Wills and Estates
Anyone of sound mind who is at least 18 years old can make a Will. A person under 18 may make a Will if they are (or have been) married or in a civil union or de facto relationship. Others under the age of 18 can make a will if given approval by the Family Court or if they are in the military or are a seagoing person. The best time to draft your Will is now. However, drafting your Will can be more complex than expected. It is important that you address previous relationships, new relationships, stepchildren, or grandchildren. Other factors to consider when drafting your Will are whether you wish to leave someone a life interest in your property, hold any assets on trust, how you wish to deal with your family trust if you have one and how you wish to provide for your family or other interests you may have. You can also provide instructions in your Will about your funeral, whether you want to be buried or cremated and whether you want to be an organ donor. We can assist by writing your Will for you, explaining the ramifications of it to you and ensuring that everyone can understand and act on your wishes if you die. We encourage you to review and update your Will regularly as circumstances change and if you already have a Will, we can assist you with updating it.
Enduring Powers of Attorney
An Enduring Power of Attorney (EPA) comes into effect if you become ‘mentally incapable’, for example because of an illness or accident. The person you give the decision-making power to is called your attorney. They are often a family member or a trusted friend. Because an accident or illness can strike at any time, if a power of attorney is not in place before this happens, your family will be unable to access assets or bank accounts, pay bills or make decisions about your health care and where you will live.
You will need two separate kinds of EPA. An EPA for personal care and welfare allows your attorney to make decisions about your health services and where you live if you become mentally incapacitated. An EPA for property allows someone to manage your personal property – assets, bank accounts, bills etc. An EPA for property can be restricted to come into place only when you are incapacitated, or can be active immediately, allowing you to provide someone else with the ability to sign documents on your behalf if you are out of the country. If you become incapacitated, without an EPA, your family will need to apply to the Court to have someone appointed as your property manager or welfare guardian and this can be time consuming and expensive.
When a person dies, their assets and property are known as their “estate” and their property is administered by personal representatives. The estate may include bank accounts, life insurance policies, superannuation schemes, KiwiSaver, investments, shares, property and vehicles as well as personal and household items. If the personal representatives were appointed in the Will, they are known as executors. Where there is no Will, they are appointed by the court and are known as administrators. Where a Will appoints executors, their authority to deal with the estate is confirmed by the High Court in a grant of “Probate”. Where administrators are involved, they obtain their authority to act as personal representatives by the High Court granting “Letters of Administration”. The person entitled to apply for the appointment as administrator is the person who stands to benefit most from the estate, such as your surviving spouse or partner, or one of your children. If none of them wants to do it, certain others can be appointed.
Applications to the High Court for grants of Probate or Letters of Administration require the preparation of formal documents. The lawyer acting for the person wanting to apply for appointment as administrator will prepare these. Once the court has granted probate, a will becomes a public record, and you can request a copy of it from the court.
If a person does not have capacity to handle their own affairs and they do not have valid enduring powers of attorney in place, applications can be made to the Family Court under the Protection of Personal Property and Rights Act 1988 (PPPR) for someone to be able to deal with the subject person’s property and make decisions for and in respect of the subject person’s welfare. The types of applications that can be made under the PPPR include:
- The appointment of a property manager or property administrator, depending on the subject person’s level of assets and income; and/or
- The appointment of a welfare guardian for the subject person; A medical report is required as evidence that the subject person is wholly or partly unable to manage their own affairs, as part of the application.
On receiving an application under the PPPR, the Family Court will appoint a lawyer for the subject person to review the application, to ensure that the applicant is a suitable person to be appointed to look after the subject person’s affairs. An appointed property manager is required to provide financial statements (in respect of the subject person’s assets, income, liabilities, and expenditure) at the beginning and end of the property manager’s appointment and every year during the management period. Any orders are subject to time limits and applications are usually required to be renewed every three years. We can assist you with these sorts of applications.
Family Protection Act Claims
In making a Will, people have moral duties to their children and other relatives. The terms of the Will should reflect those moral duties. If the Will does not, then you or somebody else may feel left out or forgotten. If you feel you have been unfairly left out of a loved one’s Will you may need to make a claim under the Family Protection Act 1955 (FPA) alleging that the deceased has not made adequate provision for the proper maintenance and support of their immediate family.
In writing your Will, if you do decide to treat people differently in any major way, especially your children, it is a good idea to record your reasons for doing so in your own handwriting and lodge them with your Will so they can be taken into account if there is any dispute after you die. The courts have tended to rule that parents have a moral obligation to make some provision for children – even adult children who are well-established and have no financial need and if they have not, then the Court will likely rectify this with an award to that child.
Family trusts are used to protect assets from creditors, relationship property claims and claims against your estate. Trusts are also a practical way of managing assets for intergenerational wealth. It is vital however, that they are set up for the right reasons and administered correctly. We can help you with the administration of, winding up, or setting up of a Family Trust.
New Trusts Act
If you have a trust or are a trustee, it’s really important that you know about recent changes to trust law in New Zealand. The Trusts Act 2019 now sets out several ‘mandatory’ duties that trustees must comply with as well as a number of ‘default’ duties and obligations that trustees must abide by unless they are modified or excluded by the trust deed. Importantly, the new disclosure and record-keeping obligations imposed on trustees should bring a new level of thoroughness to trust record-keeping. We can advise you on how these legislative changes might impact you.
Asset and estate planning can be complex, and it is important to obtain independent legal advice tailored to your individual circumstances, from an experienced professional.