That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
Without a Will: The Hidden Costs of Dying Unprepared ( Ep 100!!! )
What happens when you die without a will? The consequences can be devastating for those you leave behind. In this eye-opening conversation with returning guest Tracey Pavan, we unpack the critical importance of proper estate planning and the unexpected legal pitfalls that can trap even the most well-intentioned families.
Tracey shares shocking revelations about how marriage automatically revokes existing wills unless specific language is included, leaving many couples mistakenly believing they're protected when they're actually intestate. We explore a heartbreaking real-life case where a mother's death without a will resulted in her insurance payout going to her estranged husband rather than benefiting her children as she would have intended.
The discussion delves into the practical realities of intestacy - from the complex court applications required to the surprising legal formulas that determine who gets what when you die without a will. Did you know your spouse doesn't automatically receive everything? Instead, they get the first $155,000 plus one-third of remaining assets, while your children receive two-thirds - potentially creating financial hardship during an already difficult time.
We also address crucial considerations for parents: naming guardians for minor children, handling blended family situations, and ensuring your wishes are clearly documented. With will preparation starting around $350 - far less than the cost of dying intestate - there's simply no excuse for postponing this essential legal document.
Whether you're newly married, recently separated, caring for dependents with special needs, or simply want to ensure your assets are distributed according to your wishes, this episode provides vital information everyone needs to properly protect their loved ones. Listen now and take the first step toward peace of mind knowing you've properly provided for those who matter most.
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Welcome to that Homeland Hub. Today I am rejoined by my beautiful, gorgeous friend, tracey Pavan. Hello, tracey, as ever, nusso, thanks for the invite back. Thank you for coming back. Did you know you were my guest 100 episodes ago?
Speaker 2:I can't believe that. It doesn't seem like that long ago, does it? 100 episodes, it's enormous.
Speaker 1:Congratulations, I know in the short time that we've been running this, so consistency 100 episodes it's enormous. Congratulations. I know in the short time that we've been running this, so consistency is the key.
Speaker 2:Well, obviously fabulous guests, yes, and interesting topics, thank you.
Speaker 1:Thank you so much, tracy. Today I brought you back because there were some articles flying around and we had our chat as well the other day for dinner that the issues that you're seeing is people unfortunately passing away, dying and not leaving any wills behind.
Speaker 2:Yeah, it seems to me. I don't know if it's true or not, but when I look at the data and I see the notices in law magazines looking well they're called wills notices and it's law firms and trustee companies looking for wills for people who have died it becomes a real I guess an emotional sort of thing for me, because a will is just so essential. You have your life insurance, you insure your house, you have all these things, but you have nothing there when you die to tell everybody how you want things done. And a will should be on that list with your essential items, along with enduring powers of attorney.
Speaker 1:Yeah. So this is really a topic that I really want to dive into, with enduring powers of attorney especially as well, because not many people realize what it actually means, what it actually does. So let's step back a little bit for the will, the reason, and we'll link this article, hopefully, possibly, and that's the one I shared with you. So there was this couple. They separated. They were a married couple, they separated, separated and then they had two young kids and the mom passed away.
Speaker 1:Now she just recently upgraded her insurances and she thought that, you know, now she was this new man and if she, you know, whatever happens to her, the money will go to this man and the children. Unfortunately, when she did pass away, her family were trying to find any recollection of what she wanted to happen, any wills or any notices or anything, and they couldn't find anything. And what happened was because she was still married to that man, even though she was separated, all the money went to him and although, yes, okay, he's the father of the children, he got the kids now, but he ended up buying big ticket items and, by the sound of it, her family was not happy with that because they thought this is not how she wanted to spend that insurance money. So to me it's interesting situation because we deal with a lot of separations at the moment. Right, so can you just step us through what happens? So if people set up a will when they're married and then when they separate, what happens there?
Speaker 2:So a general will if I'm talking in common will drafting is you will have a spouse or a de facto couple, civil union couple, and they will leave everything to one another and then, if they die, then to any children that they may have. That's the basic sort of will we have, and there might be guardians in there and some directions as to funeral. When you have a blended family, things become a little bit more difficult because you have these competing interests. You've got well, I want to look after my partner, but I also want to look after my children, and there's legislation out that is in place that says that, what's called the Family Protection Act. It says that you have a legal and moral obligation to provide for certain people under your will, and they are spouse, partner, children, grandchildren and, in some cases, dependent parents and dependent stepchildren. Those are rare, but you might, in a blended family situation, not be able to sort of fit everything into that.
