Creating a will before we die is a subject many of us avoid, or is addressed in a way that doesn't clearly state our intentions when leaving behind assets for independents and loved ones.
Gary Fitzpatrick, from Comac Trustees tells Summer Times important it is to get your affairs in order, or families potentially face even more heart ache when when you pass on.
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Gary Fitzpatrick has taken over the estate of the deceased mother after she appointed a trustee on her death bed to oversee her will and the division of $120,000 to her children.
The mother had died through medical misadventure and the family had sued for the money.
The eldest of her children had looked after the other siblings while on the benefit and desperately needed the money, but over five years they only received $2000, despite numerous requests to do release more. The trustee had been a lawyer, who the mother hadn't known very well.
There has been a complaint made to the Law Society about the trustee. Fitzpatrick took over the estate free of charge, while financial adviser Hannah McQueen is also helping the children with advice.
He says these types of experiences can be avoided by exercising care and caution.
Current figures show between 40 and 70 percent of Kiwis don’t have a will or current will.
“Sadly, there’s more people who die without a will that should be happening,” he says. “I think statistically there will be about 15,000 people who will die each year who will not have a will.”
Having a will gives you opportunity to make sure the assets you’ve earned and acquired over time pass to the people you want to receive it, he says.
“If you die without a will that decision-making process is taken away from the individual and New Zealand law will dictate the terms of what path those assets will follow.”
This can involve a number of scenarios.
“If you have a spouse or a partner and children, the spouse or partner will receive a certain amount of the asset base, depending on the way the assets are owned," Fitzpatricks says.
“The children will have some money held in trust for them, which may not necessarily asset a grieving partner, who needs additional financial support to manage the affair of their family moving forward.
"If there are no children then the surviving partner will take everything traditionally, but there are also situations where the families are wider spread out or blended.
"It’s not uncommon to find the children starting to support their parents as they age and live longer, so there’s a lot more need to have a will that covers all the bases and looks after family members that you want to provide for.”
When looking for a trustee to oversee a will Fitzpatrick recommends finding a law firm that specialises in the area. Not only does a lawyer’s skill base matter, but it’s also important to ensure that person is a good fit in dealing with your family.
He says it is incredibly important to state your wishes clearly. “So many wills are drafted in a way that doesn’t meet the expectations of the will maker at a later stage or possibly the more common thing we see is a person makes a will, they pop it in the bottom drawer and they don’t review it ever again.”
The age of the will can be a major factor, with some wills 30 or 40 years old and not reflecting the modern circumstances of that family.
Blended families can present more complicated needs, with various scenarios needing to be discussed and addressed before a will is drafted.
“If you don’t get it right then it leaves a big hole where everybody has a perception of what they think the game plan was supposed to be, and it’s not necessarily anything like that,” he says.
Something that is still common among families is the labelling of a deceased person's items, marking these out to go to specific members of the family. Fitzpatrick recommends a list of the items with individual names beside them to avoid misunderstanding, label swapping and potential conflict.
“It’s amazing how small things like that can cause a rapture in a family at a later stage,” he says.
One is entitled to see another person’s will when they are alive, but when the die, if the will needs to be probated, that is, formally recognised in a court of law so the assets can be administered, then the document becomes a public document and everyone is therefore able to see it.
There are about 450,000 family trusts operating in New Zealand too, which have some benefits over wills and estates, depending on circumstances, Fitzpatrick says.
“There are people who structure their affairs using the trust because it’s a different arrangement to that of an estate and a will.
“It’s not for everybody but there are now more circumstances where trusts are coming a bit more into play with blended families and different aged children, it gives them a little bit more control over the management of the asset base."
There are occasions when wills can and will be contested, particularly when a document is badly-drafted, or when there is doubt cast over it.
“In terms of contesting wills, certain family members have rights that they can bring to bear if they feel they have not been provided for appropriately within a will maker’s document,' he says. "That tends to extend to parents, spouses, children, grandchildren, or any other person who may be financially dependent on that deceased person.
“There’s various aspects of law that enable them to bring claims, either under what we call family protection, testamentary promises, property relationship. Everybody’s circumstances have to be looked at individually and assessed at the time.”
If a partner dies without a will, their estate goes automatically to the other partner, depending on how the assets are owned, he says.
“If a husband and wife own something jointly then the survivor takes the entire asset by virtue of survivorship. If they had a property and it was owned as tenants common and equal shares, each one of them has a one-half share that they can leave under their will or through law to follow a certain path. So, ownership of assets and they way they’re structured is quite critical. What it tends to lead to is having your will drafted should be done by somebody who has some skill and expertise.
Fitzpatrick doesn’t recommend ‘do-it-yourself’ wills, which have become more prominent these days as people seek to avoid lawyers’ fees.
“We have seen what we call write-your-own wills, where people draft their own and then attempt to set something up because they think they’re saving money, but quite often post-death the document is not particularly useful and then there’s a lot more money spent trying to understand the intention or rectify it.”
A modern complication of wills and estates involves digital assets, where much more information is stored on people’s iPads and smart phones. “We’re moving more towards a paperless society regarding bank accounts and other asset ownership and so when a person dies a lot of their life can actually be contained in an electronic device. Part of the thing that we now talk to people about is where they store some of their digital information what their passwords are, their access to bank accounts, so that we know where to look.”
Without that information there may have a bank account with significant sums of money that nobody knows about, so it's essential these assets are flagged up for allocation in the event of your death.