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Jun 09 2016

Where there’s a Will, there’s a way – things you need to know about Wills

Jun 09 2016
All News

Where there’s a Will, there’s a way – things you need to know about Wills

Written by: Brittany Earl

Consider William’s situation:

William is 29, loves to travel and surf. In addition to his investment in surfboards, William has been saving for a house and has accumulated $25,000 in his KiwiSaver fund.

William considers himself a lucky man. He has just arrived back in New Zealand from Rio de Janeiro where he has been honeymooning with his new wife Fortune. William and Fortune spent their time in Rio hanging ten on Copacabana Beach and exploring the city. Whilst on holiday and much to his delight, William found out that he was going to be a father; his son is now 8 months.

Scenario one – impact of marriage on a Will

Given the recent Zika virus outbreak in Rio, William wisely signed a Will two days prior to his marriage and subsequent departure to Brazil. Unfortunately, William’s Will was not made in contemplation of his marriage.

1. Should William be concerned about the validity of his Will?

Yes. Under section 18 of the Wills Act 2007, a Will is revoked (rendered null and void) if the will-maker subsequently marries (or enters into a civil union). If the Will states it is made in “contemplation of marriage” or “civil union”, the Will is fine and not void.

Scenario two – death without a Will

Shortly after William’s return he starts to feel very unwell. William’s wave of good luck appears to be at an end; a trip to the doctor and blood tests reveal that William has the Zika virus. William does not have a Will although he has always wanted to gift his surfboards to his best friend Mick. 

1. If the Zika virus strikes William down without him having a Will in place, what would happen to his property?

If William dies without a Will the Administration Act 1969 applies to the distribution of his property. This means that specific people will receive a share of his property (not necessarily those he would choose). Accordingly, William’s property may not be distributed in the manner he intended.

In this scenario:

(a) Fortune would receive all of William’s personal chattels (including his surfboards);

(b) Fortune would receive the first $150,000 of William’s estate;

(c) Fortune would receive a 1/3 share of the residue (if any);

(d) The remainder of William’s estate (if any) would be held on Trust for his child.

While Fortune would likely give effect to William’s wish to gift his surfboards to Mick (had she known about this), without a Will in place there is no guarantee Mick will receive these.

2. What would happen to William’s KiwiSaver fund if he does not have a Will in place?

If William has no assets other than his KiwiSaver account, his provider will require Letters of Administration from the Court before they will pay out funds. This process can take up to seven or eight months, or longer if there is a dispute, and can cost up to $2,500. This additional time and cost would have been avoided if William had a Will.

Scenario three - separation

William has a Will in place and leaves all of his estate to Fortune. Unfortunately, and much like a surfer at Piha, William and Fortune’s relationship is on the rocks.

1. William and Fortune separate. Should William update his Will?

Yes. Separation does not automatically revoke a Will. In the absence of a formal separation agreement or dissolution of marriage William will need to change his Will to exclude Fortune.

2. If William and Fortune were in a de facto relationship and their relationship ended and William wants to exclude Fortune from his half share, should he update his Will?

Yes. The end of a de facto relationship does not automatically revoke a Will. To prevent gifts passing to Fortune, William will need to change his Will.

If you have any questions, please feel free to contact our Family or General teams.