The Will

A Will is a legal document that specifies how you want your personal assets to be administered and distributed after your death.

In most cases Wills are prepared by a lawyer or trustee company and held by them in safe-keeping. The person who has died will usually have a copy of their Will amongst their personal papers.

After the funeral the estate’s lawyer will arrange to meet with the executors to discuss the Will and make sure they understand it. The lawyer may have emailed or sent it to the executors beforehand, just so everyone is familiar with it. If any of it is unclear the executors should ask the estate lawyer to explain it to them.

The executors have a strict duty to administer the estate in accordance with the requirements of the Will, unless:

  • The court orders otherwise (see section on ‘Claims against an estate’), or
  • All of the beneficiaries are adult and able to direct the trustees to do something different (this needs to be recorded in writing).

There are a number of standard clauses which appear in most Wills:

  1. Cancel all earlier Wills: in order for the court to approve probate, it needs to be clear that any earlier Will has been cancelled or revoked.
  2. Appoint executors and trustees: these are the people who will administer the estate and carry out the terms of the Will (there may be only one person or there may be several who are executors).
  3. Specific gifts of money (legacies) to named people or bequests to charities or other organisations. There may also be specific gifts of various items, for example, a gift of furniture and household items to be divided among the family.
  4. There should be a clause saying what should happen to the rest of the estate (sometimes called the ‘remaining estate’ or ‘residue’) after payment of the funeral costs, taxes and other liabilities.
  5. There will usually be some further clauses setting out the powers and authority the trustees have to administer the estate. Although the law gives executors some automatic rights, these are restricted and many Wills will have this set out more fully.
  6. In addition, the Will may have other clauses such as naming a guardian for any children who are under-age, and directions about a funeral or cremation.The executors have a duty to ensure the deceased is buried or cremated; and they should usually take into account the directions stated in the Will, although these aren’t legally binding. Although the family or close friends usually organise
    the funeral, the executors are responsible for ensuring appropriate funeral arrangements are carried out.

Keeping everyone informed

Despite what you may have seen in the movies or on TV, there’s no legal formality known as the ‘reading of the Will’. There’s no requirement for the estate lawyer or anyone else to do this and many families don’t want this to happen.

The estate beneficiaries are, however, entitled to be kept informed about the administration and the progress of the estate. The beneficiaries who will receive a share in the remaining estate will usually be given a copy of the whole Will.

Beneficiaries who are simply to receive a bequest of a particular item or a legacy of a specified sum of money will usually be told what is said in the particular clause relevant to them, and aren’t usually given a copy of the entire Will.

Trusts created by a Will

Sometimes trusts are created by a Will: these are known as 'testamentary trusts'. Quite often the terms of the Will can mean that part of the estate has to be held on trust for a particular time. An example is where part of the estate is left to under-age children. Unless the Will directs otherwise, this must be held on trust for them until they reach the age of 20.

Another type of trust that is sometimes seen in Wills is what’s called a ‘life interest trust’. Common examples are:

  • The right for a named person to live in the deceased’s home for a specified period or until the person concerned is no longer able to live there.
  • The right to receive the income or interest from a specified amount of money or particular investments, for example, the rent from a particular property. This arrangement can continue during the lifetime of the named person.
  • The Will may set aside an amount of money or investments to be held on trust for a named group of people (possibly the deceased’s young children or grandchildren) and this may be used for their education or other needs.

The beneficiaries have a right to be kept informed during the course of the estate administration. In the case of beneficiaries aged under 20, their parent or guardian should be kept informed.

The law also lays down strict requirements for funds to be invested as a prudent person would invest when looking after someone else’s money. Appropriate advice should be obtained if there is a large amount to be held on trust or it is to be invested for any length of time.

Overseas assets

Assets in another country can cause complications. The New Zealand probate document may need to be re-sealed (approved) by the court of a Commonwealth country, for example, Australia or the UK. In other countries, such as the USA, it may be necessary to apply for a separate grant of probate in each country. It’s also necessary to comply with the tax laws of those countries. This will often include payment of death duties and capital gains taxes. As a consequence, the administration of the estate can be delayed for several years whilst all this is sorted out.

To avoid problems such as this, Will-makers with assets in different countries are sometimes advised to have a different Will in each country. This allows the assets in each country to be dealt with separately without holding up what is happening in any other country.

Correcting mistakes in Wills

Sometimes mistakes occur in the preparation of a Will. Fortunately the Wills Act 2007 now allows the High Court to correct drafting errors. The Court can make changes to ensure the Will correctly carries out the Will-maker’s intentions.  These problems don’t arise very often; this is fortunate as there’s considerable cost involved in applying to the High Court. If the Will hasn’t been signed and witnessed correctly, it’s also possible to apply to the High Court to declare the Will to be valid. Again the Court must be satisfied that the document carries out the Will-maker’s intentions.

Waiting before estate distribution

Many people think that once probate has been granted, the estate can be distributed immediately. There are, however, a number of very good reasons to wait some months as the effect of the Will can be changed.

There is always the possibility that a claim could be made on the estate, for example, someone could bring a claim under the Family Protection Act or other similar laws. How and when this can happen is explained in the later section on ‘Claims against an estate’. The possibility of a claim such as this affects the time it will take before the estate can be distributed. Executors act at their own personal risk if they distribute the estate too soon after the grant of probate. If a successful claim is brought later, the executors may be forced to claim back some of what was previously distributed to the beneficiaries under the Will. If the beneficiaries are no longer able to pay, the executors may have to pay up from their own funds. Because of this risk, most executors wait six months to see if there’s any possibility of a claim against the estate.

Anyone who is planning to bring a claim of this type can give the executors a notice of intention to claim. Again the executors act at their own risk if they make a distribution after receiving a notice of intention. However the notice is only valid for three months and can’t be renewed after that.

These rules apply only to a claim by someone who wants a share of the estate. Different rules apply to debts owing by the deceased. Executors are personally liable to pay the estate debts unless they have advertised for creditors in a local newspaper under s35 of the Trustee Act 1956.

Distributions in special circumstances

There are times, however, when a portion of the estate can be distributed earlier than the usual six month mark. This could be when the estate is of a significant size and there’s no valid reason, as far as the executors are concerned, for holding up the distribution of some of the funds, or there may be a situation where one beneficiary could use their legacy for a specific purpose. In such cases, a healthy portion of the estate is retained and the beneficiaries usually sign an indemnity that releases the executors from liability.

Another situation where early distribution can be made is when funds are needed for a beneficiary’s education or welfare, even though a claim against the estate is likely.