Getting probate? The threshold of $15,000 is set to rise

A testamentary guardian is appointed via a Will or Deed to “step into your shoes” as a parent when you die. A testamentary guardian is not appointed to care for the child. That is something quite different and cannot be provided for in a Will. You can read more about testamentary and court appointed guardians in the Care of Children Act 2004.  When should you appoint a testamentary guardian and what do they do? A testamentary guardian is appointed alongside the surviving parent (usually) for input into “the big important decisions” about a child’s upbringing like education (where do they go to school), health (major medical decisions not day to day bumps and sniffles), religion, residence (which country or region do they live in, not a specific house or street), and permission to marry under the age of 18. These rights and responsibilities end when the child attains the age of 18 years or earlier if the child marries, enters a civil union, or lives with another person as a de facto partner.  Why do it? It is worth considering if you have separated from your child’s other parent to ensure your views about upbringing are represented in the event of your death or if you are worried your family will be “cut off” from the child when you die. If you are still happily in a relationship it is probably not necessary to appoint a testamentary guardian as it is likely you can trust your spouse/partner to make good guardianship decisions for your children if you die. If you are worried about what happens if you both die together then you could each say in your wills that “if we both die together, we appoint X as a guardian.” If you are the sole guardian of your child (the other parent has died already) then you should definitely consider appointing a testamentary guardian.  So, who does care for the kids if we die? The surviving parent would usually remain carer for the child unless unwilling or unable or unsuitable. If you have both died it is assumed that the family will rally around the child to take them in. Whomever they live with (which may be the testamentary guardian if appointed or may not be – there is no default assumption) may then file an application for a parenting order providing them day to day care together with guardianship orders if necessary. A testamentary guardian could apply for a parenting order if they wanted to contest day-to-day care or seek contact rights to the child and as they are already a guardian they would not need the leave of the Court to do so. Before an application for a parenting order can be filed, the guardian will normally have to provide evidence that he or she has sought to resolve the matter with the other guardian/s by family dispute resolution unless the circumstances are urgent. The legal test to determine a child’s care arrangements is “what is in the welfare and best interests of the child” so it depends on all the circumstances at the time.  Things to remember: Only one testamentary guardian can be appointed.  The consent of the person to be appointed as a testamentary guardian is not required.  A person appointed as a testamentary guardian cannot decline the appointment. As a guardian of the child, the appointee could apply to the court for an order for his or her own removal. Another guardian could also apply for removal of the testamentary guardian.  A testamentary guardian has the same rights and responsibilities as the living parent/guardian but only upon the death of the appointor. They have no say in the upbringing of the child prior to that parent’s death.  By appointing a testamentary guardian you are not appointing somebody to care for your child if you die. 

If you have been appointed as an executor of a Will, then when that person dies you are responsible for administering their estate and carrying out their wishes according to the Will. An executor’s role can be very straightforward, or it can be fraught with conflict.  Read on to find out how to deal with all potential eventualities. Some key responsibilities include: Find and locate the Will; Understand the asset pool of the Willmaker eg. where they bank, do they own any vehicles or property; Do you know the immediate family of the Willmaker and those who should be notified; Make any relevant and important decisions in respect of the estate; Manage all decisions and disagreements around the estate. Locating the Will and understanding the terms You should locate the original Will and ensure you understand its terms, for example, what happens if a beneficiary has passed away or if the beneficiaries are still minors.  The estate’s lawyer can assist with any interpretation issues. It is very important that you keep the Will in a safe place and do not alter or mark it in any way. Identifying assets and liabilities of the estate You must identify the assets and liabilities of the estate such as bank accounts, property, insurance, shares, income streams and debt. If the estate has an asset worth more than $15,000, then you must engage an estate lawyer and apply for probate.  Probate gives you, as executor, authority to deal with the assets of the estate. Applying for probate The Court ensures that an estate is not left unadministered where an executor refuses or neglects to carry out their duties.  If you fail to apply for probate within three months from the death of the Willmaker, any other executor, or any other person interested in the estate, can make an application to Court to be appointed as your replacement.  The Court will give you the opportunity to respond, or to formally step down.  If the Court does not hear from you, then an alternative executor will be appointed by Court order. The Court has the power to remove you and appoint a replacement.  For example, there may be conflict issues between you and another executor, or a family member, or other interested person might take issue with your appointment.  This will involve a Court hearing if you wish to defend your position, or you do not reach an agreement to step down.  Often the appointment of an independent person can resolve conflict issues. Securing and insuring property Any assets should be secured so far as possible.  