Speaker 2:So there's no real general one-size-fits-all for this.
Speaker 2:You really have to speak at length with your lawyer, talk about your different needs, what you want to do, and we've got to try and work together to get a solution that benefits everybody so we can balance those competing interests or we can provide something for the other spouse, but before that, part of your solution to this would be, in a de facto situation, to have a Section 21 contracting out agreement or a property sharing agreement where you've said, well, look, we don't want the Property Relationships Act to apply to us, us, we want our own rules as to what happens in the event of our separation.
Speaker 2:So if you have one of those in place and you have your will, they can all work together, but there needs to be clauses in both to allow those things to happen, all right. So it's not. It's never just a straightforward situation and while I encourage everyone to make a will and in some cases I would say that the wills you can buy in shops and things are better than nothing I've had experience to show that that's not always the case. And those wills where you're not getting the advice, you're not talking about options, you're not receiving the real understanding that you need to know what the potential effects and implications of what you're doing. They just can't provide that. You need to see your lawyer, you need to be able to talk that through.
Speaker 1:So can the same couple use the same lawyer, or would you recommend that she sees one and he sees one? Can the same lawyer do both wills?
Speaker 2:Yes, they can, but it would be better if they saw different lawyers, simply because, even though they've got everything together or they're together as a couple, there is still this competing interest side of things. If they are married and in fact a relationship and the children are theirs, so there's not a blended family situation, that would be fine Same lawyer fine. But where you've got a blended family, it's often good to get someone impartial saying to you well, okay, you can do this. You can leave a life interest in your half share of the house that you own to your partner, but by the time he dies, your children may well be in their 40s. Is that what you want to do? Do you want to leave it for a shorter period of time? There's a whole lot of options and those options aren't on the buy one at the shop will packs. So, yeah, there's a lot to it, but a will is better than no will. If you have no will, you die in test state.
Speaker 1:What does?
Speaker 2:that mean? That simply means that you don't have a will, and the actual ramifications of that are that you have to do what's called letters of administration, you have to apply to the High Court for letters of administration and someone has to be an administrator of your estate. So when you've got a will and you get a grant of probate, where you don't have a will, you get letters of administration in general terms, all right, and that who becomes your administrator? There is a hierarchy of people in order that would be able to be that person for you, and that becomes problematic in itself, because if both your parents have died and you have siblings and those siblings are able to all apply as administrators and you have a family dynamic there that's not entirely comfortable, then deciding who becomes an administrator becomes a problem.
Speaker 2:You can have more than one, but if you've got a large family, the dynamics are bad. Then it's just going to cause further stress. The costs are also more Zewiniso. They will always be more because you have to do so much. There's so many more steps in the intestacy process than there are in the probate process. So I strongly recommend I cannot say it enough please, please, do a will. It doesn't have to be overly complicated, but at least there's something recorded telling people who you leave behind this is what I want to happen and, honestly, the stress on the family where there is no will is really really hard.
Speaker 2:Yeah, it's really hard and it's not going to take you a long time. No, you know maybe an hour, hour and a half total to get your will drafted. I don't know what other folk charge, but the starting point for a will with us is $350 plus GST. Wow, you know how many coffees do you have a week at $7 a coffee. Is a coffee going to deal with what happens in your estate when you die?
Speaker 1:Yeah, no, this is very. I think and this is why we're doing this, because, as you say, there's been so much stress left behind for a lot of families that don't have a will. But tell me what happens and a lot of people don't realize this, and we had an interesting discussion about it, you and I that when people make a will, let's say they're de facto partners, they're together for years and years, and then they make a will and then get married, yes, and then one of them passes away thinking, oh well, there is a will. What happens there?
Speaker 2:Yeah, it's a problem, so it's not a problem.
Speaker 1:It is a problem.
Speaker 2:So it's not a problem. Congratulations, you got married. It's not the marriage that's the problem. It's the fact that if you have made a will and then you marry, your will is automatically revoked unless you have a will made in contemplation of marriage. And you can get that done very easily. You just have to let the person who's making your will for you know that you plan to marry and a simple clause goes in there and it says this will is made in contemplation of my marriage to XYZ and then you have to decide whether or not that person receives your estate if you get married or if you don't get married. You might just never get there and it's really simple.
Speaker 2:But you need to put that in there. And it's the same when you've got assets overseas and you can't always have those assets administered by a New Zealand executor right. So it's often best to have. Well, when you have land for, say, or an immovable in another country, new Zealand law can't deal with that the law of the land, as it were, in the country where the property is that must deal with it. So I always recommend that you have a will over in the other country for those assets there and then you have a will in New Zealand for your New Zealand assets and you need to make sure that your willmakers in both countries are aware so that they can note that in the will. But yeah, it's more common than you think that people don't realize that when they marry and they've already have a will together, that that will will be revoked without that clause in it.
