The New Zealand Law Commission report on Succession states
1. This Review of Succession Law examines the body of rules that governs how a person’s property is distributed when they die. The review requires consideration of the Property (Relationships) Act 1976 (PRA), the Family Protection Act 1955 (FPA) and the Law Reform (Testamentary Promises) Act 1949 (TPA). It also includes the rules governing the distribution of intestate estates under the Administration Act 1969. The succession to whenua Māori under Te Ture Whenua Maori Act 1993 (TTWMA) does not form part of this review.
2. This Report begins with consideration of what it means to develop good succession law. We conclude that the current law governing entitlements to and claims against estates is old, out of date and inaccessible. Reform is required to achieve simple and clear law. Reform is also required to reflect te ao Māori perspectives in succession.
3. Our view of te Tiriti o Waitangi | Treaty of Waitangi requires us to focus on how kāwanatanga might be exercised in a responsible manner, including how the exercise of tino rangatiratanga might be facilitated in specific circumstances. In the context of succession, we conclude that responsible kāwanatanga requires us to facilitate tino rangatiratanga through recognising tikanga Māori where that is necessary to enable Māori to live according to tikanga, to weave new law that reflects tikanga Māori and other values shared by New Zealanders and finally to recognise the limits of kāwanatanga.
4. This approach requires tikanga Māori to be considered in both defining and responding to a policy “problem”. In some areas, this has been difficult to implement, given the pervasive nature of aspects of state law. We conclude that it is the tikanga of the relevant whānau that will be most important.
5. We also conclude that the exercise of responsible kāwanatanga requires that tikanga Māori be able to continue to govern succession to taonga and the appropriate role of state law in relation to taonga should be limited to facilitating the resolution of disputes in accordance with tikanga Māori. We discuss these matters further in Chapters 3, 12 and 13.
6. We identify several criteria that good succession law should satisfy. Good succession law should:
(a) be simple, accessible and reflect New Zealanders’ reasonable expectations;
(b) be consistent with fundamental human rights and international obligations;
(c) balance mana and property rights (including testamentary freedom) with obligations to family and whānau in order to promote whanaungatanga and other positive outcomes for families, whānau and wider society; and
(d) facilitate efficient estate administration and dispute resolution.
7. We recommend that a new statute should be enacted as the principal source of law in place of Part 8 of the PRA, the FPA and the TPA. It should be titled the Inheritance (Claims Against Estates) Act (the new Act). The intestacy regime should be revised in line with our recommendations in Chapter 7 but remain in the Administration Act. There is merit in considering whether the new Act and other statutes relevant to testate and intestate succession could be consolidated into one statute.
SUCCESSION AND TAONGA
8. Taonga are knowledge and identity markers for Māori. They may be described in various ways including that they are highly prized and valuable objects, resources, techniques, phenomena or ideas. Taonga remind the living of their obligations to the living and future generations. Taonga have associated intangible attributes such as mana, tapu, kōrero mauri and utu. Where a taonga strongly reflects these attributes, it may have its own mauri which must be respected. For these sorts of taonga, the holder of the taonga exercises a kaitiaki role on behalf of the group. Where a taonga has fewer of the attributes, individuals may exert more influence over the taonga.
9. We conclude that taonga should be treated in a way that respects the tikanga relating to taonga grounded in mātauranga Māori. State law should not determine the substantive question of succession to taonga. The Wills Act 2007, the Administration Act and the new Act should ensure that succession to taonga is determined by the tikanga of the relevant whānau or hapū. In our view, this approach actively protects “te tino rangatiratanga o … o ratou taonga katoa” and is the best way for the Crown to responsibly exercise its kāwanatanga to that effect.
10. To exclude taonga from succession under state law, taonga must be defined. We prefer a definition that references the tikanga of the relevant whānau or hapū. This reflects our view that what constitutes a taonga should be determined by the tikanga of the relevant whānau or hapū. It is a factual inquiry that must be undertaken considering both the relevant tikanga and the circumstances of the case.
RELATIONSHIP PROPERTY ENTITLEMENTS
11. Part 8 of the PRA provides that, when a partner to a qualifying relationship dies, the surviving partner is entitled to a division of the couple’s relationship property instead of whatever provision is available for them under the deceased’s will or in an intestacy. The rules that apply to the division of relationship property when couples separate apply, with some modifications, to the division of relationship property on death. The policy basis for Part 8 of the PRA is that a surviving partner should be no worse off on the death of their partner than if the couple had separated.
