Wills: lockdown legal tidy ups #2

by | Apr 30, 2020 | Blog, Personal asset planning, Relationship Property, Trusts

Everyone should have a will. It’s really that simple. In fact, I would go further, everyone should have a well written one…

At the time of writing this, we have entered Alert level 3, which is great for the country but doesn’t make much difference to me. I’m still here in my bubble, but I have seen a few different people (with the appropriate social distancing of course) which has been nice. I’m really missing my colleagues (AlexanderDorrington’s staff are still working from home) and my clients. It’s unusual for me to have a week I don’t have at least one client meeting, I hope that changes soon but in the meantime, I’ll just pretend I’m in a meeting but write down some of the things that usually come up instead of saying them out loud. It’s not the same but it will have to do.

I decided to start with having a look at my own will, I figured it would be ok since I only had it prepared a few years ago. Hold on, it is actually dated September 2011 – maybe it does need a quick review!

The biggest change for me is probably the fact that my son is now 18 which means:

  • He can be an executor;
  • He no longer needs a guardian; and
  • He could be the one to appoint (and remove) trustees of my trust.

Let’s look a little more closely at each of those issues.


The role of Executor

The role of an executor varies for each will. Because I have a trust, the executor of my estate has very little to do, basically get any assets in my personal name into my trust. For some estates, the role is much more complex. For example, if there are children who are not receiving assets until a certain age, the executor is responsible for looking after those assets until that age is reached. Regardless of what is required, it’s a really important role and should be given careful consideration. I’m probably not going to put my son in this role quite yet, maybe in another couple of years.


Appointing Guardians

Appointing guardians may be the single most common thing to prevent a will from being completed. I get it, it’s a really big decision, but that’s all the more reason to have that conversation and get the will finished. There are a few options relating to guardians which might make the decision easier. For me, my mum is the guardian but she might not be the person who has day-to-day care. Talk with us about the options available to provide care for your children. I think I’ll leave the current arrangement in place, although it will only apply to my daughter now.


Appointment of Trustees

If you have a family trust (which you are the settlor of) you can likely pass the power to “hire and fire” trustees to someone else under your will. This is another thing you will want to think really carefully about.  I should warn you discussions around this decision often lead to having to think about whether or not your spouse is likely to run off with that new partner and spend all your hard-earned cash. Yes, sometimes my job is awkward.

These three decisions (two if you don’t have a trust) are as important as what is actually going to happen with your assets.


Dealing with your assets

When it comes to how you want to deal with your assets, there are a couple of parts to this. First, you have the ability to make specific gifts (either items or cash amounts) to specific people. This is a nice way to pass along family heirlooms like jewellery or art. When I looked at my will I noticed that I had left my kids items which were stolen when our house was robbed a few years ago. If the willmaker no longer owns some of the items in a will, that gift is just ignored. It doesn’t make the will invalid. I think I might still tidy that bit up though.

Since I’m doing that I thought I might as well check-in and ask the kids if there are any specific items they want. Daughter wants the dog, trust me when I say there is nobody on this earth that would try and separate her from the dog so I think she’s pretty safe. And son, he’ll take the air fryer (a boy’s got to eat after all).

The big decision is course what should happen with your major assets and there are options around how to make that work best for you and your family. This will depend on a few factors:

  • Do you have children and how old are they?
  • Does your family have a trust?
  • Do you have directorships or shares in a company;
  • Is your family a traditional nuclear or blended one?

It’s definitely not one size fits all but there is a solution for every situation, we just need to work out what is best for you and yours.


Do you have questions?

I’ve been writing wills for a good few years now (about 25!) so I’ve had a few questions in that time, here are a few which have stuck with me:

Will there be a reading of the will with all the beneficiaries present?

No. This is a bit of a surprise to a lot of people. I must find out if this is a thing that actually happens in real life in America or only in movies where there are shocking things revealed by the will. The reality is, in New Zealand at least, we encourage clients to prepare wills which will produce the least shock value to the family and in fact to discuss the contents of their will with their family while they are still alive. If I ever do get to do a will reading I sincerely hope it includes a haunted house which you only inherit if you survive a night alone in it.

If I don’t have a will does the government get all my assets?

No. The Administration Act sets out an order of people for your assets to go to. It’s a logical list but often doesn’t reflect what people would have done if they had the choice. They do have a choice if they make a will!

Can I leave money to my pets?

No. Sorry your pet can not be the recipient of a gift under your will. However, you can gift your pet to a specific person and then gift that person a sum of money with the wish they use it to care for your pet.

Is there a way to make sure I’m really dead?

This is not something that should go in your will.

I want to leave everything to one of my kids and leave out the other, can I do that?

Yes and no. This is one we should discuss in person. You can put whatever you like in your will. However, it could be challenged in court. Whether successful or not, challenges come at great cost and emotional toll on everyone involved. There are things you can do to limit the exposure. We can help with that.

Why should I pay a law firm for a will when I can buy a will kit/draft my own?

This is my favourite question. Of course, you can buy a will kit and prepare your own will. You can also buy a scalpel and do your own surgery (but please don’t do that!). Lives are complicated these days. You are so used to yours, you probably don’t realise the many things to consider when making a will. So many people call me and say “my situation is really simple”. But once we start really discussing things, it’s actually not that simple.


Example – the importance of getting it right

The unfortunate thing about wills is, any mistakes are often not discovered until a person dies. Let’s be honest, it’s a little difficult to check what the actual intention was at that point and even more difficult to do a new will to rectify the situation. Little things make a big difference when it comes to will drafting. It’s really important to use words in the will that reflect what you want to happen.

To put what I’m saying in context, let’s use a real-life situation (or at least a simplified version of the facts from a case which ended up before the court):

  • Ms Fox prepared a will leaving her assets to her son. She included In the will some wording to suggest that the assets should be “put into a Trust Account” for her son;
  • Ms Fox died;
  • Three months later her son died with no will.

What should happen with the assets from Ms Fox’s estate?

One party (Ms Fox’s sister) claimed the assets never belonged to the son (he was just able to use them during his lifetime) and so they should stay as part of Ms Fox’s estate and pass to her parents.

The other party (Ms Fox’s ex-partner and father of her son) claimed that the assets did belong to the son. Therefore on the son’s death, they should form part of his estate and pass to him (as the person with the highest priority in accordance with the Administration Act).

So, who got the assets? The ex-partner. I told you, words are important.


The next instalment

Next week I’ll be giving you the lowdown on enduring powers of attorney. Why did they use to be one page (ah, the good old days)? Now they have become so verbose you could wallpaper your living room with them!

By Angela Mills