Half of all new Zealanders don’t have a will and it’s something that has prompted Public Trust to run a Tough Questions campaign. Public Trust’s insights suggest that New Zealand has a poor record in estate planning compared to similar countries, possibly due to a lack of understanding about what can happen if unprepared.
More than 1.5 million adult New Zealanders don’t have a will and many of them will have children. This means there are thousands of parents who haven’t established a plan for supporting their children if they die, let alone naming a guardian to care for them. Not having a will almost certainly means no enduring power of attorney either. That means there is nobody known to them who is trusted to make decisions on their behalf if they’re unable to through illness or injury.
New Zealand’s Public Trust says that modern family life has only heightened the need for estate planning. Many families are now fragmented or blended due to separation and remarriage, meaning a greater need for clarity about one’s intentions.
“There’s a good chance that, if you die without a will, what you assume will happen to your estate probably won’t,” says Public Trust General Counsel, Henry Stokes.
“With no will, the court steps in to sort things out. Many people are shocked by who ends up getting what and how things play out with things like guardianship.
“People don’t understand the mess and stress that is left behind if even the basics aren’t in place. It can create a lot of resentment and bitterness within families. Children and partners can feel completely wronged,” says Mr Stokes.
If you’re a young New Zealander, it’s even worse: 66% of 25 to 39 year olds don’t have a will.
Public Trust thought that part of the problem is that many people believe that if they die without having made a will, their entire estate would automatically go to their partner, so they wouldn’t need a will. Of course, that is not what actually happens, and there is a need for ongoing education on the need for a will and the issues that can arise without one.
Younger people may also believe that don’t have any assets, which is unlikely to actually be the case at the time they die, particularly when KiwiSaver (or superannuation in Australia) is taken into account.
There are likely to be other reasons though:
- A large one will be the actual or perceived cost of seeing a lawyer. Unfortunately, the cost of not receiving expert legal advice during the estate planning phase can be much higher: court battles over an estate are time-consuming, mentally draining and costly.
- Wills are an emotional thing to do, and people might feel more comfortable exploring their options before they commit to formalising and signing a will.
If you don’t have a will and you die, the Administration Act steps in
Dying without a will is known as “dying intestate”. In these situations, there’s a law (Administration Act in New Zealand) which decides how your property is distributed.
It describes a number of family situations you might have at your death (e.g. partner or spouse but no children or parents; partner or spouse and children but no parents; partner or spouse and parents but no children; children but no parent or spouse), and sets out the corresponding distribution of property. It also says what happens if you die without any family.
It may be that these default positions are what you’d want to happen. After all, the legislation is intended to try and provide a fair outcome for most situations. Your property won’t just disappear. It’s likely your family will get something.
But it may not be what you’d want. For example, you may want to ensure your children receive a larger portion than what is provided for by the law. Or you may wish for them to inherit particular pieces of property, such as a family heirloom.
Dying without a will also makes things more complicated and uncertain for your family and loved ones, which is particularly tough in a time of grief. The last thing you want is to think your family members were at odds because you didn’t leave clear instructions.
Even just a will with basic instructions can be a big help. And for most wills, it’s a pretty straightforward process. You list what you’re leaving behind, who it should go to, any instructions for your funeral, and who you’d like to carry out your wishes.
If you don’t have a will, what do you need to do?
- Make sure you have a will
- Identify a trusted person to be the executor
- Think about how you would like to leave your assets and to whom
- Understand that being part of a blended family makes the situation even more complex
- Think about what-if scenarios – what if one of your beneficiaries goes through a divorce or goes bankrupt?
Succession law is complex, and you need to seek the advice of someone who is an expert. For any issue regarding wills, estates, or estate disputes, contact us today for your FREE, 10-minute phone consultation.