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A WILL IN TIME (SAVES TROUBLE AND EXPENSE)

Tom Allen
Tom Allen

Article Published in the Western Leader: 2 October 2007
Written by Tom Allen, Registered Legal Executive

Father of four young children deceased suddenly.  The father had always been conscious about the need to look after his widow and the four young children.  He had taken out a life insurance policy over his life for a substantial sum of money.  However, after the father passed away, what should have been a simple process became complicated because the father:

(i)         failed to make out a will; and

(ii)        failed to name his widow or children as beneficiaries under the life insurance policy.
 

The father had named himself as the beneficiary under the life insurance policy and as a result any payment under the insurance policy was payable to the father’s estate.

Neither the widow nor the four young children could use the money for their everyday living until a grant of Letters of Administration was obtained through the High Court appointing the widow as administrator to the father’s estate.  Invariably there are delays associated with obtaining such a grant.  Financial problems added to the sorrow that the young family had to bear after the loss of their father.

In a case like this where there is no will and moneys are held in the deceased estate, the Administration Act 1969 applies and the father’s estate would be distributed between the widow who would receive his personal chattels and the fixed sum of $121,500.00 plus interest plus a one-third share of the remainder of the father’s estate. The balance being two-thirds of the remainder of the estate goes to the four young children.  The children will only be able to receive their share once they attain the age of 20 years or they marry or enter into a civil union under the age of 20 years.

In this case, as the children were of very young age, their mother, the widow, was required to hold two-thirds of the father’s estate in trust for the children and to transfer the child’s share to the respective child at the appropriate time.  The mother in fact had to hold the moneys in trust over a period of some 15 years.

Whilst the father was thoughtful enough and took out a life insurance policy to look after his young family, the complications, trouble and expense that his young family was put to as a result of not having a will and not naming his widow as the beneficiary to his life insurance policy, is definitely not what the father would have contemplated or desired.

Alternatively the father should have set up a family trust with his wife as joint trustee, and his wife and young children as beneficiaries.  The family trust could have been named as beneficiary to the life insurance policy.

A little more effort from the father in taking proper legal advice could have made all the difference to his young family.  If you have any queries please contact Tom Allen, telephone 837-0550, email tallen@corbanrevell.co.nz.