You might think you’re too young to have a Will, it’s something for older people, right? Or, perhaps you don’t have many assets, and think you should wait until you buy a house. Maybe you don’t really mind where your assets end up, your parents or family can make these decisions for you. It doesn’t matter if you are single, in a relationship or married with children, having a Will is arguably one of the most important things you can do for yourself and your family.
What a lot of people do not realise is that, if you die without a Will, your family could be required to apply to the High Court of New Zealand to obtain directions about the distribution of your assets. If this occurs, your family will not necessarily be able to make decisions for you, as there is legislation in place which states, generically, how your assets will be distributed. Not only can this process be lengthy and expensive, but it places added stress on your family in a time of grieving. If you already have a Will in place, this process is a lot faster and less costly as your Will simply needs to be approved by the High Court, to ensure it is signed correctly, before your assets can be administered.
Dying without a Will
If you die without a Will, this is called dying “intestate”. If you die intestate and have more than $15,000 worth of assets, your family is required to apply to the High Court for directions. When considering whether your assets exceed this sum, think about the value of your KiwiSaver, your bank accounts, any bonds or shares you own, your furniture, and any bikes or other toys you may own. It adds up quickly! By having a Will , YOU get to determine who will benefit from your assets and it can make the process easier for your loved ones.
There are a few important terms we use when asking you for your Will instructions. The term “estate” is used to describe your assets. This may include property, cash, shares, or personal effects (jewellery, furniture etc). The term “executor” is used to describe the person(s) who will be tasked with administering your estate in accordance with your Will to ensure your wishes are carried out. Your executor would normally be in regular contact with your lawyer for assistance.
If you wish for some or all of your assets to be held on trust, meaning for the benefit of someone else for example young children, the people responsible for holding the assets are the “trustees” of your Will. Your trustees and executors will often be the same people. Your trustees are required to hold, and if necessary invest, your assets until your children reach the age you specify in your Will, for example 25 years, at which time your trustees can transfer your assets to your children.
Under your Will you should also consider appointing a “guardian(s)” of your minor child/children. While parents will usually be the natural guardians, if both parents die before the child/children reach 18 years of age or one parent is not involved with a child’s life, it is a good idea to appoint someone you trust to look after your children. You should consider whether your guardian is also the the trustee (the person holding assets on behalf of your children) so they can access funds for your children’s welfare and education. In some circumstances, it might be better for your guardian and trustee to be different people, meaning that both parties are required to communicate about how the funds held for your children are allocated for your children’s welfare and education.
Another thing to consider is what age you would like your children to be when they receive assets from your estate. While your children will legally become adults at 18, you might decide it would be better to wait until they are say, 25, before they inherit your assets. You could also look at establishing a family trust during your lifetime so that the vehicle for holding your assets is already in place when you die.
You can make “specific” gifts to people under your Will. This may include leaving your jewellery to your sister or your golf clubs to your brother. Or, you can leave sums of money to certain people or charities. If you own a rifle, you need to make sure you leave it to someone who holds a firearms licence, otherwise they can be seized by the police.
After specific gifts have been made, the balance of your estate is called the “residue”. You can leave the residue to one person or to more than one people in equal or unequal shares. You can also include a provision that, for example, if your children have died before you, their share is left to their children (your grandchildren). If you don’t know who you would like to leave your residue to and you don’t have any family you are obliged to care for, you could consider leaving the residue to a charity or foundation, such as the Wakatipu Community Foundation.
Burial or cremation
You can leave funeral instructions in your Will. You may wish to be buried or cremated and your ashes scattered somewhere meaningful to you. You may even wish that your ashes are made into a diamond for your loved ones to wear – this can be done!
In a world where technology is more important than ever, it could be a good idea to attach a list of passwords/login details to your Will. This list can be held in a sealed envelope and stored with your Will.
Ownership of assets
Another thing to keep in mind during your lifetime is how you own your assets. If you have assets together with someone else, for example a partner, you may own these as “joint tenants” (think, a joint bank account or both of your names on a property title) or as “tenants in common” (as to specific shares, for example Bill as to a ½ share and Sandy as to a ½ share). If an asset is held as joint tenants, it will automatically pass to the surviving partner if one partner dies. Both partners need to specify in their Will who the asset passes to if they are the surviving partner. If you own assets as tenants in common, each holder of a share can record who they wish their share to go to.
Do you hold any assets in a trust? If so, you should know that your Will can only deal with assets held in your personal name. With respect to trust assets, you can prepare a letter to the trustees of the trust to advise how you would like the trust’s assets to be distributed in the event of your death. While your trustees are not bound to act in accordance with your wishes, your directions will be considered seriously by the remaining trustees, particularly if the remaining trustee is an independent trustee (for example your lawyer or accountant).
Excluding people from your Will
If you wish to exclude certain people from receiving your estate, it is important that you have a Will in place to accurately record these intentions. Before you exclude certain people, you should discuss this with your lawyer as there are some legislative requirements noting people you are expected to provide for (in particular, partners and children). If you don’t provide for these people, they may have a right to make a claim against your estate.
When to review your Will
You should contact your lawyer to review your Will if your circumstances change. A change in circumstances could mean the birth of a child, getting married/living together, separating from a partner or when one of your named beneficiaries dies. One thing a lot of people don’t realise is that a Will becomes invalidated upon marriage (meaning you could die intestate if you haven’t updated your Will) but also that a Will continues to have effect after a divorce! So, if you get married, make sure you update your Will and, if you separate, consider reviewing your Will if you do not want an ex-partner to receive all or part of your estate.
You should always try to remember to review your will (say) every 5 years. Often no changes will be required but it is a good habit to get into.
If you do not currently have a Will in place, or have an existing Will and decide it may need some updating, then now is the time to get in touch with one of our experienced Wills and Estate lawyers who can assist.
Contact us on 03 441 2743 for a discussion about your Will or find out more about the Wills and Estates team here.