Dealing with the deceased’s property: Wills, “intestacy”, and small estates

Introduction

Whose job is it to deal with the deceased’s property?

This is done either:

  • by the “executor” appointed under the deceased’s will, or
  • if there’s no will, then normally by a close relative who’s entitled to benefit from the deceased’s estate under the laws of “intestacy” (the laws that say who a person’s property goes to if they didn’t leave a will). The close relative gets formally appointed by the courts to manage the estate, and is then called the “administrator”.

“Personal representative” is a general term that covers both executors and administrators – in other words, it refers to whoever is doing the job of managing the estate, under a will or not. But in this chapter we’ll use the combined term “executor/administrator”, rather than “personal representative”.

This part of the chapter includes information about dealing with the deceased’s will (as well as what happens when there isn’t a will). To find out about making your own will, and how the directions in your will might be overridden in some cases, see the “Wills” chapter.

What property does the deceased’s “estate” include?

The deceased person’s “estate” is all their property, including their personal possessions (like clothes and jewellery), money in bank accounts, any house or other land they own (called “real” property), proceeds from insurance policies, and shares in companies.

The deceased’s estate won’t include any property that he or she owned jointly with a partner, like a house. Because they owned the property jointly (legally, this is called owning as “joint tenants”), this means that when one of them dies the other becomes the sole owner. (This is different from owning property together as “tenants in common”, which is where you each have a separate ownership share that you can pass on under your will to whoever you choose. And note that although these technical legal terms refer to “tenants”, in fact they’re about ownership, not about renting or leasing property.)

What tasks will need to be done?

The executor or other person dealing with the deceased’s estate will need to:

  • apply to the courts to get approval to deal with the property, either by getting approval for the will (called “probate”) or, if there’s no will, by getting appointed as the “administrator” for the estate (but court approval isn’t needed if it’s only a small estate)
  • get the deceased’s estate ready to distribute to the people entitled to it, by identifying all of the deceased’s property, dealing with any claims that someone might have against the estate (for example, a relative left out of the will), and paying any taxes and debts that might be due out of the estate
  • then distribute all the remaining property to the people entitled to it under the will or under the rules of intestacy.

Those tasks are all explained in the sections below.

Getting court approval to deal with the estate

Note: You don’t have to get court approval if the property in the estate is less than a certain amount: see below, “Small estates: No need for court approval”.

Applying for “probate” if the deceased left a will

If you’re the executor appointed in the deceased’s will, you should first make sure that you have the latest will. You should also find out about and locate any changes to the original will (called “codicils”). Contact the deceased’s lawyer, if they had one, or the Public Trust.

You’ll then need to apply to the High Court for it approve the will as valid and to approve your power to deal with the deceased’s estate as the executor. This is called getting “probate” for the will.

When you apply for probate in the High Court, the application will need to be supported by an affidavit (a sworn statement) and other documents, all in the form required by the High Court Rules. Usually the paperwork for the application will be prepared by a lawyer acting for the estate, and the executor can then complete the process and file the application with the court.

If someone claims the will is invalid and challenges it in court, the process is more complicated and involves a High Court trial. In that case a lawyer will usually be needed to represent the deceased’s estate.

Once the High Court has made an order granting probate, or granting letters of administration if there’s no will, the order becomes part of the public court records, and anyone can look at it (along with the will if there was one).

Note: If the deceased owned a house or other land, a probate order from the courts (or letters of administration if there’s no will) will allow the house or land to be transferred to the beneficiary who’s entitled to it. Legal ownership will first be transferred into the name of the executor/administrator of the estate, and then transferred to the relevant beneficiary.

Getting court approval when there’s no will (“Intestacy”)

If there’s no will, the closest relative (or a trustee company or Public Trust) can apply to the High Court for an order entitling them to deal with (“administer”) the estate – the order is formally called “letters of administration”. The person given authority to deal with the estate is then called “the administrator”.

This process will also be necessary if the deceased left a will but it’s invalid or didn’t name an executor, or if the named executor is unable or unwilling to act – for example, they may have since died, or moved overseas.

If the deceased didn’t leave a will, they’re said to have died “intestate”. In these cases there are special rules – called the “rules of intestacy” – that say who their property will go to, and in what proportions (see below in this section, “Distributing the property / Who gets the property if there’s no will?”).

The administrator appointed by the High Court performs the same duties as an executor under a will. “Personal representative” is the general legal term used to refer both to executors and administrators.

