Having a will is something that you do for the people that you love.
If you don’t love anyone – then you can live without having a will.
But if you do love people, having a will is a kindness for them. The aim of your will is to express your wishes about what should happen to your body, your estate and any dependents after you die.
In the movies and TV shows, the reading of a deceased persons will is regularly depicted as a big event – held in a lawyers office – with suspense and some sharply drawn in breaths and shocks.
In reality in many day to day cases, family members or a close friend will have a copy of the persons will and it may well have been discussed. Given that your will can give instructions as to what you want done with your body (buried, cremated) it is a good idea to provide access to your will to someone other than your lawyer, so that your wishes are followed.
For many people, their will is straightforward, leaving assets to a remaining partner or dividing equally amongst children. Wills become more complicated when there is no partner or children to divide the assets between. And even more complicated when there is an estranged child.
Wills do not have to be prepared by a lawyer (but if your situation is complicated, we would strongly recommend that you do talk to a lawyer).
The key things with a will are that:
1. The following people are identified with full name, occupation and where they live:
a. Person making the will
b. Executor
c. Beneficiaries who are named
2. That the signing of the will is witnessed by two people who are not involved in the will in any way. These people can’t be beneficiaries or the executor. It is vital that the person who is making the will signs the will in the presence of the witnesses, at the same time. We prefer to get our clients to get the witnesses to initial every page as well as signing the document.
3. That there is a clear date that the will is made on – and ideally that a statement that any previous wills are revoked.
While you can list your ‘things’ in your will, this can cause problems if the ‘things’ change. We suggest that you would be best to maintain a separate list of ‘things’ that you want people to have.
If you have a Family Trust in place, it is likely that your lawyer will recommend that you forgive any debt that the Family Trust owes you.
People making wills often choose family to be the Executor. From experience, it is probably easiest to minimise the number of executors on your will as each person will have to agree and do all of the administration and fulfil the Anti Money Laundering requirements.
If your assets are less than $15,000 your will does not need to go through probate, and may be able to be dealt with in a straight forward manner. (Administration Act Regulation 4).
For all other situations, you will need to get a lawyer involved in carrying out the wishes in the will (with associated costs).
If you don’t have a will, that makes life complicated for the people that you leave behind. In this situation, you die intestate and your assets are managed according to the Administration Act. Here is a blog post that we wrote on this - https://www.moneyworks.co.nz/blog/post/79477/What-happens-if-you-die-without-a-will-in-New-Zealand/
This Act hasn’t been changed for some time, but the amount of funds that are allocated to each category of person gets updated in the regulations. Section 77 of the Act provides a list of how the assets and personal chattels are distributed depending on the people that the deceased leaves.
As an example S77(3) says - if you were to die without a will, and you leave a husband, wife or partner, no children but one or both parents then:
- Your husband, wife or partners gets your personal chattels
- The rest of your estate is divided as
o The prescribed amount to the husband, wife or partner
o Anything that remains is held in trust for 2/3 for husband, wife or partner and 1/3 for parent(s).
- The current prescribed amount is $121,500.
Therefore, if you have $500,000 of assets (that aren’t held as joint ownership with your partner), then $121,500 is provided to your partner, then of the remaining funds $252,333 would be held in trust for your partner, with $126,166 being paid to your parent(s).
This may not be how you want your assets distributed.
Note: If your relationship or your marriage ends… your will does not automatically change – you will have to manually change the contents of it.
Portions vs $ values When you are making your will, we recommend that you allocate portions of your assets to different beneficiaries. Unless you are regularly updating your will, if you put in dollar values, the value may be much higher or much lower (as you use up assets), which may mean that your will ends up being not valid.
Grandchildren vs children You can leave assets to any person or entity/charity that you wish, but you need to ensure that children are fairly considered. If you want to skip a generation (if for example you feel that your children are financially stable) we would strongly recommend that you get legal advice, and talk to your children about your decision, as this is something that could be challenged.
Recommendation and Summary
We strongly recommend that you make a will and ensure that you keep it up to date (we are regularly reminding our clients to update their wills – it isn’t an easy thing to do or think about), so that you have control over what happens to your body and assets.
We also recommend that that you provide your executors a copy of your will (and maybe even discuss it with them prior to it being required to be enacted) and the details of any of your financial advisers.
Here are some more blog posts that we have written over the years that might be of interest.
https://www.moneyworks.co.nz/blog/post/79280/Why-you-need-to-get-the-right-legal-arrangements-in-place-to-protect-yourself/
