Jul 5, 2022
New Zealand’s inheritance laws are undergoing a major revamp. New Zealand’s inheritance laws are not only outdated, with current inheritance legislation largely dating back to the middle of the 20th century, but have been recognised as being unnecessarily complex and inaccessible. In an effort to update how inheritance works for modern families, the Law Commission has proposed 140 recommendations for changes to inheritance laws to help simplify the process and to ensure that the law provides for the diversity in family relationships that we see in the 21st century and to properly reflect Māori succession.
The review of inheritance laws covers who can make a claim on an estate, (including who can challenge a will), how inheritance without a will is managed and the ability of the Court to look to assets which fall outside of the estate in the event of a successful claim. To adjust to these changes and to ensure that your estate is distributed in accordance with your wishes, writing and keeping a will updated will be more important than ever.
Inheritance laws have long been inadequate when it comes to dealing with the complexities of modern families. Specifically, the proposed changes help to provide greater clarity when it comes to blended families and separated couples. Additionally, the changes seek to reflect the current general attitudes about who we should be obligated to provide for with our estate.
For example, under current law, parents are considered to have a “moral duty” to provide for their children, regardless of their age or circumstances. While this makes sense for younger, dependent children, the duty doesn’t seem quite as clear when those children are well into middle age themselves, well established or estranged from their parents. These and other inheritance norms may be set for some significant changes:
The proposed changes will also provide for the option of determining succession of taonga in accordance with tikanga Māori.
Among the proposed changes is consideration for courts to be able to look at the estate planning of a deceased person in a holistic light in the event a claimant against that estate is successful. Where a person has deliberately structured their estate to ensure another person (or group of persons) is not able to benefit from their estate by transferring those assets out of the estate (for example into a trust), or by owning that asset jointly with the person they wish to inherit, the suggestion is to allow the Courts flexibility to bring those assets back into the estate if appropriate.
The proposed changes are designed to clarify and simplify inheritance and succession laws. In order to make sure that your estate is passed down in accordance with your wishes, it is recommended you have a will in place, and if you already have one, then recommend you review and update your will to ensure that your estate planning meets with current and future inheritance laws. A professional estate planning practitioner will be able to guide you through the process to ensure that your intentions for your estate are carried out.
For those New Zealanders who don’t have a will, the recommendation from the Law Commission is that the distribution scheme remains the same. This means that without a will, your assets may not go where you think they will, as legislation directs a split between your various family members, worked out based on what family you have at your death. Creating a will remains important to ensure your assets go where you wish them to.
Regardless of what changes ultimately materialise, inheritance law is due for a major shakeup. While these changes will take some time to come through, whether you’re estate planning in general, writing a will, or updating your existing will, it’s a good idea to reach out to a professional adviser to ensure that your estate is ultimately handled the way you want it to be. If you’d like to learn more about inheritance and how we can help, please contact us today!