This sounds like an easy question, but if you pass away, what happens to the life insurance you took out 10 years ago? Who will eventually get this money? Will it be your first high school sweetheart, your kids, your new partner or maybe your business partner? If you like this uncertainty—not knowing what will happen if you unexpectedly pass away—then feel free to stop reading this guide to creating a will.
However, if you want to secure the best future for your loved ones, in this guide we’ll show you that the best time to set up or make sure your will is correct is today.
WHERE THERE’S A WILL THERE'S A WAY
A will is a legal document, which lets you say how you want your property dealt with when you die. Once you die, everything you own and everything you owe is called your estate.
Your will contains your instructions on what to do with your property when you die and how you want your dependents (spouse, civil union partner, de facto partner, children, etc.) to be looked after. As far as you and your family are concerned it could be the most important paper you ever sign. A will can relieve financial and emotional strain on your family after your death and help minimise the likelihood of dispute about your estate. Remember, it is not just money you have to think of, but all your possessions and debts.
WHO CAN MAKE A WILL?
Anyone of sound mind who is at least 18 years old can make a will. Some exceptions apply for younger people.
WHAT IF YOU DIE WITHOUT A WILL? (KNOWN AS DYING “INTESTATE”)
If you die intestate, the law specifies how your property will be distributed—usually to a surviving spouse/partner, immediate family, or to near living relatives. This may not be what you or your family wish for. Your lawyer or a family member can still administer your estate if you have not made a will, but only according to the Administration Act.
WHAT SHOULD MY WILL INCLUDE?
Your will should name at least one executor. An executor is a responsible person who will see that your wishes, as expressed in your will, are carried out and who will administer your estate until it is properly distributed. If any claims against the estate are made during this process, your lawyer can advise the executor.
It should also include, amongst others:
- Payment of your liabilities such as mortgages, overdrafts and debts.
- Adequate provision for your dependents (partners, children, adult children not able to look after themselves and, sometimes, parents). Your will should say who you want to inherit your personal possessions as well as your general assets.
- Your will can name preferred guardians of your children.
- You can set out any specific funeral arrangements that you want.
- You can state your wishes about being an organ/tissue donor.
- You can give directions as to how a Business you own should be dealt with when you die. That is a complex topic, so you need to consult a lawyer, a financial advisor and an accountant.
ENDURING POWERS OF ATTORNEY
When you see your lawyer about making a will, also ask about drawing up enduring powers of attorney. This nominates someone who can manage and care for your property if you become incapacitated through accident or illness.
WHY SHOULD I SEE A LAWYER?
Though you choose what to say in a will, the law specifies how you should say it. If you do not comply with the law, your will—or parts of it—may be invalid. A lawyer can:
- Suggest how you can best and most fairly provide for your family and dependents;
- Express your wishes so they have the legal effect you intend and ensure your will is properly drawn up and valid;
- Tell you about alternatives you must consider (including who may challenge your will and why—this can be a complex area of law);
- Advise on the appointment of suitable executors;
- Advise on and form trusts for your beneficiaries;
- Explain extra powers available to your executors and trustees that you might want to include in your will and advise on the appointment of suitable people to take on these roles.
HOW MUCH WILL IT COST?
Whoever you consult about making your will, do check their charges beforehand. And, at the end of the day, having an expert prepare your will could save your relatives the grief and expense of you having an invalid will or none at all.
WHY DOES THIS ARTICLE FEATURE IN THE SPIN?
At Velocity Financial, we see ourselves as specialists who work with specialists. In case of insurances and mortgages, the real value we can add is setting them up right. An integral part of this, is structuring the ownership in an optimal manner this includes wills, trusts and enduring powers of attorney. We work together with specialists such as lawyers (legal) and accountants (tax) to achieve the best result for our clients.
This is just the tip of the iceberg of what we do at Velocity and we would advise you to see a lawyer when you have the chance. Often a great time to do so is when you get out insurance, expand your family or when you get or change your mortgage.
To the best of Velocity Financials knowledge, all information in this guide is true and accurate but should only be used as a reference. Over and above, Velocity Financial assumes no liability for any losses suffered by any person relying directly or indirectly on information in this article as it is publicly available information on the Wills Act 2007, Trustee Act 1956 and the pamphlet of the Law Society NZ. It is recommended that readers consult a lawyer before acting on this information. We can be of assistance for recommending various lawyers for all issues related to wills.
Alexander Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.