September 10 2014
Messy, expensive and time-consuming
Most people know that it’s important to have a Will and to keep it up to date. But what happens if you die without a Will? You might assume everything will go to your spouse or partner but that’s not usually the case. In fact, dying without a Will can mean a messy division of your estate between your spouse/partner and children.
There can be many reasons why some people die without a Will (the legal term is ‘intestate’). Possibly they tried to draw up their own Will and failed to get it signed correctly. They may have meant to make a Will but never got around to it. Sometimes a person had a valid Will but is unaware that their Will was automatically revoked on marriage. It’s important to talk about your Will with your lawyer after events such as marriage, divorce or separation.
If you don’t leave a valid Will then the law has to make some rough and ready allocations of who should get what.
The law doesn’t take into account your individual circumstances or the needs of your dependents.
So who gets what?
The Administration Act 1969 sets out who is to benefit if you die without a valid Will.
If you leave a spouse or partner but no parents, children or other descendants: The spouse or partner receives the whole estate.
If you leave a spouse or partner and children or other descendants: The spouse or partner will receive the personal chattels plus $155,000 (with interest) and one third of anything that is left. The children receive the remaining two thirds. If any of them have died, their children receive their share and so on for each generation.
If you leave a spouse or partner and parents but no children or other descendants: The spouse or partner is entitled to the personal chattels plus $155,000 (with interest) and two thirds of anything that is left. The parents receive the remaining third.
If you leave children or other descendants but no spouse or partner: The children receive the whole estate equally and if any of them have died, their children receive their share and so on for each generation.
If all else fails: The next in line (in order of priority) are: any surviving parent or parents; brothers and sisters (if any have died then their descendants); grandparents; uncles and aunts and their descendants.¹
If you have none of the above: Everything passes to the State. Dependents and anyone who might reasonably expect to have benefited may apply to the New Zealand Treasury which may pay out some of the estate to them.
Points to note
- The spouse or partner who may benefit would include a civil union partner and any de facto partner or same sex partner. If there’s more than one spouse or partner, they must share this entitlement equally.
- Personal chattels are defined to include almost anything that can be moved. These could be, for example, vehicles, boats, horses and equipment for them, as well as furniture and personal items such as clothing and jewellery.
- The figure of $155,000 is current at the time of writing. It has increased steadily over the years and is likely to be increased with inflation in future. Interest is payable on this amount from the date of death until the date when it is actually paid out. The rate of interest is currently 5% pa but this is updated from time to time.
- If there’s a Will but it only deals with part of the estate, then the rules outlined above will apply to the part of the estate not covered by the Will.
Make sure you have a Will
If you die without a Will, the process to sort it all out is usually slower and more expensive to get the necessary High Court order for an intestate estate (called Letters of Administration) than it is to get probate of a standard Will.
Special searches have to be made to make sure there are no children born out of wedlock and so on.
Just as with a Will, it’s possible for someone who feels they have been left out unfairly to bring a claim against the estate under the Family Protection Act 1955, Property (Relationships) Act 1976 and similar laws.
¹ Section 77 of the Administration Act 1969 sets out the details.