12. In tikanga Māori, marriage was traditionally a relationship equally as important for the whānau and hapū as the spouses because it provided links between different whakapapa lines and gave each new members. However, while marriage was highly valued, it was not given absolute precedence over other relationships because of the importance of whakapapa. The operation of whanaungatanga, aroha and manaakitanga mean whānau take care of their members, including undoubtedly a bereaved partner. This is likely to manifest itself in care not only for the partner but for any children of the relationship and likely involve whānau of both partners.
13. We conclude that the new Act should continue a surviving partner’s entitlement to a division of relationship property. We are satisfied with the policy basis for this approach and consider it aligns with the reasonable expectations of New Zealanders.
14. A relationship property division under the new Act should occur differently to division under the current rules of Part 8 of the PRA:
(a) The option A/option B process through which a partner formally elects a division of relationship property should not be continued in the new Act. Instead, a partner should have a right to apply to the court for a relationship property division within 12 months of the grant of administration.
(b) Whereas the PRA revokes any gift to a surviving partner under the deceased’s will when they elect a relationship property division, we recommend the partner should generally still receive the gifts. Whatever property is then needed to “top-up” the surviving partner’s entitlement to the full extent of their relationship property interest should be awarded from the estate. We consider this approach is likely to be more consistent with the deceased’s testamentary intentions and easier for the personal representatives to administer.
(c) Key changes we recommended in the PRA review should be brought into the new Act including changes concerned with the classification of relationship property and the relationships that should qualify for relationship property division.
FAMILY PROVISION CLAIMS
15. Under the FPA, a family member of the deceased can challenge the provision left to them under the deceased’s will or in an intestacy on the grounds it is inadequate for their “proper maintenance and support”. The courts have applied the statute by asking whether the deceased has breached the “moral duty” they owed to make proper provision. The courts have held that adequate support, as a standalone concept, can require financial provision from an estate as recognition of belonging to the family, even if the claimant has no financial need.
16. In tikanga, whānau occupies a central place. Rights and obligations are sourced from whakapapa, whanaungatanga, manaakitanga and aroha. These obligations can include financial and moral support as well as an obligation to take responsibility for each other’s actions. The whānau is also crucial for discussing and settling familial issues relating to child rearing and succession. One of the primary obligations of the whānau as a whole is to the welfare of tamariki and mokopuna.
17. The practice of whāngai, where a child is raised by someone other than their birth parents, usually another relative, is firmly rooted in whanaungatanga. The rights of whāngai to succeed according to tikanga varies amongst whānau, hapū and iwi.
18. We conclude the FPA requires reform. The objectives of the statute are not sufficiently clear to satisfy modern legislative drafting standards. Instead, the law relies heavily on judicial discretion to assess whether there has been a breach of “moral duty”. It is unsatisfactory to have a legal test expressed in these terms. In many cases, reasonable minds will differ on the “moral” way of distributing an estate among family. Feedback from submitters showed strongly divergent views on when it should be appropriate to disrupt a deceased’s testamentary intentions to grant further provision to family members. Aotearoa New Zealand’s increasing cultural diversity and the need to enable te ao Māori perspectives no doubt add to the differences of opinion. In addition, the courts have been reluctant to accept arguments that tikanga Māori should determine the scope of a deceased’s moral duty.
19. We recommend the repeal of the FPA. In its place, the new Act should allow certain family members of the deceased to apply to the court for a family provision award.
Family provision awards for partners
20. A deceased’s surviving partner from a qualifying relationship should be eligible to claim family provision. The court should make an award where the partner has insufficient resources to maintain a reasonable, independent standard of living. The court should take into account the provision available from the deceased on the deceased’s death. The court should have regard to the economic disadvantages arising from the relationship for the surviving partner. The court should have discretion to determine the amount of a family provision award to a surviving partner, having regard to a list of factors expressed in the new Act, including the tikanga of the relevant whānau.
Family provision awards for children
21. In respect of the rights of the deceased’s children and grandchildren to claim family provision, we are unable to present a single recommendation for reform. Through our research and consultation, it is evident that opinions in Aotearoa New Zealand are divided on the question of whether adult children should be eligible to seek further provision from a parent’s estate. Instead, we put forward two options for reform for the Government to consider.
