Divvying up family funds: What’s fair?
Jane Phare 1976 in 2019. Since then that report commission has effectively been on the back could not proburner after the Government asked pose a single rethe commission to examine the form recommeninheritance laws, so both laws can dation as it normbe considered concurrently. ally tried to do.
One of the most divisive inheritDr Rhonda ance issues is whether or not an Powell, a Christadult child should be able to contest church barrister a parent’s will if he or she has been specialising in trusts, cut out. The issue drew opposing estates and relationship views during the consultation proproperty, strongly discess, leading the commission to agrees with the under 25 cut-off. suggest two very different options. She’s firmly in favour of “forced
One is that only children under heirship” — children’s right to the age of 25, or those who are inherit from their parents — as disabled, would be eligible to claim. opposed to testamentary freedom, The other is that children and which is law in Britain and New grandchildren of all ages should be Zealand and recognises an individeligible to claim if the deceased has ual’s right to dispose of their assets unjustly failed to provide for them however they wish. if they are in financial need; or has She argues that it is people in failed to recognise the child or their late 20s and 30s who are likely grandchild. to be struggling financially — pos
John-Luke Day, a principal legal sibly paying off debt from their and policy adviser for the comeducation, trying to buy a house, or mission, said it was important for supporting young children. the law to reflect society’s attitudes “That’s the age where you need and values, but opinions were so money. It seems so arbitrary to cut strongly divided on the issue the it at 25.”
Powell would like to see more “moral recognition” of the parent/child relationship. Installing an age cutoff made it difficult for a child who had been inexplicably cut out of a will to contest the decision.
“And that’s just so common. People make really outrageous decisions,” she said. “Someone takes umbrage about something and there’s a falling out over what could be a relatively minor thing. But it becomes a big sticking point in the family relationship.”
However, it’s likely to be a while before the over-25s need worry. Indications are that both the new inheritance act and the proposed Relationship Property Act are some time away from becoming law. The Herald asked Justice Minister Kris Faafoi for a timeline for the two reviews to become law. A spokesperson for his office said that given the scale of the Law Commission’s reviews — 140 recommendations for both the inheritance and relationship property acts — it would be “a significant undertaking and likely take a period of years”.
Day said trying to reconcile the competing interests of parties in the case of a surviving partner and children from a previous relationship, or relationships, was another “tricky” question.
The commission has recommended that if a person dies without a will, the estate will go to the surviving partner if there are children from that relationship.
But if there are also children from a previous relationship, the estate will be divided — half to the surviving spouse, and half divided between children from previous relationships.
Another issue is where property does not form part of the estate because the existing statutes do not give the court power to access that property. Apart from assets in trusts, one of the most common examples is a joint tenancy property. The co-ownership means that when one partner dies, their share in the property automatically transfers to the surviving partner, known as “the survivorship rule”.
That leaves children from a former relationship unable to access a share of the family home.
The commission has recommended that courts be given greater powers to access property that falls outside the estate in those cases.
Other recommendations include:
● Introducing effective dispute resolution both in and out of court, including measures to encourage the disclosure of relevant information;
● Continuing surviving partners’ rights to a division of relationship property when their partner dies but revising the rules so that instead of forfeiting the gifts under the will, the value of these gifts are taken into account in a “top-up” approach;
● Revising the rules for how estates should be distributed when a person dies without a valid will.
● Currently the surviving partner receives a fixed sum of $155,000 and a proportion of the estate, often leaving little else for family members. The commission recommended the estate should be divided in fixed proportions rather than set amounts;
● Widening the definition of children eligible for family provision awards, including step-children who have been cared or provided for by the deceased, and those in whāngai relationships.