What Happens to Someone’s Property after They Die in New Zealand?
Nearly everyone leaves behind some sort of property when they die. At that point, it is up to the people remaining to figure out what to do with it. At a time when grief can be nearly overwhelming, someone has to deal with the estate. While this may be a difficult task, knowing what to do can bring about the first bit of relief in the situation.
Who is responsible?
The personal representative of the deceased is responsible for distributing the deceased's property. A personal representative is either someone who was named as executor in the deceased's will or a court-appointed administrator, who is usually chosen from among their close relatives.
What is included in the deceased's estate?
The estate of the deceased includes all their possessions. Physical property might include clothing, jewelry or vehicles, among other items, as well as real property such as land or a house. It also includes any money they have in a bank.
When the deceased owned property with someone else as joint tenants, this means that they both owned the property. This may happen if two people own a house together. Because the house belonged to both of them, the person still living automatically takes sole ownership of it and it is not considered a part of the estate. However, if they do not own the property jointly but each have an individual share in it, this is called tenants in common. In this case, the deceased's share of the property becomes a part of his estate.
Is there a need for an official administrator of the estate?
For most estates, the answer is yes, there does need to be an executor or court-appointed administrator to satisfy legal requirements. The only exception is that if the deceased left only a small estate, then it does not have to go through probate and thus doesn't need an official administrator. A small estate is defined as one that does not include ownership of land but does include any or all of the following:
- $15,000 in bank accounts.
- $15,000 in shares.
- $15,000 in life insurance policies.
- $15,000 in Government stock.
- $15,000 in local authority stock.
This property can be transferred to the executor or a close family member without probate. Remember here that real property such as a house that is jointly owned is not considered a part of the estate, so joint ownership of land does not require probate, either. The executor, administrator or a beneficiary of the estate simply provides a death certificate to the person or organisation holding the property. As soon as they are satisfied that probate and letters of administration have not been granted by the court, they can release the property.
Steps in settling the estate
1. Whoever is handling the estate, whether that is an executor or a beneficiary, starts the process by applying to the courts if the property amounts to more than what would be considered a small estate. Probate must be granted before the will can be carried out. If there is no will, the court appoints an administrator.
2. After the person who will take care of the property has been chosen, either in accordance with the will or by order of the court, the property must be identified and prepared for distribution. A part of this is handling claims against the estate and paying taxes and debts.
3. The property left after satisfying debts, taxes and claims then has to be distributed to the person(s) entitled to it.
How to apply for probate if the deceased left a will
If the deceased left a will naming you as executor, the first step you need to take is to find the latest will and codicils, or changes. The best way to find out about them is to go directly to the deceased's lawyer or the Public Trust.
Once you have the final will, the next step is to apply for probate. In most cases, the estate's lawyer puts together the required documents, application and affidavit. The affidavit contains evidence that the person has died and where they were residing at the time of their death, along with a statement that the will is the final will of the deceased. The entire application, including all its required documents, must be prepared in the correct form, according to the High Court Rules. You then take over as executor and file the application. You get probate for the will when the High Court recognizes it as a valid will.
A High Court trial may be needed to determine the validity of the will if someone claims it is not an authentic will or the final will of the deceased. If that happens, a lawyer represents the estate.
After the High Court approves the will, it makes an order granting probate or letters of administration. The order and the will both become matters of public record, which can be viewed by anyone.
How to apply for letters of administration if there is no will
Your loved one may die without a will. This is called dying intestate. If they do die intestate, someone will need to file an application to get approval for administering the estate. This can be a closest relative, a trustee company or Public Trust. Even if the deceased had a will, this needs to be done if the will is invalid, named no executor or named an executor who will not or cannot follow through with handling the estate. The High Court approves an administrator, officially allowing them to deal with the estate.
What happens to the house and land?
Once the court grants probate or letters of administration, the house or land can be transferred legally to the executor or administrator. This personal representative can then transfer it to the beneficiary. However, if the property was owned jointly, it goes immediately to the joint owner.
Identifying property and obligations of the deceased
Once you approved as executor or administrator of the estate, you need to gather information about the deceased's assets and liabilities.
1. Find all the assets.
2. Take possession of the assets.
3. Have the assets valuated if necessary.
4. Identify anyone who might make a claim against the estate and seek a settlement of those claims.
5. Pay the deceased's debts and taxes.
Finding the assets
Finding all the assets of someone who is deceased is not always a simple task. You need to know about all their assets, including bank accounts, insurance policies, share accounts, overseas assets and any property that can be called an asset of the estate. In some cases, you might have to investigate this by looking through the deceased's property and papers, talking to people who know about their assets, and writing to organisations that hold their assets.
Taking Possession of the Assets
The administrator or executor shows the court order granting them administration to the organisations and individuals who are in possession of or responsible for the assets at the time of the death. As a part of this task, you need to produce the court order when dealing with the Land Titles Office to gain legal possession of the land. You will also need this document when dealing with overseas assets.
