Your Wedding Day and its Effect on your Estate

Your Wedding Day and its Effect on your Estate

Are you aware of what happens to your will when you get married? Are you sure about what happens to your will if a marriage ends in divorce? As with so many things in the law surrounding grants of probate, the answers will surprise you.

In fact, we are finding that more often than not, it is not the person themselves who finds out the answers. The truth usually is discovered by the grieving family of a person who has died when they come to apply for probate of the will, and it is often an unpleasant surprise at an already difficult time. 

The short answers are:

• Marriage cancels a will; and

• Divorce does not.

Which really does seem to be entirely backwards to what common sense would dictate.

Marriage cancels a will

W.e recently had an unfortunate case where a client and her de facto partner had been together for many decades. She made a will leaving almost her entire estate to her de facto partner many years before she died. However, as she became ill leading up to her death, they decided, as a romantic gesture, to get married and did so to the delight of their friends and family, never dreaming it would have any effect on their already carefully prepared legal paperwork.

The lawyers found out she had been married only after she died when the family prepared to apply for probate. Even though she had married the person who was in the will, the will was automatically cancelled, and the court treated her as having no will at all.

Thankfully, because of the setup of their assets and the size of her estate, the rules governing people without wills meant that almost the exact same division of assets occurred as would have occurred in the will, but that won’t always be the case. In many cases, the effect of the rules governing people without wills may be very different from what the person decided in their will.

You can avoid this issue by inserting a clause in the will that says specifically that you are expecting to get married to a particular person and that this shouldn’t cancel the will if it does happen. Still, even wills made by lawyers who carefully consider your situation won’t generally include this unless you specifically discuss your plans to marry in the near future.

The best solution is to update your will on a regular basis, especially as your circumstances change, and to discuss regularly with your lawyer what your upcoming plans are and what your wishes are so that the lawyer can make sure your will caters for all likely eventualities.

Divorce does not cancel a will

Given that many wills leave the entire estate or a large part of it to a marriage partner, separating or divorcing that partner would seem a sensible time for a will to be cancelled. However, neither separation nor actual divorce cancels a will.

They do, however, have an effect on the will under some circumstances. If, for example, the couple have an order from the court formally dissolving their marriage, then the will is read as if the divorced partner died before the deceased partner (even though they are in fact still alive, just divorced) in the places where the divorced partner is appointed a trustee or given a gift under the will. 

This at least means the divorced partner doesn’t receive their gifts and aren’t put in charge of running the estate, but often leaves awkward holes in the will if there isn’t a backup provision in the document.

It also only works with the correct paperwork in place; we have seen many difficult cases where a couple has been separated, sometimes for decades, but never formally divorced. The will was also never updated. So the divorced partner is still entitled to everything the will leaves to them.

Civil Unions

Civil unions follow exactly the same rules as marriages.

De facto relationships

Entry in and out of de facto relationships does not affect the will’s validity whatsoever. That can often create very unsatisfactory results, especially when wills are not updated over a long time.

Conclusion

 Other laws (particularly those surrounding property and relationships) assist with this situation. In cases where wills are accidentally cancelled, the outcome is at least somewhat more in line with what we would expect. Still, they often aren’t exactly what the deceased wished and come at the cost of extra time, stress and legal fees that are unwelcome, to say the least.

Families can also sign documentation to agree to do things differently in an estate. Some family members sometimes sign away their interests, but this relies on people’s sense of moral obligations and only works if everyone agrees and is willing to sign the documentation.

As with so many rules in the world of probates, these rules were put in place often a hundred or several hundred years ago when the situation in society was very different. In the case of marriage, it almost always occurred at the very beginning of a relationship, at least in terms of financial interdependence, whereas nowadays, that is rarely the case. Divorce was so rare that the lawmakers didn’t even feel it needed to be mentioned. Although a lot has changed in our society since those days, not an enormous amount has changed in probate law.

Whenever your relationship status changes or is due to change, spare a thought for your probate application and see your lawyer, who can guide you through the surprising byways that you must traverse; your family will thank you for it. 

For more information

 If you find yourself faced with one of these awful surprises after a loved one has died, we can unravel the confusion and re-build the last wishes in the will as best as is possible to do; contact Jenny Lowe by email at jenny.lowe@nzprobatesandreseals.com. Jenny is one of few legal specialists in New Zealand for reseals, probate and letters of administration applications.

jenny.lowe@nzprobatesandreseals.com
Jenny is one of the few legal specialists who can obtain re-seals, probates and letters of administration from the New Zealand High Court, for foreign estates that have assets in New Zealand.