22. Under Option One, the deceased’s children and grandchildren of all ages should be eligible to claim family provision. A court should grant an award when the deceased has unjustly failed to:
(a) provide for the child and grandchild who is in financial need; or
(b) recognise the child or grandchild.
23. Under Option Two, only the deceased’s children under 25 years of age or those who are disabled would be eligible to claim. For a child under 25, a court should make an award when, taking into account whatever provision is available to the child from the deceased on the deceased’s death, the child does not have sufficient resources to enable them to be maintained to a reasonable standard and, so far as is practical, educated and assisted towards attainment of economic independence. For children who are disabled, the disability must have reduced the person’s independent function to the extent that they are seriously limited in the extent to which they can earn a livelihood. A court should make an award when, taking into account whatever provision is available to the child from the deceased on the deceased’s death, the child does not have sufficient resources to enable them to maintain a reasonable standard of living.
24. For both options, the court should have discretion to determine the amount of a family provision award, having regard to a list of factors expressed in the new Act, including the tikanga of the relevant whānau.
25. For both options, we recommend a child of the deceased should be defined to include an “accepted child” and whāngai. An accepted child would be a child for whom the deceased had assumed, in an enduring way, the responsibilities of a parent. The extent to which a whāngai should be entitled to family provision should be informed by the tikanga of the relevant whānau.
CONTRIBUTION CLAIMS
26. Under the current law, a person who provides benefits to someone who later dies may have claims they can bring against the deceased’s estate in respect of their contributions. For example, they may claim an award under the TPA, breach of contract, a constructive trust over the estate, estoppel, unjust enrichment or quantum meruit.
27. In tikanga, utu, take-utu-ea, whanaungatanga and whakapapa and mana may be relevant to contributions to a deceased. Utu involves the idea of reciprocity, which provides for the ongoing maintenance of relationships. Utu sits within the take-utu-ea framework, which is a framework for assessing breaches of tikanga and what the appropriate utu is to reach a state of ea, or resolution. Whanaungatanga and whakapapa concern the nature of the relationship between the contributor and the deceased. From an ao Māori perspective the appropriate response to contributions is relative to the increase in mana caused by the contributions and not the contributions themselves.
28. The main problem with the current law is its complexity and uncertainty. The multiple claims arising from similar factual situations can lengthen litigation and increase costs. Predicting outcomes and awards can be difficult, which can discourage parties from settling claims out of court.
29. For these reasons, we proposed in the Issues Paper to codify the current law through a single statutory cause of action that would apply in respect of contributions to a deceased or their estate. We have not, however, carried through the proposal as a recommendation. Feedback from consultation, while broadly supportive of the intention behind the proposal, questioned the extent to which the law could be codified and also raised the risk of unintended consequences.
30. We therefore conclude the new Act should restate a revised testamentary promise cause of action. The cause of action should respond in much the same way as the TPA to hold a deceased to their promise to make testamentary provision to someone from whom they have received substantial work or services. Other causes of action in common law and equity would continue to operate outside the new Act.
INTESTACY ENTITLEMENTS
31. Intestacy occurs when the whole or part of the deceased’s estate is not of disposed of by will. Dying intestate is relatively common in Aotearoa New Zealand. It is estimated that around half of those aged 18 or over do not have a will. Rates of will-making are lower in Māori, Pacific peoples and Asian communities.
32. Section 77 of the Administration Act sets out the rules for distributing intestate estates consisting of all property other than whenua Māori. Broadly, the rules prioritise the intestate deceased’s partner and children, followed by parents, siblings, grandparents, aunts and uncles (by blood) and cousins. When none of the specified family members are alive to succeed, the Crown will take the estate as bona vacantia (ownerless goods). Intestate succession to whenua Māori is governed by TTWMA.
33. The intestacy provisions in the Administration Act are old and have not been recently updated. We are concerned the distribution of intestate estates provided for under section 77 does not:
(a) reflect contemporary public attitudes and expectations;
(b) respond to the growing number of blended families;
(c) align with a surviving partner’s relationship property entitlements; and
(d) conform to modern legislative drafting standards.
34. Additionally, the intestacy regime does not reflect tikanga Māori. For example, certain relationships like whāngai are not recognised.
