It’s hard to know where to start when you’ve lost a loved one. It can be even more stressful when there is no will. We can guide you through what happens next.
What happens when your loved one dies without a will
When someone passes away and hasn’t left a will, it’s called an intestacy, or dying intestate.
If the person has no real estate or their assets do not exceed more than $15,000 from each institution (e.g. savings, shares, Kiwisaver), their estate is considered a small estate and can be managed and distributed by their next of kin.
If the person has more than $15,000 worth of assets or owns property, then formal administration of the estate is required by law and certain processes must be followed for managing and distributing the person’s estate.
The process for managing someone’s estate when there is no will is longer and more complex than if there was a will. Save your loved ones' stress by making your will today.
How to settle an estate without a will
If the person died with less than $15,000 of assets and didn’t own any real estate, their next of kin may take up the task of managing their estate without having to apply for legal authority. This includes collecting assets and paying debts, as well as distributing assets.
For an estate that’s larger than $15,000 value, the process is as follows:
Decide who will be the administrator of the estate
The administrator is responsible for managing the estate (closing accounts, filing tax returns, selling property, dealing with the debts) and distributing the estate. It’s similar to the role of executor when there is a will.
The closest relative or a trustee corporation is able to apply to the Courts for permission to be the administrator, but bear in mind that it is a big responsibility and the process can be both time consuming and stressful. The right choice will be someone who:
Can act and make decisions objectively
Understands the laws and legal responsibilities of an administrator (or can seek specialised advice where needed)
Has the time to take on the role
Can manage family disagreements if/when they arise
Has a good understanding of law, accounting, and tax without getting overwhelmed (or can seek specialised advice where needed).
Many people choose Public Trust to administer their loved ones’ estates. Our team is well practised in this area and can ensure the process runs smoothly, removing the burden from you and your family.
Alternatively, if you choose to be administrator yourself, Public Trust can also assist you with fulfilling all or some of your duties. Get in touch with our team now to chat about how we can help.
Obtain Court authority to act as the administrator of the estate
Whether you choose to be administrator or ask Public Trust to act for you, the chosen person will need to obtain legal authority to fulfil this role.
To do this, they need to prepare and file an application to the High Court to be granted letters of administration, which gives them the authority to administer the estate. This part of the process can take some time, but can often be faster with Public Trust involved.
To prepare the letters of administration, the following must be demonstrated to the court:
There is agreement about who will be the administrator:
The administrator must have consent to act from all those who had the same level of relationship with the deceased (such as the administrator’s siblings) or a closer relationship (such as the deceased’s partner) and who have a right to apply for Letters of Administration.
If Public Trust is appointed administrator, we need the consent of the likely estate beneficiaries and who have a right to apply for Letters of Administration.
Steps have been taken to find a will:
The Court needs to be satisfied that there is no Will, so you need to show the steps you have taken to find the will. This may include advertising in an appropriate publication for someone to come forward with the Will, contacting professionals that may have the will and asking people who were close to the deceased if they have it or are aware of the existence of any will.
There is proof of the deceased’s family relationships:
You need to prove the key beneficiaries’ relationships to the deceased and show that all children have been accounted for in the format required by the Courts.
Administer the estate
Once the letters of administration are granted, the administrator needs to take care of the paperwork, close accounts, settle debts, pay taxes, and so on.
This part of the process is mostly the same as when there is a will in place. The only difference is that when there is a will, assets are divided according to the will’s instruction. When there isn’t a will, assets are divided according to the law.
Distribute the estate
When there isn’t a will, the distribution of assets is determined by law. Note that in New Zealand law, some de facto relationships and civil union partnerships are recognised as equal to marriage, for the purposes of estate distribution. See more about how the Property (Relationships) Act could affect you here.
Without a will, a person’s assets will be distributed according to their family circumstances:
If there is a spouse or partner, but no parents or children: The spouse receives the entire estate.
If there is a spouse or partner and children: The spouse receives the personal effects (such as furniture, paintings, homeware), $155,000 (with interest from the date of death) and a third of anything left. Children will receive the remaining two thirds, divided equally between them.
If there are stepchildren or a blended family: Where there are blended families the situation is more complex. Whether stepchildren are entitled to benefit from an estate will depend on a number of factors including the age of the stepchildren, their relationship to the deceased and whether they relied on the deceased financially. To fully understand stepchildren’s entitlements you should make an appointment to see your nearest Public Trust Trustee.
If there is a spouse or partner and parents, but no children: The spouse receives the personal effects (such as furniture, paintings, homeware), $155,000 (with interest from the date of death) and two thirds of anything that’s left. The deceased’s parents will receive the remaining third divided equally amongst them.
If there are children but no spouse or partner: The children receive the entire estate; it will be shared equally among them.
If there is no spouse or partner, no children, but there are surviving parents: The entire estate is divided equally between the parent or parents.
If there is no spouse or partner, no children, no surviving parents but surviving siblings: The entire estate is divided equally between the siblings.
If none of the above scenarios apply, a genealogist will be engaged to determine next of kin details. If no next of kin are able to be located then everything will be passed over to the New Zealand Government. Anyone who thinks they should have benefited from the estate can apply to the New Zealand Treasury to be considered.
How long will it take?
When there isn’t a Will in place, the process of winding up the estate can take a lot longer than following a Will. As a guideline, and depending on the complexity of the estate, it can take anywhere from 6 – 24 months from the person’s death to the closing of the estate, or longer if next of kin cannot be confirmed or located.