Succession planning for your digital assets

Mirror Wills In a typical, nuclear family structure, it is common for a couple to leave their entire estate to each other, and for their Wills to provide that after they have both died the family estate will go to their children. This is commonly known as a mirror Will. In the modern age, however, blended family structures are becoming increasingly common. If you have children from a previous relationship, you may find yourself stuck between wanting to ensure your children are provided for, and also ensuring your partner is looked after when you die. If a couple is comfortable relying on their new partner to provide for their respective children in the surviving spouse or partner’s Will, a mirror Will could still be used. However, these Wills do not create a legally binding agreement between couples. Either spouse or partner is therefore free to change their Will at any time during their lifetime. These Wills frequently result in claims against the estate made by the deceased spouse or partner’s children from a previous relationship. Mutual Wills A mutual Will is another available option. A mutual Will is a mirror Will signed alongside an agreement between the respective Will-makers that they will not amend the terms of the Will in a way that will worsen the position for their stepchildren. While mutual Wills are effective for protecting the interests of both partners’ children, they are restrictive on the surviving partner and can be difficult to enforce. To help avoid the risk of claims against your estate, and to offer peace of mind, a life interest Will may provide the answer. Life Interest Wills In your Will you can grant to somebody a life interest in an asset, giving that person the right to use that asset for the rest of their life. On their death, the asset will pass to the people named in your Will. Life interests may be granted in: Your entire estate; Specific assets e.g. family heirlooms; Real property e.g. the family home; or A right to receive income from estate property e.g. bank account, shares or other investments. A life interest can be a good way to provide for your partner, while still ensuring the asset will eventually be given to the named beneficiaries, usually your children. A common example is where a person provides a life interest in the family home to a spouse or partner, and once their spouse or partner dies the family home will pass to the Will-maker’s children. Often the couple will own the family home in equal shares. This allows each of them to deal with their 1/2 share in their Will in the way they choose. A life interest Will provides a basic level of asset protection. Any assets subject to a life interest will be held by the trustees appointed in the Will and do not legally belong to the person with the benefit of the life interest (such as the surviving spouse or partner). It can therefore provide peace of mind to the Will-maker that all of their loved ones will be looked after. On the other hand, a life interest can be restrictive for the surviving spouse or partner. The surviving spouse or partner effectively loses control over assets that they may have considered to be theirs if they were used by the couple to benefit both of them. Any dealings with the asset will require the trustees of the Will to consent, and will be subject to the terms of the life interest in the Will. Issues can also arise if the circumstances of the surviving partner change, for example, if they need to go into care or move into a retirement village. A life interest Will can also mean the children may not see their inheritance for many years. Holland Beckett’s succession and estates team is here to discuss your particular circumstances to determine if a life interest Will is right for you.

Contracting Out Agreements (often referred to as prenuptial agreements) are often viewed quite negatively. They can be seen as having one foot out of the door in a relationship. However, Contracting Out Agreements can be powerful tools to help you and your partner cement your intentions for how your property is dealt with when you die thus preventing a future argument between families. A Contracting Out Agreement is not just for separating couples - it can assist to ensure your wishes are upheld upon death. When you pass away with a Will, your partner has two options; they can chose to follow the terms of your Will pursuant to the Administration Act 1969 (“Administration Act”) or they can make an election under the Property (Relationships) Act 1976 (“PRA”) to have their share of relationship property determined. Why does this matter? This matters because modern relationships are complex. For a multitude of reasons you may not intend to leave your partner 50% of your property upon death. For many of our clients in second relationships, they want to provide for their partner, but they want the majority of their estate to go to their children from their first relationship. The option for partners to elect whether or not to follow your Will, can take control of your property out of your hands leaving what you may see as an unfairness to your children. This is why a Contracting Out Agreement can be such a powerful tool. With a Contracting Out Agreement in place, even if your partner elects a determination for a division of your estate in line with the PRA, they are bound by the terms of the Contracting Out Agreement which determines which assets are in the pool for division and which are out. What does a Contracting Out Agreement do? Under the PRA there is a presumption that upon death or separation your partner is entitled to an equal share of the relationship property. This legislation will apply to you unless you elect to “opt out” by entering into a Contracting Out agreement whereby you and your partner reach your own agreement on what property will be determined separate property and what will be relationship property. Without a Contracting Out agreement relationship property includes: The family home; The household chattels; Vehicles used for family purposes; That share of Kiwisaver or other superannuation policies accrued during the relationship; Your income; and Anything else acquired during the relationship or used for your shared life together. A Contracting Out Agreement is capable in most circumstances of mirroring the terms of your Will. It has the capacity to be very specific. Not only can you dictate which property belongs to which partner and their estate, you can also make special provisions for your partner upon separation or death. An example of this is in circumstances where you want the family home to pass to your children or some other third party upon death, you can still provide your partner with a qualified life interest in the home. You may decide, for example, that you wish for your partner to continue living in the home for a specific period of time (or the rest of their life) but as soon as they move out, start a new relationship, or die, the home will pass to your beneficiaries in accordance with your Will. A Contracting Out Agreement is a flexible tool capable of reflecting your Will. How do we make a Contracting Out Agreement? A Contracting Out Agreement is a binding legal document. Like most legal documents, there are specific procedures that must be followed to make sure your document is enforceable. For your Contracting Out Agreement to be valid and legally enforceable you will need to: Record the agreements reached in writing; Receive independent legal advice; and Have your signing witnessed by a lawyer. You and your partner will need different lawyers. Once you have engaged a lawyer, you can share your intentions for how you want your relationship property to be divided and any specifications for what you want to happen upon death. Lawyers can assist you and your partner to make sure you are both adequately provided for. If you have concerns about how your estate will be distributed when you die, we recommend that you discuss matters with your partner and get some advice. Furthermore if you already have a Will or a Contracting Out Agreement, we recommend that you review the terms of these documents regularly to ensure they still reflect your intentions and your circumstances.Talk to the Holland Beckett Family or Succession and Estates team for more information. This article was first published for First Mortgage Trust newsletter, April 2025.

