Mimi Lewll, Smith and Partners shares her advice: KiwiSaver has changed the financial landscape for many Kiwis – and one of the big changes has been the consequences of New Zealanders having a significant asset (their KiwiSaver account) but no will.
Before KiwiSaver, it often wasn’t a significant issue if a person who didn’t own a home died without a will, as they did not have significant assets – and therefore in our experience, it has not been necessary to apply for a grant of administration (“Probate” or “Letters of Administration”) for many young people in their twenties or early thirties. This is because many young people have not had a sufficient amount of assets to require a formal grant of administration.
What is formal administration?
When a person dies, a grant of administration is required when the person has any asset worth over $15,000.00 in his or her own individual name. This could be a bank account, life insurance policy, shares or any property. If you have a will, this takes the form of a Grant of Probate. If you do not have a will, Letters of Administration are required. Both of these are issued by the High Court.
Jointly Held Assets
Any asset held jointly with another person (ie a property, bank accounts, life insurance policies or shares) does not form part of the person’s estate as it transfers to the joint owner on the person’s death.
KiwiSavers with more than $15,000
KiwiSaver accounts are always held in a person’s individual name, meaning that if you have $15,000.00 or more in your KiwiSaver fund it will be necessary to apply for Probate (if you have a will) or Letters of Administration (if you don’t have a will) in order to access the funds in the KiwiSaver investment.
How a will can help? If you have a will, you yourself will have appointed an executor that you want to be in charge of your estate. The executor(s) will apply for a grant of Probate and once it has been granted they will be able to apply to the provider to have the KiwiSaver funds released. The executor(s) will then distribute the funds in the estate to the people you have chosen as the beneficiaries of your estate. This is in many cases a fairly straightforward process.
What happens if you don’t have a will?
If you do not have a will, the Administration Act 1969 sets out the priority of who can apply to be the administrator who will be in charge of your estate (you do not get to choose). The administrator(s) will apply for a grant of Letters of Administration on Intestacy, and once it has been granted they will be able to apply to the provider to have the KiwiSaver funds released.
The administrator(s) will then distribute the funds in the estate in accordance with the rules as set out in the Administration Act, and you will not have any choice as to who are to be the beneficiaries of your estate.
In some cases the persons who will benefit under your estate under the Administration Act are the same people who you may have appointed beneficiaries under your will, but in many cases they may not be the people you want to inherit your estate. A lot more time, cost and stress for those left behind.
Applying for Letters of Administration is also a much more complicated, time consuming and expensive process than applying for Probate.
Is there $15,000 or more in your KiwiSaver account? Contact us today to get your will sorted. Phone: 09 836 0939 Email: firstname.lastname@example.org