What’s at stake when it comes to a battle of the wills?
Many people do not realise that there are often very important choices to be made upon the death of a spouse or partner in relation to their inheritance under any will compared to making a claim under the Property (Relationships) Act.
In a recent example a couple who had been together for 15 years each had adult children from their previous relationships. When the husband died, his Will left his surviving wife a life interest in the family home (which was registered in his sole name) and made provision for her to receive income from various assets during her lifetime.
The wife had always thought the family home, while in her husband’s name only, was relationship property and would be shared equally between them. She had hoped to be able to leave a share to her children in the event of her own death.
The terms of the Will meant that the home would remain as part of the deceased husband’s estate and upon the wife’s death, only her husband’s children would benefit, not hers.
Under the Property (Relationships) Act, as the surviving partner, she had a choice to make. She could accept her inheritance and receive the life interest and income provided under her late husband’s Will, or she could make a claim under the act for a division of relationship property (usually for half of all relationship property).
If she chose the option of making a claim (and filed her choice with the court), she would lose any entitlements under the Will, whether she eventually proceeded with the claim or not. The choice should therefore not be made lightly as there will be an investment needed in legal assistance and the potential downside if the claim is not proceeded with or is not successful can be huge.
The likely effect of a successful relationship property claim, in this case, would be that the balance of the Estate available to the deceased’s children would be substantially reduced. Whether to make a claim or not needs to be carefully considered and finely balanced against all other options.
Consideration should be given to both the financial implications and to the likely impact on family relationships. How will making a claim impact on the family dynamics? Is the time and trouble to obtain a bigger ‘‘share’’ offset by the negative effect on the family and how various family will react?
The choice that needs to be made under the Act must be made within 6 months of the Grant of Probate or Administration of the estate (or in the case of an estate valued at less than $15,000, within 6 months of the date of death). If no formal choice is made, then the surviving partner is deemed to accept what they were provided under the Will.
The possible contesting of an estate and relationship property matters are commonly intertwined and expert legal advice should be sought by a surviving partner as soon as practicable.
‘‘Is the time and trouble to obtain a bigger ‘‘share’’ offset by the negative effect on the family?’’
Column courtesy of RAINEY COLLINS LAWYERS phone 0800 733 484 www.raineycollins.co.nz
If you have a legal inquiry you would like discussed in this column please email Alan on aknowsley@raineycollins.co.nz