Three laws every Kiwi will-maker should know about
Learn about the Property (Relationships) Act 1976, Family Protection Act 1955 and Law Reform (Testamentary Promises) Act 1949 and how they impact wills.
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Making a will is one of the most important steps you can take to help protect your loved ones and set out your wishes for the future. But many people are surprised to learn that a will is only one part of the picture when it comes to getting things sorted.
In New Zealand, there are several laws that can affect what happens to your estate after you die. In some situations, a surviving partner or even an ex-partner may have rights under relationship property laws. In others, family members may be able to challenge a will, or someone may make a claim based on a promise made during your lifetime.
That doesn't mean your will isn't important. A well-prepared clear will remains the foundation of a good estate plan. But understanding the laws that can interact with a will can help you make more informed decisions, help reduce the risk of future disputes and help provide greater certainty for your loved ones when you die.
Here are three key laws every will-maker should know about, and how they could affect your estate. As always, if you’ve got a blended family or complicated family situation we recommend getting legal advice based on your personal situation.
Property (Relationships) Act 1976
What is the Property (Relationships) Act 1976? This Act sets out what should happen to a couple’s assets when they separate or one of them dies.
Who does it impact? This Act could impact those in a relationship. A de facto relationship is the name given to the scenario where two people live together as a couple, sharing their lives in a way similar to a marriage or civil union, even though they haven’t formally married or entered a civil union. The Property (Relationships) Act 1976 applies automatically to couples in de facto relationships. (Find more info on de facto relationships here.)
How could the Property (Relationships) Act 1976 impact your will and estate planning? The Act sets out what happens to a couple’s assets when they separate or one of them passes away. If you think this Act might apply to you, you might want to seek professional advice as to how best prepare for or help prevent a claim, as your partner may be able to make a claim on your estate. You may want to consider a contracting-out agreement or prenup too. If you have not formally ended a relationship, this might also cause problems or have unintended consequences with the administration of your estate.
What’s a real-life scenario of how the Property (Relationships) Act 1976 might apply?
· Imagine you’ve been living with your partner for several years, but your will leaves most of your savings and KiwiSaver to your children. If you die, it may not be as simple as dividing everything according to your will. Your partner may have rights to relationship property under the Property (Relationships) Act, which could affect what forms part of your estate and what ultimately forms part of your estate under your will.
· Say you and your partner have built a life together and you own the home, but your will leaves your home to your child. If you die, your partner may have relationship property rights that need to be dealt with before your estate can be distributed according to your will.
Family Protection Act 1955
What is the Family Protection Act 1955? This Act allows family members (such as children and spouses) to challenge a will if they feel the person who died failed [in their 'moral duty'] to provide adequate maintenance and financial support. Sometimes we see this play out in the media, when family members are disputing what they have been given in a relative’s will through the court.
Who does it impact? The Family Protection Act 1955 impacts those who write a will who may be intentionally, or unintentionally, excluding or not providing enough for a family member.
How could the Family Protection Act 1955 impact your will and estate planning? If you think this Act might apply to you, you might want to seek professional advice as to how best prepare for or help prevent a claim. If any claim by a family member is successful, the court will order their entitlement to come from the estate. Claims on estates can be costly and stressful for those involved, and delay the time it takes to administer your estate when you die. If you think this Act might apply to you, we encourage you to get legal advice when writing your will.
What’s a real-life scenario of how the Family Protection Act 1955 might apply?
· You might have a stepchild who you have not included in your will. When you die, your stepchild might be able to make a claim if they can prove they had been provided for, either fully or partially, by you right before your death. If they are successful, they could be entitled to a share of your estate.
· A parent might leave one of their children out of their will, or leave them significantly less than others. That child may be able to make a claim against the estate, but being left out or receiving less doesn’t automatically mean a claim will succeed. The court considers the individual circumstances, for example any financial hardship, and whether the will-maker failed to provide adequately for their maintenance and support.
Law Reform (Testamentary Promises) Act 1949
What is the Law Reform (Testamentary Promises) Act 1949? This Act enables people to claim against an estate if they can prove the person who died broke a promise to leave them something in their will in return for work or services provided during their lifetime. The work or services provided would need to go well beyond what’s typically expected in family relationships.
Who does it impact? The Law Reform (Testamentary Promises) Act 1949 may affect you if your will intentionally or unintentionally leaves out someone you’ve promised to provide for.
How could the Law Reform (Testamentary Promises) Act 1949 impact your will and estate planning? This is an important Act to consider when you’re writing your will. If any claim by a family member is successful, the court will order their entitlement to come from the estate. Claims on estates can be costly and stressful for those involved, and delay the time it takes to administer your estate when you die. If you think this Act might apply to you, you might want to get professional advice about the steps you can take to prepare for or prevent a claim.
What’s a real-life scenario of how the Law Reform (Testamentary Promises) Act 1949 might apply?
· Imagine a child who works on the family farm for little or no payment on the promise that they will inherit the farm from their father. The services provided by this child would need to go well beyond what’s typically expected in family relationships. But then when their father dies, the farm is not included in their inheritance. The child may be able to make a claim.
· Imagine you regularly help an elderly aunt over many years, providing companionship, taking her to medical appointments and helping out around her property. Again, the services you provide would need to go well beyond what’s typically expected in family relationships. She tells you that she will “look after you” in her will with a cash gift in recognition of everything you’ve done. If she dies without fulfilling that promise, you may be able to make a claim against her estate.
Claims made against an estate
Any claims against an estate must be filed in court, usually within 12 months of the grant of administration and there is specific legal criteria to be met. Claims made against an estate can be stressful for everyone involved and can delay the process of estate administration.