Wills and Living Wills

• Overview
• FAQ

What is a Will?

A will is a legally binding and important record of your wishes for the distribution of your assets when you die. It is probably the most important document you will ever sign. We strongly recommend that everyone over the age of 18 makes a will. By making a will you can:

• Ensure the people closest to you such as your spouse/partner, children or grandchildren, will be provided for.
• Appoint an experienced person to manage your estate (an executor and a trustee).
• Appoint a guardian for your children.
• Ensure your last wishes are clearly understood.
• Give funeral directions (i.e., burial or cremation).
• Provide for family education (i.e., children or grandchildren).
• Benefit a charity or cause such as medical research.

What happens if I die without a will?

This is called dying intestate. If you die without a will your estate will be distributed according to the law under the Administration Act 1969. With the introduction of the Property (Relationships) Act on 1 February 2002, de facto and same sex relationships now share the same entitlements as married couples.

• if your spouse/partner survives but there are no children or parents; your spouse/partner receives everything
• if children survive but there is no spouse/partner; the children receive everything
• if your spouse/partner survives and children are also living; the spouse/partner receives all personal chattels, $155,000 and 1/3 of the remainder and the children receive the remaining 2/3
• if your parents are living but no spouse/partner or children; your parents receive everything
• if your spouse/partner and parents are living but no children; your spouse receives all personal chattels, $155,000 and 2/3 of the remainder and your parents receive the remaining 1/3
• if you have no spouse/partner or living parents but brothers and sisters; everything goes to them or to their children
• if you have no brothers and sisters but grandparents; half your estate passes to your maternal grandparents and half to your paternal grandparents. In their absence to maternal and paternal aunts and uncles
• if there is no spouse/partner, children, grandparents or parents surviving; everything goes to certain blood relatives. If none can be located then the estate goes to the government.

This distribution may cause problems where a spouse is denied part of the estate they require to care for children. Legal expenses and time delays are usually greater where there is no will. There may also be doubt over who will administer your estate.

What does it cost to make a will?

We will draft your will or redraft your existing will for free if you appoint Perpetual Trust as your executor.

What are your fees for administering an estate?

To administer your estate, we charge a flat fee of $500 plus 2.75% on the first $600,000 gross assets, then 1.5% thereafter. There is a statutory provision under the Trustee Companies Act which states that our fees cannot exceed 5% of the estate. Where the gross value of an estate is under $100,000, we will charge on a pure time and cost basis.  These fees only apply to assets in your sole name. Assets in joint names generally pass to the surviving owner automatically. However, there may be some legal and accountancy fees payable such as transfer of ownership to an individual name and preparing accounts and tax returns.

What is an executor?

The executor is the person or trustee company you appoint in your will to administer your estate.

What are the duties of an executor?

The executor's duties include obtaining the High Court's permission to finalise your estate (called obtaining probate), locating, protecting and valuing your assets, assessing and paying your debts, locating beneficiaries, filing your final tax return and distributing the assets as directed in the will to the beneficiaries. Estate administration can be complex and time-consuming. It requires expertise in law, accounting, investment and taxation.

Is there a minimum amount of money I need before I can make a will?

No - if you have assets that you wish to go to a specific person then you should make a will. If you are married or in a long-term relationship, have children, own a home, have life insurance or any other asset you should have a will. A will ensures that those close to you, such as your spouse/partner, children or grandchildren are financially protected and that your last wishes are clearly understood.

When should I review my will?

You should review your will in these circumstances:

• marriage - an existing will is automatically cancelled by marriage, unless the will states it was made in contemplation of marriage
• separation - this has no effect on your existing will but you may wish to make another one
• dissolution of marriage (divorce) - cancels any gift to, or appointment in favour of, your former spouse
• new relationships - if you are entering a new relationship you should review your will taking into consideration the provisions of the Property (Relationship) Act 1976.
• change of property - if you have sold, given away or lost items specifically bequeathed in your will
• change of executor - if your executor or trustee dies or is otherwise unable to fulfil their responsibilities
• guardianship changes - if your guardian dies, is no longer able to act or you change your mind.