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How long will it take to unlock estate assets?

How long will it take to unlock estate assets? – A timeline for probates, letters of administration, and reseals

A common complaint we hear is how long it takes for people to receive their inheritance once a friend or family member has died.  

Being remembered in someone’s will is often a bittersweet surprise. But, once you have waited for over a year or more to receive that gift, the experience can begin to feel sour. 

Dealing with an estate from start to finish can vary greatly, and how long it takes depends on how complex the estate is and how many people need to be involved (and how many questions they each might have). Yet, any estate that has assets worth over $15,000 will have probate as part of its process, and it is worth knowing about that probate process as it can take some time.

When someone dies, all of the organisations which hold the assets (such as banks, insurance companies and Land Information New Zealand) lock those assets. A grant of probate is the document that unlocks those assets and allows the executor of the will to access them to complete the administration of the estate by following the instructions in the will.

When the person who died had a will, the application is called a grant of probate – when they did not have a will, it is called a grant of Letters of Administration. When one of these has been granted in a Commonwealth country and needs to be approved by our court for use on assets in New Zealand, it is called a Reseal. 

You are required to make all of these applications to the High Court of New Zealand. It usually takes between 4 to 6 weeks from when the application is put into the court to receive a grant. Sometimes the court can be quite a bit quicker than this (at the moment, for example, they are processing most of these applications in roughly four weeks). Still, we always like to encourage our clients to expect the worst and then, if it is faster, they are in a better position.

If an application is urgent (for example, one of the people entitled to money from the estate is struggling financially or if the estate owns a house that has a hole in the roof which needs estate money to protect and repair the home), the court can be convinced to make an urgent grant if you explain to them why it is required. An urgent grant takes only between 1 to 2 weeks.

The real differences in timing come not from the court process itself but from preparing the application and collecting all of the evidence needed for the court to make the grant.

Grant of Probate

The Courts make a grant of probate when there is a will, so it is reasonably easy to discern who the executors are because they are listed in the will.

Lawyers must prepare an application for the estate, which includes an affidavit from the executors to confirm specific details to the court, such as:

• The deceased person really has died.

• The will they are producing is the most recent will that the deceased made

• they really are the executors listed in the will and,

• They promise the court that they will carry out the wishes stipulated in the will.

All executors have to sign this affidavit, and their signatures must be witnessed by a lawyer, Notary Public or a Justice of the Peace.

The original will must also be in the presence of the executors when they sign their affidavits. The necessity for original documents to go back and forth can often add a lot of time. Specifically, when waiting on the post, if the executors don’t live close to the lawyer for the estate. If they do live close by, they can pop into the lawyer’s office to sign, and nothing has to go by post. 

Occasionally, the original documents can get lost in the post, and then a completely different application has to be carried out. 

We always recommend sending original documents with tracked services to avoid this problem where possible.

Letters of Administration

This application has all the same issues as a grant of probate in terms of timing, but with the added complication of needing to choose who the executors are because there is no Will that determines this. Executors under letters of administration are called “administrators”, but the role is almost identical.

Essentially, how the administrators are chosen depends on what family members of the deceased person are alive at the time of their death. The government have a prescribed list for who receives what from the estate. Whoever is entitled to the largest part of the estate in the list is designated the estate administrator. 

The tricky part is that you have to prove, one by one, that the various classes of relatives are not alive or in existence to narrow it down to the relatives who are entitled to the largest portion of the estate. If one relative is entitled to the largest portion, they are allowed to be the administrator. If there is more than one relative who receives the same portion, the relative who applies to be the administrator also has to have consents signed by all the other relatives who are entitled to the same portion of the estate as they are.

This adds another whole dimension of complication in making searches of government registries, finding the people who need consent, convincing them to sign consents, and for the original documents to all be created, signed, and posted back to the estate lawyer.

Reseal

A reseal is the easiest of the three applications. The hard work for the grant of probate or letters of administration has already been completed in another country. 

The executors or the administrators don’t have to sign anything for the application for a reseal – this is taken care of by the lawyer making the application. The only original document that needs to be posted is the probate or letters of the administration itself (although this posting time is often quite long because it is always crossing borders).