35. We conclude that the intestacy regime should be reformed. Revised provisions governing the distribution of intestate estates should be continued in the Administration Act (new intestacy provisions). The objective of the new intestacy provisions should be to reflect what most people who die intestate would do with their estate had they made a will. The Crown should facilitate tino rangatiratanga in relation to the intestacy regime, principally through excluding taonga from the state law rules of intestate succession, making provision for tikanga to determine when people in whāngai relationships should succeed in an intestacy, and facilitating tikanga-based resolution processes for whānau wishing to agree to a different distribution of the estate than that provided in state law.
36. Where the deceased intestate (the intestate) is survived by a partner from a qualifying relationship, we recommend that the partner should continue to succeed. We recommend, however, that the prescribed amount to which the partner is entitled when there are descendants or parents of the intestate should be repealed. Instead, a surviving partner’s entitlement should be based in all cases as a proportion of the estate regardless of the size of the estate. In addition, the surviving partner should take the intestate’s “family chattels”, which should have the same definition as “family chattels” under the new Relationship Property Act we recommended in the PRA review.
37. Where the intestate is survived by their partner but no children or descendants, the partner should continue to take the entire estate. Where, however, the intestate is survived by their partner and children, we recommend the introduction of new rules to respond to the growing numbers of blended families. The rules should provide that, where the intestate’s children are from the relationship with their surviving partner, the partner should take the entire estate. Where the intestate has one or more children from another relationship, the partner should take the family chattels and 50 per cent of the remaining estate. The intestate’s children should share evenly in the remaining 50 per cent. The rationale for this approach is that, where the partner is also the parent of the children, it is reasonable to expect they will pass the intestate’s wealth to the children by providing for them during their life and/or on their death. It also avoids fragmenting the estate in a way that may negatively affect the surviving partner. If the surviving partner is not the parent of the intestate’s children, it is less likely that the partner would act as a conduit for the intestate’s children. There is more reason to ensure that the children receive entitlements from the estate at the time of the intestate’s death.
38. Where the deceased is survived by their children but no surviving partner, we recommend the rule continue that the children share evenly in the whole estate. Where a child died before the intestate, we recommend that that child’s share is distributed evenly between their own children (the deceased’s grandchildren). This is known as per stirpes/by family distribution and is the current law. We consider this should continue to apply to all situations where a descendant’s parent has predeceased the intestate.
39. The children who are eligible to succeed in an intestacy should include the individuals considered by law to be the intestate’s children. Stepchildren and other classes of children for whom the intestate may have accepted parental responsibilities should not be included. Although the intestate may have wished to provide for these accepted children, extending the definition of child or descendant would overcomplicate the law, create practical uncertainties and establish an unreasonable responsibility for administrators.
40. People in whāngai relationships should be eligible to succeed in an intestacy when this accords with the tikanga of the relevant whānau. The share of the estate that the individual will receive should be determined according to the default intestacy rules.
41. Where the intestate leaves no partner nor descendants, we recommend that the estate is distributed to the intestate’s parents. If there are no surviving parents, the siblings of the intestate should share the estate, passing to the siblings’ descendants according to per stirpes/by family distribution. If there are no surviving siblings or their descendants, the intestate’s grandparents or their descendants should share the estate.
42. Where no relative eligible to succeed in an intestacy survives the intestate, the Crown should continue to take the estate as bona vacantia. It is rare for estates to vest in the Crown as bona vacantia. The Crown should continue to have discretion to distribute the estate to certain parties upon application. We recommend that this includes other organisations, groups or people. This should enable hapū and iwi, charities or other community groups to apply to The Treasury to receive that money.
AWARDS, PRIORITIES AND ANTI-AVOIDANCE
Property claimable
43. Under the current law, a surviving partner’s relationship property entitlements will be met from the relationship property of the estate. Awards the court makes under the FPA and TPA are sourced rateably across the estate. However, under the PRA, FPA and TPA, the court has discretion to exonerate any part of the estate from an award.
44. We recommend that these rules should continue with some modification. As recommended in Chapter 4, a relationship property award to a surviving partner should “top-up” the gifts they receive under a will to the full extent of the surviving partner’s relationship property interest. This top-up amount should be sourced from the relationship property of the estate unless the court orders otherwise.