For example, if there is a property, you should check who has access to keys, that the insurance is up to date and that any expenses (such as rates, water and power) are up to date. Notifying relevant parties You or the estate’s lawyer should notify relevant providers of the passing, such as the estate’s bank, insurer, WINZ (if a benefit was being received), IRD and any other asset providers or debtors. You must also notify the beneficiaries of the Will and make relevant disclosures to them.  Your estate’s lawyer can assist with this. Risks facing executors Potential arguments can arise between family members who may be unhappy with the terms of the Will.  The Court can become involved where an interested party makes a claim on the estate. As executor, you are named as a party to the claim and are required to participate in the Court process.  You are under a duty to take into account the interests of potential claimants on an estate and therefore can be held personally liable to the beneficiaries or potential claimants for distributions made within six months from the grant of probate.  Due to this potential liability, it is strongly advised that the estate’s assets are generally not distributed until the expiry of six months.  In practise, estates can take several years to distribute. Before making distributions, you should seek advice from your estate’s lawyer to ensure you are not exposing yourself to undue risk.  You also should take advice as to how to manage any conflict between the beneficiaries and how to deal with potential claims.  The Court of Appeal has confirmed that an executor must be even-handed when dealing with beneficiaries/claimants and must not actively or dishonestly conceal relevant information about the estate. As executor, you are required to act with neutrality and independence, while doing your best to follow the wishes of the Willmaker.  You can attempt to reach agreement with all beneficiaries as to how assets are to be distributed, but if there is no agreement it will be for a Court to decide. Although uncommon, you may also be required to act on the interests of minor children or mentally disabled persons who are otherwise entitled to make a claim. When all estate administration steps are complete and the executor is holding the assets ready to distribute, they become a trustee similar to a trustee of a family trust with duties and obligations under the Trusts Act 2019. Often this period of trusteeship is short, as the Will stipulates distribution out to beneficiaries. The trustee’s role can continue depending on the wording of the Will. Executor expenses In New Zealand, the general rule is that an executor cannot charge for their time unless there is a specific clause in the Will allowing them to do so.  However, executors are entitled to reimbursement for their reasonably incurred expenses.  This could include if you were to pay the insurance for an estate property or a rates bill to avoid a late fee. Executor’s decision making Executors are appointed by the Willmaker to carry out their intentions.  It is important to always consider the intention and wording of the Will before making any decisions.  Those close to the deceased will want to be involved in any decisions and this should be welcomed.  The executor will work as a neutral person making sure that the wishes of the deceased are upheld eg. if they want to be cremated making sure that this is done, or the specific bequests are carried out. Where there are intimate decisions that need to be made eg. where to bury the body and the Will will not necessarily specify this – it is the role of the executor to facilitate discussions and agreement between the whānau. Can I get out of it? If you are unable or unwilling to be an executor, the next nominated person in the Will can be appointed.  You will need to renounce before you take any steps to administer the estate. If you have accepted the role as executor and the estate administration is ongoing, you cannot simply retire, but rather you have to apply to the Court to be removed (and replaced if required). The role as executor will continue for a long period of time, for example where the estate holds a property and a beneficiary has a life interest to live in it, or there are minor children not due to receive their inheritance until a certain age.  If this is the case and you no longer want to be an executor, then provided the estate administration steps have been completed (gathering of assets, paying debts), then it is possible for an executor, who is now technically a trustee of the estate, to retire and another to be appointed by Deed rather than involving the Court.  Frequently we see executors retire in this situation and an independent trustee or trustee company is appointed to continue the ongoing management of the estate and manage the obligations to beneficiaries. What is a Statement to Accompany a Will or a Memorandum of Wishes and should I read it A Statement to Accompany a Will is a statement made by the Willmaker explaining any decisions made in the Will.  It provides more of an understanding around what the intention of the Willmaker was at the time of drafting and signing the Will. The Memorandum of Wishes is similar to the Statement whereby it gives the executor or trustees further instructions with the Will and helps give insight into what decisions they want to be made.  Neither of these documents are legally binding, however, it is useful to read them and consider what they are wanting to achieve. How to get important information The best way an executor can obtain information about the Willmaker’s assets and liabilities would be before death.  If you find yourself aware that you are an executor of an estate, have a conversation with the Willmaker. Where do they keep their bank statements or passcodes if you need to locate them, who is the property insured with?  Make sure that if there are any updates that you are aware of these. It pays to have an updated Will, necessary statements or instructions for the executor and to have regular conversations about what you would like to have happen when you die. Talk to our succession and estates team about your options and to obtain the right advice for you.