If my net assets dramatically increase in value do I have an obligation to let you know or does my current will cover it? There is no charge to change your will so we recommend you update it as your circumstances alter.

Who can act as a witness?

Anyone who will not benefit from the will can act as a witness unless they are a spouse of a beneficiary. They must be over 18 and fully understand what they are witnessing.

I have furniture/jewellery that has been in my family for generations. Can I put the distribution of these in my will?

You may if you wish. However, it can make a will long and complex if there are a large number of items to include. In our experience there are frequently changes to distribution choices. To avoid having to redraft your will every time there is a minor change we recommend a clause in the will giving a general gift-of-chattels to one or more people with a wish for the distribution in a note to those individuals. We can store the distribution letters with the will and any time there are changes you simply provide us with an updated copy of your instructions.

Am I able to include funeral instructions in my will?

Absolutely. You can state whether you wish to be cremated or buried and at which cemetery you wish to be buried. It is also important that you tell your next of kin what your wishes are. You can prepay your funeral via our pre-paid funeral trust.

What is a guardian?

A guardian is a person, usually a family member or close friend, who will look after your children when you are no longer here.

Are the guardians financially responsible for my children?

No. You are ultimately responsible for the financial well-being of your children.

How do I ensure that my children are supported financially after I have died?

The equity in the family home or adequate life insurance are generally the main ways of ensuring this. We can help you calculate the amount of life insurance you need to care for your family (spouse and children) in case you die unexpectedly and can arrange the cover for you. Talk to us about Lifestyle Planning.

Who will authorise payments to my guardians for the upkeep or maintenance of my children and how is this usually decided?

The trustees. If you would like another family member to be involved in this process you may appoint them as an advisory trustee in your will. Payment requests are usually made by the guardian to the trustee for specific items. The cheques are then sent directly to the provider rather than given to the guardian to ensure the monies are spent as intended. For example, if a child requires orthodontic work, the cheque is sent directly to the orthodontist.

When can you inherit from an estate?

A trustee cannot pay inheritances to children until they are 20 years of age. However, trustees have discretion to make funds available for things like maintenance and education.

What happens if I die with insufficient money to cover all my debts?

This is called an insolvent estate and is dealt with in a similar manner to a bankruptcy. There is a preferred creditors list and on this list the funeral director is generally paid first. With an appropriate level of life insurance this can generally be avoided. We can assist you with an analysis of your financial needs in the event of your untimely death and arrange the cover for you. Talk to us about Lifestyle Planning.

What is the Family Protection Act (FPA)?

The FPA imposes a moral duty on the person making a will to be prudent and fair in the distribution of their estate on death. That is, the Act is intended to prevent temporary arguments or rifts within families from affecting a person's potential share of an estate, to prevent the disposal of assets excluding family members, to prevent wills making families worse off than if there was no will, and to prevent the next of kin having to rely on welfare to survive. Those who can apply to the court under the FPA are spouse/de facto, parents, children, grandchildren, and stepchildren being cared for by the deceased at the time of death. The court may award a share of the estate to an applicant if it considers the deceased disregarded their moral duty to their family and that there was insufficient provision made under the will. The Family Protection Act was passed in 1955.

What is the Testamentary Promises Act (TPA)?

The Act essentially states that if the deceased has made a promise for payment/reward for assistance/work which has been completed then a claim may be bought against the estate if that promise has not been met either prior to death or in the will. The court can enforce a promise made by the deceased. The Law Reform (Testamentary Promises) Act was passed in 1949.

Didn't find an answer to your question?

Please feel free to make an online enquiry and one of our advisers will get back to you. Alternatively you can call your nearest Perpetual Trust office on 0800 737 738 or e-mail us: email@perpetual.co.nz.