The Pandora’s Box of Dying Without a Properly Drafted Will

While often overlooked or deferred, a will is perhaps one of the most important documents a person can sign, and having a will executed during your lifetime can not only ensure that your wishes are recorded, but it can provide those of your family who survive you with the reassurance that such wishes will be fulfilled on your death. Dying without a will can open a Pandora’s box and turn the administration of your estate into a messy, expensive, and prolonged affair. For many of us, especially where family estrangements, young children, overseas assets, or trusts are involved, having a current and properly drafted will is the best thing that we can do to simplify the administration of our estate for our survivors.

Default succession and administration regime on intestacy

When a person dies without leaving a valid will, this is known as an “intestacy” and their estate is known as an “intestate estate”. The law prescribes an order of priority for who is entitled to benefit from an intestate estate and the amount they are entitled to receive.[1] A very similar order of priority determines who the court will formally appoint as the “administrator” to manage the estate (the right to apply for letters of administration is usually granted according to beneficial interest).[2] Broadly speaking then, the people entitled to benefit from an intestate estate generally have the burden of administering it.

Priority is given to the surviving spouse/partner and then in descending order to any children, grandchildren, parents, siblings, grandparents, and uncles and aunts.[3] Depending on your family circumstances, dying without a will may result in your assets being distributed in a manner that is inconsistent with your wishes or expectations. The burden of administering your estate could also fall upon a family member who is less suitable for the role, such as an estranged relative or elderly parent. 

Guardianship of children under 18 years of age

Parents usually have automatic “guardianship” of their children, meaning that they have all the duties, powers, rights, and responsibilities that a parent has in relation to the upbringing of a child.[4] Guardians have an important role which includes helping to determine a child’s name, registered sex, residence, major medical treatment, education, culture, religion, and language.[5] But who makes these important decisions for your child if you are not around?

Sadly, a child’s guardianship can become a contested issue between remaining family members if both parents have died, or conflicts arise between the two sides of the family. Few of us would trust anyone except our closest friends or family to make such important decisions for our child, let alone a judge in a courtroom. Parents can appoint a testamentary guardian for their child or children in their wills, giving that person legal authority to step into the parent’s shoes as the child’s guardian. The appointment comes into effect immediately on death. Such an appointment allows you to select those persons who you feel would act in the best interests of your children and in a manner consistent with your wishes. Having this arrangement is particularly important if you are the sole surviving parent of your child, or your circumstances are such that it is important there is someone to represent your views during your child’s upbringing.

Overseas assets in cross-border red tape

As Kiwis continue to relocate offshore to work, live and play – or alternatively return home to New Zealand from their OE – it is important not to forget that overseas assets still form part of our deceased estates. If you ask anyone who has made the move from one country to another, they can tell you how complicated, frustrating, and arduous cross-border red tape can be. The administration involved in the closure and transfer of overseas assets is no exception.

For your personal representatives to access and deal with those overseas assets following your death, their authority must usually be confirmed by obtaining a court grant in the country in which the asset is located. This is hardly straightforward in either time or cost since each country (or each state) has its own succession and intestacy rules that must be complied with. For example, there is no single intestacy regime for intestate estates in Australia (and each state makes their own intestacy rules). Scotland has its own system for wills and inheritance that is separate to England and Wales. Dealing with overseas assets may therefore require the involvement of lawyers in multiple jurisdictions.

If you have assets in more than one jurisdiction, one good way to deal with this is to have a will that covers your worldwide assets. It is a far easier to obtain a grant of probate of a will in Country A and reseal that probate in Country B than it is to try and engage in the legal gymnastics that are foreign intestacy laws. Resealing is a well-known procedure and most estate lawyers in Commonwealth countries will be familiar with it.

Depending on the location and type of assets you have, it may instead be advisable to have a jurisdiction-specific will that deals with the assets of that jurisdiction, e.g. a French will for your French assets. This also helps to simplify estate administration by preventing the complications in one jurisdiction from affecting the progress with probate or administration in the other jurisdiction.

Powers to appoint and remove trustees of a trust

One of the most overlooked consequences of dying without a will is the position concerning any powers of appointment and removal of trustees that were held by the deceased. The power of appointment and removal of trustees is often retained by the settlor (the person who set up the trust) as a way for them to retain broad control and oversight over the trust by determining the identity of the trustees.

Many trust deeds contain standard provisions that: (a) permit the power holder to transfer these powers of appointment and removal to such other person as the power holder nominates by deed or will; and (b) provide that if the power holder dies, subject to any terms of any transfer, these powers are exercisable by the “legal personal representatives” of the power holder from the power holder’s date of death (that is, the executors of the will or the administrators of your estate) or the remaining trustees of the trust. Accordingly, if you are holding such powers and die without a will, these powers could pass to a person you never intended to hold such powers. This may be inconsistent with the reasons for the establishment of the trust in the first place, so it is important to ensure that you have a will in place that ties in with the trust deed.

At TGT we are able to advise you in preparing a new will that dovetails with your trust or other entities, and can provide expert advice on the drafting of provisions that cater to your specific requirements.

[1] Administration Act 1969, s 77.

[2] Above n 1, s 6(1).

[3] Above n1, s 77; High Court Rules 2016, r 27.35.

[4] Care of Children Act 2004, s 15 and 17.

[5] Above n 4, s 16.