Making sure you have a Will in place is one of the most valuable actions you can take to support and guide your loved ones after you pass away. In your Will, you can decide who is in charge, and instruct exactly how your assets should be dealt with when you die. When you have a Will, the process to administer your estate is generally cheaper and quicker. Without a Will, your assets are distributed to eligible family members according to the legal framework in the Administration Act 1969 (“Administration Act”), which may not work out how you think. The process is more complicated, takes longer, is generally more expensive and you have no say over who is in charge and who gets what. What is the process if you die without a Will? This is called \"dying intestate\". If you own assets over $15,000, then an application to the Court for Letters of Administration will be required. A person with an interest in an estate (i.e a surviving partner or spouse, or children) can apply to administer an intestate estate. The right to make the application is in order of priority under the Administration Act 1969. Some of the fundamental rules of the Administration Act 1969 are: If you have a husband, wife, civil union or de facto partner, but no living parents or children, the spouse or partner will get all of your estate. If you have a spouse or partner and also children, the spouse or partner will receive all of the personal chattels, the first $155,000 of your estate and 1/3rd of the remaining property. The other 2/3rds will go to your children. If you have a spouse or partner and no children, and living parents, the spouse or partner will receive all the personal chattels, the first $155,000 of your estate and 2/3rds of your remaining property. The remaining 1/3rd will go to the surviving parents. If there are children, but no husband or wife or civil union or de facto partner, your estate will go to your children. Before an application is made, a search has to be conducted to confirm that no valid Will exists and a search to confirm the status of children entitled to inherit. Consents from interested family members who are not applying (e.g. other children entitled to inherit) also need to be obtained. The process could become even longer and more complicated if there are disagreements about who should apply. All of this slows down what could otherwise be a straightforward process. How does this differ if you die with a Will? A Will appoints executors who have the authority to apply to the Court for a Grant of Probate, and then deal with your assets in accordance with the wishes you set out in your Will. Unlike Letters of Administration, there is no need to obtain any searches or consent, and there are no rules around who you have to leave your estate to, although you have a “moral duty” to include children and spouses/partners in some way. An application for Probate is generally cheaper and quicker. Most importantly, it puts you in control of where your estate goes. In your Will you can: Give away specific chattels i.e  jewellery, watches, cars, artwork, heirlooms, pets (yes, these are chattels) Specify gifts such as cash sums, shares Decide who will receive the balance of your estate Indicate burial wishes Nominate a legal guardian for your children if they are minor What happens in an estate administration? Assuming you have over $15,000.00 in your sole name (remembering that joint assets pass to the other co-owner automatically), then the administrator must visit a lawyer who will help them apply for a grant of Probate (if you have a valid Will) or Letters of Administration (if you die intestate). After the Court has approved the application, the administrator must find out what the assets and liabilities of your estate are and, if necessary, have assets valued and sold. Then they must pay any debts and taxes out of the estate funds. The balance is then paid out to the beneficiaries in terms of either the Will or the Administration Act rules. Generally this does not occur until at least 6 months from the date of the grant. This is because the administrator can be personally liable for distributions made within 6 months, in the event there was a claim on your estate (this could be a debt or it could be a claim by a family member). The estate could take much longer to distribute if there are a number of assets to be sold and debts to be worked through. If there is a claim on an estate, distribution could take several years. Contact our succession and estates team if you would like to discuss this further. This article was first published for First Mortgage Trust, October 2024 newsletter.