Your will can be contested and it happens more often than people realise. Despite the law around contesting wills existing in New Zealand for over a century, many people are surprised to discover their will can be challenged.
The Family Protection Act
A law called the Family Protection Act (FPA) allows certain classes of family members to make a claim against a deceased person’s estate. The most common claimants are children and surviving spouses.
Under the FPA, a family member’s claim will be stronger if they can prove they are in need of support and maintenance. However a claimant (family member) doesn’t need to be particularly disadvantaged, the courts can make an award merely to recognise a family bond between the deceased and a claimant. It is a question of whether the deceased breached their “moral duty” to the claimant: the courts look at each dispute on a case-by-case basis, and will have regard to a claimant’s financial need, medical or other issues, and the size of the estate (especially if there are multiple claimants).
So (for example) an elderly widow who was financially dependent on the deceased, has no source of income, and was written out of the deceased’s Will, would probably have a stronger claim over the estate’s assets than a financially independent adult child. (The widow would also have a relationship property claim: see below).
The Law Reform (Testamentary Promises) Act
A claim can also be made under a law called the Law Reform (Testamentary Promises) Act (TPA). A person can claim under the TPA if they performed work for the deceased, and the deceased promised to reward that person for their work out of their estate when they died, but the deceased has died and did not actually fulfil their promise. The promise can merely be implied. Unlike the FPA, the TPA is not limited just to family members.
A person can claim under the TPA if they performed work for the deceased, and the deceased promised to reward that person for their work out of their estate when they died, but the deceased has died and did not actually fulfil their promise.
Relationship Property Law
Another way to challenge a will is under relationship/matrimonial property law. A de facto partner or wife/husband can elect to claim their half share of relationship property, like they could if the couple’s relationship ended with separation rather than the death of one of the partners. A relationship property claim takes precedence over a will. This type of claim is common where most of a couple’s property is held in the deceased partner’s name. In a situation where there is a second marriage, and the deceased brought the majority of assets to the marriage and wanted to bequeath them to his or her children, this type of claim can cause serious rifts in a family. A deceased person’s representative can also apply for division of relationship property with permission from the court.
What can you do now to stop family members from fighting over your estate after you die?
There are a number of options, some more effective than others:
- Joint tenancy. It is common for couples to have bank accounts and own land as joint tenants, which means legally the funds or land will pass to the surviving spouse automatically. However, this process of “transmission by survivorship” can be prevented by a relationship property claim from the deceased’s estate.
Trusts. Property can be transferred into a trust. However, unless all of your assets are held in trust there will still be assets which fall to the estate and can be subject to an FPA or TPA claim. Trusts can also be litigated over and if family members who don’t get along are trustees and/or beneficiaries that can be a recipe for conflict.
- Deed or contract. You can enter into a deed or contract to bequeath certain property by will when you die. If the agreement is broken, the party to the agreement can sue your estate for breach of the agreement and if successful they can claim against the estate as a creditor. But if the agreement is performed it is of limited usefulness because such an agreement won’t take precedence over FPA or TPA claims. Making a contract or deed to gift by will is not a common device in New Zealand, possibly because it’s difficult to predict its usefulness and the law governing such agreements is uncertain.
- Lifetime gifting. The most basic way to avoid a claim is to ensure your estate has nothing in it because you’ve gifted away your assets during your lifetime. However, that can be fraught with problems. For one thing, gifting can affect eligibility for the residential care subsidy if you later need to move into care. Also, when elderly people begin gifting away large portions of their net wealth that can raise suspicions and lead to other forms of litigation between family members.
When it comes to avoiding challenges to your will there is no easy fix. However, setting up your affairs to best suit your circumstances is a very good start. Our estate and relationship property experts are happy to help you minimise any risk.
This article was first published in April 2017, and was updated in June 2019.