Priorities
45. Under the current law, awards under the PRA are made from the net estate after creditors’ claims are satisfied, subject to a partner’s protected interest in the family home, which takes priority over the deceased’s unsecured creditors. Similarly, awards under the FPA are made from the net estate. In contrast, awards under the TPA are made from the gross estate. Those with successful claims against an estate under other statutes, common law and equity will be regarded as unsecured creditors of the estate. As such, they will take priority over awards under the PRA and FPA.
46. We recommend the general priority given to creditors should continue. In addition, we recommend that awards under the testamentary promise cause of action under the new Act should be met from the net estate.
47. Awards under the PRA take priority over FPA claims and TPA awards. The FPA and TPA do not address which awards are to take priority over the other. The courts have taken the view, however, that neither Act takes priority, instead resolving the question on a case-by-case basis. We recommend this order of priority should continue under the new Act.
Anti-avoidance
48. The court’s power to make awards under the FPA and TPA only applies to the property of the estate. Under the PRA, the court has powers to make relationship property orders by accessing trust property in some circumstances and recovering property disposed of to defeat a partner’s rights.
49. There are, however, several ways in which the property a person owned during their life will not form part of their estate when they die. For instance, the property the deceased co-owned as joint tenant will accrue to the remaining joint tenant(s) by survivorship on the deceased’s death. The deceased may have disposed of property before their death, such as transferring property on trust, which had they not, would have remained in their estate on their death. Because the court’s powers are generally limited to the property of the estate, awards to claimants under the PRA, FPA and TPA may be frustrated by property falling outside the estate.
50. We conclude that having no or limited ability to recover property from outside the deceased’s estate undermines the rights that the new Act would purport to give claimants. Some form of anti-avoidance is therefore justified. We recommend the new Act contain provisions that would enable the court to recover property where the property:
(a) has been disposed of with intent to defeat an entitlement or claim under the new Act; or
(b) was a property interest the deceased owned as joint tenant that has accrued to the remaining joint tenant(s) by survivorship with the effect of defeating an entitlement or claim.
51. The first ground is based on long-standing provisions in other legislation, including the PRA, that allow for the recovery of property disposed of to defeat others’ rights. The second ground responds to the particular defeating effect caused by joint tenancies. Joint tenancies can be a mechanism for ensuring a designated person receives a benefit from the deceased in a similar way to if the deceased had made a gift in their will to that person. The caselaw shows that joint tenancies often defeat rights against a deceased’s estate. Joint tenancies were also raised as a particular issue in consultation.
52. When either ground applies, the court should have power to order that the recipient of the property:
(a) transfer the property or part of it to the estate; or
(b) pay reasonable compensation to the estate.
53. The court would only recover the property necessary to satisfy the award it wished to make under the new Act. The court should not order the recovery of property under the anti-avoidance provisions if a recipient of the property received it in good faith and provided valuable consideration. The court should also have discretion whether to order the recovery of property where the recipient received it in good faith, and it is unjust to order that the property be recovered.
USE AND OCCUPATION ORDERS
54. Individuals who relied on the deceased for housing or household items may suffer hardship when personal representatives are required to distribute the estate under the terms of the deceased’s will or the intestacy regime.
55. Under the PRA, the court has powers to grant a surviving partner occupation of the family home or other premises forming part of the relationship property. It may also vest a tenancy in one partner. The court has additional powers to grant a partner temporary use of furniture, household appliances and household effects.
56. We recommend that similar powers should exist under the new Act. A court should be able to grant an occupation order to a surviving partner or a principal caregiver of any minor or dependent child of the deceased. Where the deceased left any minor or dependent child, the new Act should contain a presumption in favour of granting a temporary occupation or tenancy order to the principal caregiver of the child for the benefit of that child. The order will allow the partner or children use of the home for a period as they transition to a life in which they are not dependent on the deceased’s estate for accommodation support. In exercising its powers, the court should consider the best interests of the deceased’s minor or dependent children as a primary consideration. This approach is consistent with the recommendations in the PRA review, the requirements of the United Nations Convention on the Rights of the Child and the tikanga relating to whanaungatanga, manaakitanga and aroha that requires the needs of tamariki are met.
