KEY POINTS:
Grant Brenton, general manager of personal client services at Guardian Trust, explains the importance of wills and enduring powers of attorney.
Why do I need to have a will?
An up-to-date will is the cornerstone of a good estate plan, aimed at minimising emotional and financial hardship for people left behind.
Everyone over 18 should have one, because it is the only legal document allowing you to: give instructions for the orderly distribution of assets after you die; identify who will benefit from your estate and assets you want them to receive; appoint an executor and trustee to carry out your instructions; appoint a guardian for your children; and specify funeral arrangements.
You can also set up a trust to manage the ongoing needs of beneficiaries.
What if I have few or no assets? What is the role of an executor?
You should have a will regardless - you may want items of sentimental value left to specific people. Likewise, you may have plans about how you want your funeral conducted, and preference for burial or cremation.
It's important to choose the right executor because they will take responsibility for protecting and managing your assets, and ensuring your wishes are carried out. They will also be tasked with verifying and paying liabilities, liaising with family and beneficiaries sympathetically and impartially, and overcoming any legal difficulties.
When should I review my will? Who should I appoint as my executor and trustee?
Your will should be updated every three years, or when there are major changes in circumstances. These could include having children or grandchildren, the death of a loved one, the start or end of a relationship, acquisition or disposal of assets, or establishing a family trust.
You can appoint anyone you wish, as long as they are 18 or over and are of sound mind. They should be of sound financial standing and preferably be resident in New Zealand, so the courts will accept they can carry out their duties. Appointing a relative or friend may be problematic if they lack the expertise or the time needed to administer the estate.
What can a professional executor do that someoneI already know and trust cannot?
The executorship process can be time-intensive and complicated. A professional executor has the experience to avoid pitfalls and delays, such as legal or administrative obstacles which could overwhelm the lay-person.
Professional executors also offer permanence - they won't die, give up or go away. Establishing and managing your will in this way ensures that your wishes are recorded and carried out expertly, legally and neutrally.
Are there any benefits to appointing more than one executor?
People often feel more comfortable if they appoint two co-executors but this can hinder the administration process. The legal requirement is that decisions must be unanimous and both executors must be involved in every aspect of the estate administration, including dual signing of documents. One qualified, and impartial executor is sufficient.
What is an enduring power of attorney (EPA) and why is it so important?
As with a will, anyone over 18 should have an EPA, which is a legal document appointing an attorney (an individual or organisation) to act on your behalf. There are two types - one to cover the ongoing management of your property or assets, and one relating to your personal care and welfare.
Only a private individual can be appointed as an attorney for your personal care and welfare, and it should be someone you trust. An EPA operates while you are alive, and will provide for unforeseen events, such as an accident, illness or an unplanned trip away that can cause problems for you and your dependents.
An EPA differs from a standard power of attorney in that it is still legally binding even if you lose mental capacity. It can also be used temporarily - for instance, if you are going overseas and need your investments or property managed until you return.
You can specify when the EPA takes effect and under what circumstances, and you can cancel or change it whenever you wish. It can be set up at any time - a good time is when you complete or review your will, thereby providing for maximum and ongoing control over your assets and welfare.