Note: To make sure your spouse or partner has an income after your death while they’re waiting for court approval for your estate to be distributed, it’s a good idea for you to plan ahead together by establishing at least one joint bank account. Any property (including money) that is owned jointly passes, when one person dies, to the surviving joint owner. This means that all the money in the joint account will immediately belong to your partner when you die.

Small estates: No need for court approval

Court approval not necessary for amounts under $15,000

Administration Act 1969, ss 64A, 65, 82A; Administration (Prescribed Amounts) Regulations 2009, reg 4; Land Transfer Act 1952, s 122

If the estate is a small one, it may not be necessary to apply to the courts for approval to deal with the estate (probate for a will, or letters of administration if there’s no will). Banks, company directors and so on can transfer or pay the following to the executor-administrator or to family members or the beneficiaries who are entitled to it, without any need for probate or letters of administration:

  • money in bank accounts up to $15,000
  • shares worth up to $15,000
  • life insurance policies up to $15,000
  • government stock up to $15,000 and local authority stock up to $15,000.

The executor/administrator or beneficiary will usually need to provide a copy of the death certificate in these cases. The person or organisation paying or transferring the money or other property must also be satisfied that probate or letters of administration haven’t been granted.

Note: Even if court approval isn’t needed because it’s a small estate, the executor has to follow the directions in the will – and if there’s no will, the rules of intestacy saying who is entitled to what property are still binding.

Arranging your bank accounts in advance to take advantage of the small estate rules

It may be possible to re-arrange your finances before you die so that your estate comes under the special rules explained above for smaller estates. If for example you had $16,000 in one or more accounts with the same bank, you could transfer some of this money to an account with a different bank so that you now have less than $15,000 with each of the two banks. This will avoid the cost and time involved in applying to the High Court to get probate for your will, or letters of administration if you don’t have a will.

Identifying and getting in all the property

After you’ve got formal approval from the courts to deal with the estate, you’ll need to do the following things:

  • identify all of the deceased’s assets
  • identify any people who might make a claim against the estate, and try to settle these claims if appropriate
  • gather in all the assets and get any necessary valuations
  • pay any debts the deceased had
  • pay any taxes due on the estate.

Identifying the assets

The executors have to make sure that they know what all the assets in the estate are including any overseas assets. If this information is not readily available, they will need to go through the will-maker’s papers and to talk to relatives and other people who had information about possible assets. They will need to write to the banks where accounts were held, insurance companies where policies were held, share registries, and other organisations as part of that identification process.

Note: If the will-maker owned a house or piece of land jointly with another person then that house or land will not form part of the will-maker’s estate but will become the surviving person’s property by virtue of the legal rule called “survivorship”. Land in two or more names is not necessarily jointly owned. The same applies if a person dies intestate. A lawyer will need to help the surviving person transfer the property into their sole name. The survivorship rule also applies to other jointly held items such as bank accounts (see below in this section, “Waiting for the estate to be distributed / How can I make sure my partner is provided for while they’re waiting for administration of my will?”).

Gathering in all the property

Once the court has granted administration, the executors or administrators will need to show the court order to banks, insurance companies, share registers, and anyone holding or responsible for any assets of the deceased person before those organisations will release the property to the executors or administrators or deal with them. This includes dealing with any assets that are held overseas. The grant of administration will also have to be produced to the Land Titles Office together with a transmission, so that any land can be transferred to them. Once these steps are taken they will then be able to deal with the estate assets.

There are special procedures about administration where overseas assets are concerned.

Paying debts and tax

The executor-administrator must:

  • make sure that all the debts owed by the deceased are paid (it may take some time to establish what all the debts are).
  • file tax returns and pay any tax owed by the deceased up to the date of death and any tax for any estate income earned subsequently. They must ensure all tax liabilities have been paid or allowed for before paying out the beneficiaries.

Dealing with any claims against the estate

It’s possible that a will may be challenged as invalid, or that someone may have a genuine legal claim against the deceased’s estate. For example, a family member may have been left out of the will and so could have a valid claim under the Family Protection Act – or perhaps a neighbour who regularly helped the deceased had been promised something but didn’t get it, and so could have a valid claim under the Law Reform (Testamentary Promises) Act. If so, the executor/administrator will have to resolve these disputes before they can distribute the assets of the estate.

For the different ways in which people can challenge a will or otherwise make a claim against an estate, see the “Wills” chapter, under “Challenges to your will after you die”.