57. While the home over which an occupation order is sought will often be part of the deceased’s estate, it is possible that in some instances it will not be. To strengthen the court’s powers to address surviving partners’ and minor and dependent children’s accommodation needs following the deceased’s death, we include recommendations for the court’s powers to extend to homes held as joint tenancies and homes held on trust.
58. We recommend the court should have the power to make furniture orders in favour of a surviving partner or a principal caregiver of any minor or dependent child of the deceased, either independently of or ancillary to any occupation or tenancy order. When making furniture orders, the court should consider the best interests of the child as a primary consideration.
59. When the court makes a use or occupation order, it is appropriate for the court to have discretion to order that the recipient of the order pay occupation rent. Occupation rent compensates those beneficiaries or claimants who have had their entitlements under the will or intestacy deferred and is an effective means of achieving balance between the different parties’ interests.
CONTRACTING OUT AND SETTLEMENT AGREEMENTS
60. Part 6 of the PRA provides that partners and those contemplating entering a relationship may enter an agreement that governs the division of their relationship property rather than the following the provisions of the Act (contracting out agreements). Partners may also enter an agreement to settle any differences that have arisen between them concerning property (settlement agreements). To enter a valid contracting out or settlement agreement, the PRA requires partners to follow procedural safeguards, requiring the agreement to be in writing and each partner to obtain independent legal advice from a lawyer who then witnesses and certifies the agreement. The court retains residual power to set aside agreements that would cause serious injustice.
61. In contrast, the courts have held that people cannot contract out of the FPA because it is paramount as a matter of state policy and potential claimants cannot surrender their rights through agreements. Nevertheless, we understand that parties routinely enter deeds of family arrangement to settle FPA claims.
62. Allowing people to contract out of entitlements and claims regarding an estate recognises the mana of the parties to the agreement. It is also important that the state law relating to contracting out and settlement agreements does not impose undue barriers for parties wishing to resolve matters pursuant to tikanga.
63. It is problematic, in our view, that the current law prevents parties from contracting out and settling matters under the FPA, but then allows it for matters under the PRA. This law undermines parties’ freedom to arrange their affairs in the manner they wish, promoting a certain outcome. The law can also create anomalies, such as allowing a partner to claim property through the FPA that is designated as the deceased partner’s separate property under a contracting out agreement. It is also unclear how the PRA’s provisions relating to contracting out apply when partners enter mutual wills arrangements.
64. In general, we favour an approach that enables adults to contract out of the entitlements and claims they may have in respect of someone’s estate. We believe this approach is consistent with the principles underpinning contemporary state law in Aotearoa New Zealand that adult parties generally have autonomy to arrange their property matters with each other in the way they would like.
65. Consequently, we recommend that partners or people contemplating entering a relationship should be able to enter contracting out agreements that deal with relationship property entitlements and family provision claims under the new Act. Recognising that these agreements will involve parties who do not approach one another as contracting parties at arm’s length, the parties should comply with the following procedural safeguards in order for the contracting out agreement to be valid:
(a) The agreement must be in writing.
(b) Each party to the agreement must have independent legal advice before signing the agreement.
(c) The signature of each party to the agreement must be witnessed by a lawyer.
(d) The lawyer who witnesses the signature must certify that, before the party signed, the lawyer explained to that party the effect and implications of the agreement.
66. We recommend the new Act should make no express provision for contracting out of adult children’s family provision claims. This will not preclude parties from entering agreements. Instead, parties will be able to enter agreements that do not otherwise comply with the procedural safeguards that we recommend should apply to contracting out agreements between partners. This approach will enable the court to consider the terms of any agreement between a parent and adult child when deciding whether to order family provision. There should, however, be no ability to contract out of family provision claims that may be brought by the deceased’s minor children.
67. We recommend that mutual wills arrangements should be subject to same procedural safeguards as contracting out agreements regarding claims against estates. That is, if the parties agree not to revoke their wills or deal with property inconsistently with them, that agreement should be recorded in writing, their signatures should be witnessed, and the lawyers advising each partner should certify the agreement. The advantage of this approach is that it ensures consistency with the contracting out requirements that partners should observe when making agreements about their entitlements and rights to each other’s estates. It will also resolve many of the arguments that currently arise about whether the parties have in fact entered a mutual wills arrangement.
