Month: April 2016

Introduction

When a person dies without a Will, administration of the estate is more complicated than if the person had left one.  Dying without a Will is called “dying intestate”.  Due to the complex nature of dealing with an intestate estate, additional information is required throughout the process which can cause significant delays in administering the estate.  In many cases this will delay the distribution of the estate.

Letters of Administration

Where the deceased did not leave a Will (died intestate), the estate is small, there is no interest in land and there are no assets worth more than $15,000, the deceased’s next of kin is able to deal with the estate.  However, if the deceased died intestate and owned land or assets exceeding the value of $15,000 then Letters of Administration are required to administer the estate.

Letters of Administration is a similar process to an application for Probate (where the deceased left a Will), in that the administrators need to apply to the High Court to be appointed as administrators.  However, the Letters of Administration process takes much longer than the Probate process.  Firstly, it must be established that the deceased did not have a will and enquiries must be made to ascertain whether a deceased person has left a will.  The solicitor acting for the estate usually advertises in Law Talk (the leading New Zealand legal magazine).  The size of the estate must then be established to determine whether an application for Letters of Administration is required.

The Administration Act 1969 governs who may apply to be appointed as an administrator of an estate.  The High Court Rules specify the order of priority as to who can apply to be administrator(s). The descending priority is as follows:

• The surviving spouse;
• The children of the deceased;
• The parent(s);
• Brothers and sisters;
• Grandparents;
• Uncles and aunts.

Once it has been decided who is going to apply, consent must be obtained from those with an equal or greater right to apply.  For example, if the person did not have a spouse/partner but did have children, if one or more of them want to apply to be administrator(s) of the estate then all of the other children would need to consent to the application.

A Status of Children search will also need to be carried out by the Department of Internal Affairs and a certificate showing the results of the search must be attached to the application for Letters of Administration.

Once Letters of Administration has been granted by the High Court, the deceased’s estate will be administered in a similar way as with Probate.  However, as the deceased did not leave a Will, the Administration Act 1969 determines who is entitled to a share of the estate and the size of that share.

Distribution in accordance with the Administration Act 1969

Under the Administration Act 1969, an estate does not pass to the surviving spouse.  If there is a surviving spouse and surviving children, the spouse will inherit the first $155,000 of the estate, chattels and a third of the balance of estate.  Two thirds of the estate is inherited by the surviving children in equal shares.  Where there are no children, the spouse would receive the first $155,000 of the estate, chattels and two thirds of the residue.  The deceased’s parents would receive one third of the residue.  The Administration Act 1969 provides for every possible scenario in order to determine who is entitled to receive a share of an estate and the size of that share. In essence, where a person dies without a Will, the government decides how assets are to be divided between family members.

Letters of Administration with Will annexed

Letters of Administration with Will annexed are applied for where the deceased did leave a will but the executors named in that will either died before the deceased or are unwilling or unable to act as executors.  The Will is attached to the Letters of Administration application and once the administrator has been appointed by the High Court, he/she must administer the estate in accordance with the terms of the will.

Resealing of Letters of Administration grants in New Zealand

Dying without a Will where the deceased owned overseas assets can also be extremely complex and cause significant delay.  Letters of Administration must be granted in the country where the original Will is held.  The original copy of those Letters of Administration must then be filed in the High Court of New Zealand together with an application asking the High Court to reseal the grant of Letters of Administration.

The sealed Letters of Administration has the same force, effect and operation in New Zealand as if originally granted by the New Zealand High Court, and the administrator must perform the same duties and be subject to the same liabilities as if the grant had originally been made in New Zealand.   However, because the grant must first be obtained in another country, this creates delay in allowing the administrator to deal with the overseas assets owned by the deceased.

Conclusion

Dying without a Will can be a messy and costly business for those left behind.  The Administration Act 1969 determines who can apply for Letters of Administration to administer an estate and also how assets are to be divided between family members.  This may not be in accordance with the deceased’s wishes, which highlights the importance of having a Will in place to ensure a more simple way of giving effect to ones wishes.

If you would like further information please contact Amanda Hockley on 07 958 7451.