However, reseals are not typical applications for most lawyers to make, so we recommend using specialists who often do them. Otherwise, this process can be lengthy for an inexperienced lawyer who needs to up-skill themselves to make the application. 

CONCLUSION

Overall, the application for probate, letters of administration, or reseal is only a part of a long process that can often take 12 months or more from the date that someone died to finish all the jobs in their estate and pay the money the people are entitled to inherit.

However, it often represents a reasonable chunk of that time, and the executors or administrators can do little or nothing with the estate assets until this is granted. Usually, executors and administrators are also required to hold the estate assets and not distribute them to anyone for six months from the date of grant of probate or letters of administration. This timing is a key part of the overall timing of any sizeable estate.

FOR MORE INFORMATION

If you are dealing with an estate where a reseal, probate or letters of administration are required in New Zealand, please contact Jenny Lowe by email at jenny.lowe@nzprobatesandreseals.com. Jenny is one of few legal specialists in New Zealand for reseals, probate and letters of administration applications, especially for an international estate with assets in New Zealand. We can make these complex applications simple and painless for you.

jenny.lowe@nzprobatesandreseals.com
Jenny is one of the few legal specialists who can obtain re-seals, probates and letters of administration from the New Zealand High Court, for foreign estates that have assets in New Zealand.

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What is the difference between an executor and an administrator of an estate?

What is the difference between an executor and an administrator of an estate?

If you have read any of my articles on probates and letters of administration or indeed any documents describing them, you may have noticed that there are two important people who are mentioned often: the “executor” and the “administrator”.

You may have also noticed that these two people seem to fill the same role; both the executor and the administrator are in charge of administering the estate of a deceased person.

You may at this stage (and you are not alone!) wonder why it is necessary to have these confusing terms, but there is some interesting historical rhyme and reason behind their use.

The role of administrator

As the name implies, an administrator is the person (or people) who administers an estate.

An administrator is most commonly appointed when the person who has died did not leave a will. When this happens, it means that the person was not able to legally make their wishes known as to who they would like to administer their estate and so rules that are set out in legislation apply to decide who should be the administrator.

Sometimes, however, an administrator is appointed when the person who has died did appoint someone as an executor in their will, but that appointed person is either unable or unwilling to administer the estate.

The role of executor

A simple way of looking at the difference between these two terms is that an executor is a type of administrator; they are the type of administrator that has been chosen specifically by the deceased person by being chosen in that deceased person’s will.  The court even calls them an administrator in some contexts just to confuse the enemy!

It is important from the law’s point of view that the role of executor is distinguished from the role of administrator because there are some special rules attached to people who are executors.

For example, there is a rule called “chain of representation” which means that if a deceased person has appointed an executor, but that executor has died before administration of the deceased person’s estate has been completed (or sometimes it hasn’t yet been started), the executor of the estate of the deceased executor can step into the deceased executor’s role and complete administration of the estate of the deceased person.

This cannot happen with administrators - instead, the rules set out in legislation apply to choose who is appointed as a replacement.

For more information

If you are unlucky enough to have been unexpectedly thrust into the complex and archaic world of estate administration, our probate expert Jenny Lowe is here to help. Jenny is one of few legal specialists in New Zealand for probate and letters of administration applications, covering both the simple and the complex. She is particularly skilled in applications where the deceased lived and died overseas, but the estate has assets in New Zealand.

Please contact Jenny Lowe by email at jenny.lowe@nzprobatesandreseals.com.

jenny.lowe@nzprobatesandreseals.com
Jenny is one of the few legal specialists who can obtain re-seals, probates and letters of administration from the New Zealand High Court, for foreign estates that have assets in New Zealand.

Read more articles

Who is entitled to be the administrator of an estate?

Who is entitled to be the administrator of an estate?

In our recent article about applications for letters of administration de bonis non (which you can read here), we talked about who is entitled to apply to run the estate.  Letters of administration de bonis non is quite a complex application and our article wasn't able to go into extreme detail on any one part of it – otherwise, it would have probably been too long! However, it occurred to me that it is a valid question (that we often receive) to ask who is entitled to apply to run the estate where the person who has died has not appointed anyone to do so (or the people who have been appointed cannot or will not perform their role).

When the person appointed to run the estate has been appointed in a will, they are called the executor, and when they have been appointed where there was no will, they are called the administrator.  For a handy comparison between probate (where you have an executor) and letters of administration (where you have an administrator), see our article on that subject here.