Distributing the property

Once you’ve identified all the property that the deceased owned, have gathered it in, and have also dealt with any debts, taxes and legal claims the deceased might have been responsible for, you can then distribute the property to the people who are entitled to it. You’ll follow the instructions for this in the deceased’s will or, if they didn’t leave a will, you’ll follow the special legal rules that exist for these situations (called “intestacy”).

Distributing the property under a will

The executor distributes the deceased’s property to the beneficiaries according to the directions in the will.

Who gets the property if there’s no will?

Administration Act 1969, s 77

The law sets out an order of priority for who gets the deceased’s property if he or she didn’t leave a will, and in what proportions. All those people are family members.

The basic order of priority is:

  • the spouse, civil union partner or de facto partner, then
  • children (regardless of whether the parents were married)
  • the deceased’s parents
  • brothers and sisters
  • grandparents
  • uncles and aunts.

    Note: A de facto partner will usually only be entitled under the laws of intestacy if the relationship was for three years or longer – but there may be an exception if the de facto partner has made a substantial contribution to the relationship or there is a child of the relationship.

    Administration Act 1969, ss 77, 82A

Here are some common examples of how the property is distributed under the rules of intestacy:

  • If there’s a spouse or partner, and there are also children, the spouse/partner takes:
    • all the deceased’s personal possessions, including cars, furniture, appliances, jewellery and so on (basically everything other than land, buildings and money), plus
    • a set dollar amount, which is currently $155,000, plus
    • one third of the rest of the deceased’s property.

    The children take the other two thirds of the rest of the property.

  • If there’s no spouse or partner, the children take everything in equal shares.
  • If there’s no spouse or partner, and no children, the deceased’s parents will take everything.
  • If there’s no spouse/partner, children or parents, the deceased’s brothers and sisters take everything in equal shares.

    Administration Act 1969, s 77A; Family Proceedings Act 1980, s 26

    Note: If there’s a Family Court separation order in effect (see the chapter “Adult relationships”), the surviving spouse or civil union partner doesn’t have any right to the property under the laws of intestacy. However, if the couple were living apart but there was no separation order, their rights under the laws of intestacy are the same as if they’d still been living together.

    Administration Act 1969, s 77

If a person dies without any of the specified list of family members surviving, their property may pass to the government.

Can someone challenge how the property is distributed when there’s no will?

Yes. People have the same rights under the Family Protection Act 1955, the Law Reform (Testamentary Promises) Act 1949 and the Property (Relationships) Act 1976 as they have to contest the distribution of an estate under a will (see the chapter “Wills”, under “Challenges to your will after you die”).

How long will it take for the estate to be distributed to the beneficiaries?

As a general rule, most estates should be able to be finalised and distributed within six months after the grant of administration. However, this is very much dependent on the type of assets in the estate, any legal complexities, the terms of the will, and whether anyone challenges the will.

If the assets are all in cash, or can be turned into cash quickly, and there are a small number of beneficiaries and all liabilities have been identified and are able to be paid from available funds, then it may be possible to make interim payments before the estate is completely finalised. If the terms of the will are more complicated, it may not be possible to pay any of the beneficiaries until all the assets have been gathered in.

If there are overseas assets in the estate, these may take longer to deal with because the procedure regarding administration in other countries can be complex.

Māori land

Succession: Transfer of Māori land when an owner dies

An order from the Māori Land Court is necessary to transfer the deceased’s land interests to his or her successors.

If the deceased owner made a will, any successor named in the will must be a member of the whānau or hapū associated with the land (in the terms of Te Ture Whenua Māori Act, they have to be within the “preferred classes of alienees”). People outside that whānau or hapū may be entitled to a life interest in the land or a right to income from the land only.

If there’s no will dealing with the deceased’s land interests (an “intestacy”), Te Ture Whenua Māori Act sets out rules for which whānau members the land will go to.

For more details about those succession rules, see the chapter “Māori land”, under “Succession: Transfer of ownership when an owner dies”. That section also explains how to apply to the Māori Land Court for a succession order.

Decisions at tangihanga about Māori land

Te Ture Whenua Māori Act 1993, s 176

Whānau at tangihanga can make decisions dealing with Māori land, and the decision can then be confirmed by the Māori Land Court. For example, if a father of a whānau dies, the whānau may decide to create a whānau trust in the name of their father. (See the chapter “Māori land”, under “Methods of managing Māori land: Trusts, incorporations, and reservations”.) They’ll need to record the decision as a resolution, along with details of who attended.

Other decisions that a whānau group at the tangihanga might make are, for example, to become a Māori incorporation, or to replace a trustee of an existing whānau trust. Again, these would need to be confirmed by the Māori Land Court.

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