Speaker 1:Wow, see, that blew my mind. I mean I didn't know that. And then I learned about it and I went wow, because I know so many people that you know do life together before they get married. You know they have children, they buy houses, they do all sorts of things. And then they get to a point where they're like, oh, maybe we should do a will because we've got all those assets. Do a will, and then a year later, you know he pops the question and they get married and they think that you know, everything is sorted in their lives, but gosh no, I know.
Speaker 2:And another common misconception, or what people don't understand, is that if you die in test state, I think it's all like, hey, my partner will get everything. Well, no, no, no, it doesn't work that way. And the Administration Act comes into play in that respect. What happens is the Administration Act wants to be able to vest or to give your property to somebody. So partners died and testate. If there's a spouse remaining, that spouse will receive anything that is jointly owned, will pass to them by survivorship, they'll receive all the chattels that they have together. But what happens then with the cash assets is a little bit different. So the first $155,000 goes to the spouse. Then whatever's left is two-thirds, one-third division, two-thirds to the children and one-third to the spouse.
Speaker 1:Aha, so he might end up with more money.
Speaker 2:Well yeah, we just don't know. It depends what the assets of the estate are, or kids might end up with nothing if they only had $150,000 in their account for it, that's right, that's exactly right.
Speaker 2:So, it depends on what you know, but if people have significant life insurance policies, you know you could end up with your spouse having sort of less cash than the children, could end up with your spouse having sort of less cash than the children. And if the children are minors, that money must be held in trust for them until they attain the age of 18. And it's just not an easy thing to manage because the administrator of the estate of the person who's died because this is an intestacy they're then responsible for ensuring those funds are held for those minor children.
Speaker 1:Interesting. But what happens? Let's say, if a couple separated, they've got their own wills now but they've got children right and something happens to one of them, but in his will or her will they've put that they want this and this happen to the kids Does. Then the other parent has to go through court to fight for the children Because, like if the kids were 50-50 before, and she wants her 50% of the care to be left to her family, for instance, but he doesn't like her family. What's going to happen there?
Speaker 2:Yeah, the will doesn't control that. Oh, okay, yeah, so you can put into your will a guardian it's a testamentary guardian but that doesn't mean custody, uh-huh. It depends on the circumstances. If there's, for example, a protection order in place and different things like that, that'll have a completely different effect. But the Care of Children Act comes into play then. And if there is a disagreement between family members say there's no parent if there's a disagreement between family members say there's no parent, if there's a disagreement between family members as to who will have care of those children, then there might be involvement of the family court and the care of children act comes into play. That's how it looked at there. But you know, if you're a parent and your partner dies, even if you're separated, they're your children, you have your children.
Speaker 1:Yeah, I had a really sad story. I wonder if I shared that in the last episode or not, but it was so sad. So this couple, I dealt with them many, many years ago and they came back to me and they want to buy another property and we started to chat and you know how I find out, you know how many kids, how many adults, and I knew the kids were already well grown up and they're like oh, we've got a five-year-old and a six-year-old in our care and I was like what, where did you get that from? He goes. Oh, a very sad story.
Speaker 1:So his brother was married, the lady had one child and then, when she was pregnant with the other child a year later, was the other child. A year later she found out that she had cancer or something. No, no, no, she died. She died at childbirth, something like that. So she died at childbirth, leaving behind a one-year-old and a newborn, wow. And then the father took care of the kids and then he got cancer and then he died a year later.
Speaker 1:So these clients of mine, they were left looking after a two-year-old and a one-year-old because they were suddenly, you know, the guardians for these kids and they had no other family to go to. And now this couple they're in their 50s, they've already done their parenting, you know, and they were looking forward to their elegant retirement. But here they were looking after these kids and it was very sad and, yeah, again, like this family didn't have any life insurance, didn't have any wills, and there was a huge battle for them as well to make sure that they can look after these kiddos. But yeah, they've got them in their full care now, I know.
