Claims against an estate

In New Zealand you’re largely free to leave your estate as you wish in your Will. Many countries don’t give Will-makers such complete freedom.

New Zealand law does allow, however, some people to make claims against an estate after the Will-maker has died. This may mean the court will override the Will to some extent. Unfortunately the possibility that a claim might be made means it’s not always possible to distribute the estate immediately. For more on this see the section on ‘Waiting before estate distribution’.

Property (Relationships) Act 1976

This is the legislation (often known as the PRA) which requires equal sharing of relationship property if a couple separate or divorce. In general terms, relationship property is the assets you acquire together during your relationship, as well as other assets the couple has acquired to use and enjoy. The PRA
applies to all couples – married, de facto and same sex.

The PRA can also apply after one of the couple has died. For example, if most of the assets were in the husband’s name, those assets will need to be dealt with as part of his estate. If his wife is still alive, she may claim that these assets were relationship property and she is entitled to half of them under the PRA. The same problem can arise for a de facto or same sex couple.

The law doesn’t allow the surviving spouse or partner to benefit under the Will and claim under the PRA as well: you have to make a choice. So in the example above, the wife would be required to choose either:

  • Option A – bring a claim under the legislation and abandon any entitlement under the terms of the Will, or
  • Option B – take what she is given under the Will and give up any claim under the Act.

In some cases the choice is quite easy, although there are some time constraints.  If you receive the whole estate under your partner’s Will, there is no point bringing a claim under the PRA as well. However, it’s not always clear whether you would be better off choosing Option A or Option B. The law requires that the spouse or partner must have independent legal advice before making this decision. The estate lawyer can’t give this advice; it must be another lawyer from a different law firm.

In some rare cases, the estate may have a claim to half the relationship property if this property is already in the name of the surviving spouse.

Resolving these sorts of issues is complex and expensive; if you think there’s a possibility of a claim under the PRA do get independent legal advice.

Family Protection Act 1955

Under this legislation, some close family members have a right to claim more from the estate if they believe they haven’t received enough for their proper maintenance and support. The only people who can claim are spouses, partners, children, grandchildren, dependent step-children and dependent
parents. There are some time limits on these types of claims.  In the past it was quite common for the courts to completely rewrite a Will if it was seen to be not entirely fair. More recently the Court of Appeal has emphasised that courts should only intervene in cases of proven need for maintenance and support. Each case, however, is different and the courts need to look at individual circumstances.

A surviving spouse or partner can bring a claim under the Family Protection Act as well as under the Property (Relationships) Act. Claims brought on behalf of a young child (usually initiated by the child’s guardian) are likely to be successful if the child is in need of support or needs money for education costs. An adult child of the deceased, who is able to work, is likely to receive only a small amount under this legislation, unless some particular medical or other need can be demonstrated.

Testamentary promises

The Law Reform (Testamentary Promises) Act 1949 allows claims where someone has helped the deceased in exchange for a promise of reward under the Will. The person claiming needs to show that a promise was made, and work or services were performed for the deceased in reliance on that promise.  Claims under this legislation are sometimes made by people who have worked unpaid to, say, care for an elderly person and have been told they’ll be ‘looked after’ in their Will.

Day-to-day family activities such as household cleaning or cooking meals for a relative aren’t usually considered grounds to allow a claim under this Act. There are some things that family members do because they are family, and not because of any promise that might have been made.

Other types of claims

There are other ways in which a Will may be challenged. It may be claimed that the deceased wasn’t mentally competent to sign the Will, or was subject to undue influence and didn’t freely sign the Will of their own accord. It may be that the deceased had made a binding agreement with someone to make
a Will in a particular way. For example, a couple may agree that they will sign mutual Wills and won’t change the terms in future.

Claims of this type can only be dealt with by the High Court. Claims under the Property (Relationships) Act, Family Protection Act and testamentary promises legislation can be dealt with in the Family Court at less expense.

To avoid the cost of drawn-out and expensive court battles, it’s often recommended that estate beneficiaries try to settle any disputes by agreement with the claimants. Sometimes a mediator (usually much cheaper than a court hearing) can be called in to help the claimants and beneficiaries reach an agreement.