There are many situations where this issue comes up, such as:

• letters of administration de bonis non where something has happened to the people who were appointed part way through their administration of the estate so they can no longer fulfil their roles;

• simple letters of administration where the person who has died never wrote a valid will; and

• letters of administration with will annexed where the person who has died did write a valid will, but all of the executors under that will have died, lost mental capacity or are unwilling to take up the role of executor.

There are two main situations to deal with:

• where there is a will (but for some reason none of the people listed in the will are willing or able to apply for probate and become the executors); and

• where this isn’t a will.

When there is a will

When there is a will, there are two main options:

• chain of representation; and

• the beneficial interest in the estate.

Chain of representation

The first and best option is that, if the executor appointed in the will has died and that executor who has died has appointed their own executor for their estate, their executor can act in the shoes of the executor who has died to administer this estate.

This is called the chain of representation.

This only works when the executor who has died made a will to appoint their executor and that executor becomes the executor by successfully applying for probate.  If the executor who has died did not have a will or there was no one willing or able to apply for probate, then “the chain of representation is broken” so to speak, and this option cannot be used.

Beneficial interest in the estate

When the chain of representation does not apply, the court prefers to allow the people who are entitled to most of the assets of the estate to run the estate. 

This is quite an understandable principle in that the people who are entitled to receive the bulk of the estate are likely to be the best people to run the estate because they have their own interests at heart.

When there is a will, then the will sets out who receives what in the estate, and this is simple to work out.

When there isn’t a will

When there isn't a will, chain of representation cannot be used, so the question goes straight to who has the most beneficial interest in the estate.

When someone has not written a will, the government has essentially written a will for them in a piece of legislation called the Administration Act and this has a list of who receives what which starts at the top with the spouse or de facto partner and children and goes all the way down to nieces and nephews, grandparents and cousins if there is nobody else.

Working through this list, one can find out who has the largest beneficial entitlements to the assets of the estate.

The court's discretion

Unless there is a will where the person who has died has appointed people to be their executors, there is no absolute right to become the administrator and the court has the discretion to decide what is in the best interests of the estate.

If two or more people have the same entitlement to the assets of the estate (or someone wishes to apply where there are people with a bigger entitlement than they have), then whichever of them wish to apply to become the administrators of the estate will need the consent of the people with a greater or the same entitlement as they do.

A situation where this court discretion is most often needed is when more than one person wants to apply as above, and they cannot agree who should apply.  It is then up to the court to decide who it considers to be the best administrator in the interests of the estate.

The court has some basic rules that it follows in making that decision:

• lineal descendants are preferred to lineal ancestors;

• relatives who are related fully by blood are preferred to relatives who are only half – blood;

• the interests of the majority are preferred to the interests of the minority;

• a sole administrator is preferred to more than one administrator (because the administrators must always act with each other and agree with each other and in this situation, they already don't agree, so asking them to work together is unlikely to work out well);

• someone who is a person of business is preferred to someone who has no skills in business (because a lot of estate administration has parallels to the business world);

• the party who applies first is favoured; and

• an older administrator is preferred to a young one provided the choice is not against the interests of the majority.

When an estate is struggling with debts, the administration can even be granted to a creditor in some circumstances.

In the end, the court will appoint whoever the court feels will do the best job in administering the estate.

For more information

If you are struggling with working out who should run an estate in a scenario like those described above, please get in touch with our probate specialist Jenny Lowe.

If you are a lawyer struggling with these complex probate matters, (first of all, you have my sympathy because I know your pain!) you might like to consider instructing us to assist with the application. 

We run a service for other lawyers, preparing these applications on your behalf.  Because we do so many of them (and are within walking distance of the High Court probate unit), we can complete them faster (and usually cheaper) than you can. We will save you the unchargeable time coming up to speed with a tricky application which you will not need to make often. Your client need not even know we exist; they can receive an efficient and painless grant and attribute that success to you.

We are also happy to just point you in the right direction and you can complete the application yourself.

For more information, please get in touch with Jenny Lowe on jenny.lowe@nzprobatesandreseals.com.

jenny.lowe@nzprobatesandreseals.com
Jenny is one of the few legal specialists who can obtain re-seals, probates and letters of administration from the New Zealand High Court, for foreign estates that have assets in New Zealand.

Read more articles