Speaker 2:And when I do a will for a young couple I always say, look, have you got guardians? And I know. And when I do a will for a young couple, I always say, look, have you got guardians? And do you know that that is often the one thing that prevents people from making a will young couple who will look after the children if they've both died. And it shouldn't be Make a will but don't specify a guardian. But still make a will. But you can specify a guardian. It's a testamentary guardian and if you have both died then you can make your will that says, if we've both died, these are the people we would like to be guardians of our children and just say and also have custody. And it might not go that way, but if it gets to the family court and they see that they will look to your will, that's a very strong indication of who you favoured for that role. You can only do so much that they will look to your will. That's a very strong indication of who you favoured for that role.
Speaker 2:Yeah, you know you can only do so much. Not everyone's going to step up Zebuniso. You know raising another family at a certain age becomes very difficult. Yeah, but I think that you need to review your will at least every three to five years.
Speaker 1:That was going to be my next question. How often should you be reviewing the will?
Speaker 2:Absolutely, because when you're young, you put mum and dad as your executors, potentially as your backup. I'm a plan A, a plan B and a plan C person. So if you've got a will and you're both young and mum and dad are your executors sorry, you're each other's executors in the first space, and then mum and dad next. Then, as time passes by, you're going to think to yourself oh, let's have a look at my will, have a look at my will, mum and dad. Mum might have died, dad might be old now and he's not going to be a really good backup executor. Don't leave it till then. Have a look Every three to five years or any major change in your life.
Speaker 2:When you buy or sell a house, when you have another child, just check it out and make sure it stays up to date and current, because it's not unusual for us to have a will and we go oh great, there's a will here and then find the executor's died or find that the executor doesn't want to act. Because it's not a compulsory job, you can choose not to take the role. Oh, wow, yeah, and that's not uncommon, yeah, especially if family dynamics have become messy, especially if the executors become too old or they're not in the country anymore. Yeah, people travel and they leave New Zealand, and you've got one who's not there anymore as your executor. Wow.
Speaker 1:Yeah, yeah, that's mind-blowing. So I think the message today is loud and clear yeah, if you don't have a will go get it sorted. If you thought you have a will go get it reviewed, because the chances are, you know, if you got married and things like that, it may not be appropriate anymore. Or if you know you've nominated people as executors, that's right. Review that, yeah.
Speaker 2:And also bear in mind that if you have a situation where that's not a straightforward will for example, you might have a child with special needs, something like that you really need to have the advice around that. There's different ways we can help in the will, draft it to protect that child and provide a long-term benefit for them. But you're not necessarily going to get that in a pro forma document. You need the advice.
Speaker 1:Yeah, and I think that pretty much touches on what we're facing as well. When people go in online, tick boxes and they're like, oh yeah, I've got my mortgage or I've refixed my rate, but when they don't get the advice, is it the right advice for them? And same for the wills. And it's more important for the wills because buying something online and ticking the boxes may not be the right thing and may actually create, as you say, more mess than intended.
Speaker 2:And it's such an important document and it's there for as long as it's relevant for you. But you must check it. You must have a look at it every now and then and say is this still right? For me, it's the same with enduring powers of attorney. These are documents that you have during your lifetime. They stop on death. Your will will be the governing document, but these documents provide the ability for someone to step in and act for you in the event that you can't act for yourself. But they aren't one and done. If you do one 20 years before it's done, it's not going to be any help if the people have died or they no longer wish to act. So you need to have a look at those as well. They're just equally as important and we try and get people to look at both of them at the same time will and enduring powers of attorney because they sort of are complementary in that they make sense to do together.
Speaker 1:I think I need to bring you back and we're going to unpack enduring power of attorneys, the difference between normal power of attorneys, limited power of attorneys and family trusts. I think that's a big one, because a lot of people ask me about family trusts and stuff like that. But back to wills for a second. Did you know there is an insurance provider that sees wills as an important element. So if you've got an insurance with this particular company after six months or after 12 months, if something significant happened in your life, like if you bought a house or had a baby, they will actually pay for you to go and get your will sorted.
Speaker 2:Yeah, that's amazing and I definitely encourage people to take that up if they're getting the insurances. Why not?
Speaker 1:Yeah.
Speaker 2:I mean, as I said, $350 is our starting point for a will, but if your will is complicated, it's completed on a time and attendance basis. $1,000 is a very, very good offer.
Speaker 1:Yeah, so for those that are listening, if you don't have an insurance, come get insurance first and then we can go get your will sorted at the same time. Yeah, something like that. So, tracey, thank you so much for coming in today. I feel like you and I can just chat forever, but we're going to keep this one nice and short and then I'm going to bring you back and we're going to talk about enduring power of attorneys and family trusts.
Speaker 2:Okay, you might need two sessions for that one, just saying.
Speaker 1:Awesome. Thank you so much. You're welcome. See you Bye.
