy with and which meets with your wishes.
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