Settling claims against the estate
In certain circumstances, there may be valid claims against the estate. If a close family member is left out of the will, they may be entitled to a share under the Family Protection Act. Anyone might have a claim against the estate if they helped the deceased and were promised something in return. This would fall under the Law Reform Act covering Testamentary Promises. The executor or administrator of the estate needs to resolve such matters before moving ahead with distribution of the assets.
Making payments for debts and taxes
You first have to find out what the debts of the estate are. To help ensure that all debts are found, executors or administrators typically place a Notice to Creditors in the newspaper to let creditors know to send any claims against the deceased's estate to them. Once you know what the debts are, they can be paid out of the deceased's assets.
The deceased's taxes must be paid before the beneficiaries are given any of the remaining property. You must file tax returns covering the time from the last filing to the date of death, as well as tax on estate income earned after that date.
Distributing the Remaining Property
If there is a will, the executor transfers the deceased's property to the beneficiaries as named in the will.
However, if there is no will, the property is distributed to family members as required by the rules of intestacy. These rules name the following family members in order of their priority:
1. Spouse, civil union partner or de facto partner.
2. Children, whether or not their parents were married.
3. The deceased's parents.
4. The deceased's siblings.
5. The deceased's grandparents.
6. The deceased's uncles and aunts.
(A de facto partner is considered the top priority under intestacy only if they and the deceased were in a relationship for 3 years or longer, if there is a child of the relationship, or if the de facto partner contributed to the relationship substantially.)
The rules of intestacy determine who inherits and in what proportions. The following are some of the most common situations.
1. There is a spouse or partner and children:
The spouse or partner gets all of the deceased's personal physical property such as cars, furniture, jewelry, etc. They also receive a set amount, currently $155,000 plus one-third of the remaining property. The children split the remaining two-thirds equally.
2. There is no spouse or partner but there are children:
The children split the property equally.
3. If there is no spouse, partner or children:
The deceased's parents get all the deceased's assets.
4. If there is no spouse, partner or children:
The deceased's siblings take equal shares of the assets.
What if the deceased and their spouse or civil partner were not living together?
The spouse or civil partner is still considered as the top priority unless there was a Family Court separation order. If such an order was in place at the time of the death, the spouse or partner has no right to the property if the deceased died without a will.
What if the deceased leaves behind none of these family members?
If the deceased had no spouse, partner, children, parents, siblings, grandparents, aunts or uncles who survived them, their estate may go to the government.
Can the distribution of the property be challenged?
Anyone who disagrees with the way the property is distributed may challenge the distribution if they would have right to property under the Family Protection Act, the Law Reform Act of 1949, or the Property Act of 1976. These acts cover family rights, testamentary promises and relationship property rights.
How long does it take to distribute the estate?
In most cases, it only takes about six months to make all the distributions after the grant of administration. Factors that can affect the amount of time this takes include: types of assets, terms of the will, any challenges to the will, and legal complexities.
If the terms of the will are complex, no one may be able to receive their share of the property until the estate is finalised. However, interim payments can be made in situations like the following:
1. All property is in the form of cash or can quickly be turned into cash.
2. There are few beneficiaries.
3. All liabilities can be found and paid first.
When an owner of Maori land dies, the Maori Land Court must order the deceased's land interests to be transferred to their successors.
If the deceased made a will, they were required to only pass on Maori land to a member of the whanau or hapu associated with the land. If they are not, they do not take possession of the land,
but may have a life interest in it or a right to income from the land.
If the deceased did not make a will, rules established in Te Ture Whenua Maori Act determine which whanau members receive the land.
Whanau at tangihanga
Whanau at tangihanga can make certain decisions about Maori land. Once they arrive at a decision, it must be confirmed by the Maori Land Court. This decision may involve setting up a whanau trust, a Maori incorporation or replacing a whanau trust trustee.
Ways to prevent problems for your heirs after your death
There are certain things you can do to make it easier for your heirs to settle your estate. Most importantly, you need to make a will as soon as possible and make sure you name an executor who is willing and able to do the job. If you name someone and they become unavailable later on, you need to change the will to name a new executor.
If you have a relatively small estate, you may be able to keep it in the category of small estates that do not require probate. You may be able to accomplish this by spreading your bank assets between more than one bank so that each has less than $15,000.
Your spouse or partner may be left with no income during the time between your death and the High Court's approval for distributing your property. You can prevent this by opening at least one joint account with your spouse or partner. They will then have access to your joint funds with no interruption.
Preparing for your own death can be a difficult thing to face. Yet, doing so can save your loved ones pain and heartache while making the estate easier to settle. If you are the one who is now dealing with a deceased person's property, knowing what to do certainly makes your life easier. Why not use the situation as a reminder to make this process easier for the person who administrates your estate?