Have you considered what will happen to your loved ones and the causes you care about after you’re gone? Did you know, you can direct gifts and distributions to your family whilst still making provision for charities you care about in your Will? In this way, your Will is much more than just a legal document, it is a way to protect and provide for your loved ones, and to leave a lasting impact. Why having a Will matters Having a Will is essential, as it ensures your wishes are carried out after you pass away. Your Will provides instructions on how your property, assets, and belongings should be distributed, making it easier for your loved ones and legal representatives to manage your estate. If you pass away without a Will (known as \"dying intestate\") and have assets worth more than $15,000, your estate will be distributed according to the Administration Act 1969. This means your assets may not be distributed how you intended and the process can be more costly and time-consuming for your loved ones. Creating a Will helps minimise stress, legal complications, and unnecessary expenses for your loved ones. Key Components of a Will The following should be covered in your Will: At least one executor, preferably two, who live in New Zealand. Executors are responsible for ensuring your wishes are carried out and handle the legal and financial matters, like ensuring your debts are paid and assets are distributed according to your instructions. Instructions for paying debts and liabilities. Adequate provisions for your partner and children. Clear instructions on who will inherit your property and possessions. Guardianship arrangements for any minor children (if applicable). Funeral wishes (not legally binding but should be considered by the executors). Bequests or gifts to charity. Leaving a Gift to Charity If you have regularly supported a cause during your lifetime then you may want to continue that generosity by leaving a gift to charity in your Will. Regardless of the amount, your gift can make a lasting impact. However, there are a few important considerations: Types of Charitable Bequests Residuary Bequest - A percentage of your remaining estate after other gifts and expenses have been completed. Pecuniary Bequest - A fixed sum of money or cash gift. Choosing Between a Fixed Amount or a Percentage of Your Estate Percentage-based bequest:  This is the recommended approach for charitable giving, as it ensures the gift remains proportional as the value of your estate might change over time, maintaining fairness among beneficiaries and prevents unintended financial imbalances. Fixed amount bequest:  This is a set amount of money you wish to donate. However, changes in your estate\'s value over time could result in the amount being larger or smaller than originally intended. If choosing this option, consider setting the funds aside in a separate bank account to prevent potential disputes or the money passing by survivorship if you currently have joint accounts with another person. Balancing charitable giving with family needs While charitable giving is admirable, it is crucial to ensure your estate can still provide for your loved ones. Leaving an excessive gift could lead to legal challenges under the Family Protection Act 1955, which allows family members to contest a Will if they believe they have not been adequately provided for. Additionally, it is important to assess whether the amount you plan to donate will be financially feasible as an unrealistic or excessive gift may fail and could create legal complications for your loved ones. Seeking legal advice can help you balance your wishes with your family\'s financial security. Ensuring your gift reaches the right charity To prevent confusion and ensure your gift goes to the right place: Confirm the charity’s full legal name and registration number through the Charities Register. This helps verify the charity’s legitimacy and ensures your gift is directed correctly. Consider including a discretionary substitution clause in your Will, which allows your executor or trustee to redirect your gift to a similar charity if your charity no longer exists, has changed its name or has merged with another charity.  This ensures your gift remains aligned with your intentions. Keeping your Will updated Your circumstances may change over time, potentially affecting the validity of your Will. You will need to review and update your Will from time to time, especially around key life events such as: Marriage, civil union, or separation/divorce. Changes in your financial circumstances. The birth or death of family members. Buying or selling significant assets, such as property which might be listed in your Will. Seeking professional advice To ensure the validity of your Will and that your charitable bequest is properly structured, consult with a legal professional. A well-drafted Will reduces the risk of disputes and ensures your bequest benefits both your loved ones and the causes you support.