68. When parties are in a dispute relating to entitlements or claims under the new Act or entitlements in an intestacy, we recommend that there should be the ability to settle the dispute by agreement without the need for court involvement. We do not recommend that the legislation should impose procedural safeguards in the same way as for contracting out agreements. Instead, it should be a matter of judgement for the parties, particularly the personal representatives, as to how the agreement should be entered, as it is under the current law. If, however, the dispute involves parties who are unascertained, minors or persons deemed by law to lack capacity, we recommend that the new Act should prescribe a process consistent with the alternative dispute resolution provisions of the Trusts Act 2019.
69. For both contracting out and settlement agreements under the new Act, we recommend that the court retains power to vary or set aside agreements that would cause serious injustice. A court should also be able to recover property that is the subject of a contracting out agreement or settlement agreement if it would be captured by the anti-avoidance provisions we recommend in Chapter 8.
JURISDICTION OF THE COURTS
70. Every application under the PRA must be heard by te Kōti Whānau | Family Court (the Family Court). Under the FPA and TPA, however, the Family Court and te Kōti Matua | High Court (the High Court) have concurrent first instance jurisdiction. Claims under the FPA and TPA that relate only to Māori freehold land must be made in te Kooti Whenua Māori | Māori Land Court (the Māori Land Court).
71. The High Court has jurisdiction to determine proceedings relating to testamentary matters and matters relating to the estate of deceased persons, including matters relating to intestate estates. The Māori Land Court has jurisdiction in relation to intestacy over Māori freehold land.
72. There is a fundamental question about which court or courts are the most appropriate to hear and determine claims under the new Act. We recommend that the Family Court and High Court should have concurrent jurisdiction to hear and determine all claims under the new Act. We favour the Family Court having first instance jurisdiction because of the family nature of succession matters. However, there may be situations where it is appropriate for the High Court to hear matters at first instance, such as where the proceedings are complex or contain matters for which the High Court currently holds exclusive jurisdiction. If proceedings relating to the same matter are before both Courts, the High Court should hear the claim. Both Courts should have the power to transfer proceedings to the High Court and the new Act should contain directions on when proceedings should be transferred to the High Court.
73. We recommend that the High Court and the Family Court have concurrent jurisdiction to hear and determine matters relating to eligibility in intestacies. The High Court should continue to hold exclusive jurisdiction for all other issues concerning the administration of an intestate estate and other related matters.
74. We recommend that the new Act should permit appeals as of right against interlocutory decisions that can have a significant impact on the parties’ rights and obligations. For all other interlocutory decisions, claimants should obtain leave to appeal from the Family Court or High Court. This recognises that, in exceptional cases, an interlocutory decision of a procedural nature may also affect parties’ substantive rights and liabilities, while also minimising risks that parties unduly protract proceedings with appeals.
75. For matters involving taonga, we recommend that the Family Court, High Court and Māori Land Court have concurrent jurisdiction. This recommendation is supported by our recommendations that, where needed, Family Court and High Court judges should continue to receive education on tikanga Māori and that the courts be able to appoint a person to inquire into and advise on matters of tikanga Māori. We also recommend that the Family Court and the High Court have power to transfer proceedings or a question in any proceedings to the Māori Land Court.
76. We received feedback supporting an extended role for the Māori Land Court in relation to granting probate and letters of administration. The Government should consider whether the Māori Land Court should have greater jurisdiction to grant probate and letters of administration regarding matters already before the Māori Land Court where the applications to grant probate and letters of administration are uncontested.
RESOLVING DISPUTES IN COURT
Limitation periods
77. Currently, parties generally have 12 months to commence proceedings under the PRA, FPA and TPA. We conclude that significant changes to the limitation periods for commencing proceedings are not required. We recommend that applications under the new Act should be made within 12 months of the grant of administration in Aotearoa New Zealand subject to the Court’s ability to extend that time provided that the application is made before final distribution of the estate. Final distribution should be deemed to have occurred where all estate assets are transferred to those beneficially entitled.
78. Where an estate can be lawfully distributed without a grant of administration, slightly different rules should apply. Generally, the applications should be made within 12 months of the date of death. Personal representatives should continue to be protected against personal liability from claimants under the new Act where they distribute any part of the estate in the circumstances prescribed in section 47 of the Administration Act. This protects personal representatives when they make distributions six months after the grant of administration or when they are distributed with the consent of that person.
Disclosure of information
79. We recommend that the new Act should include an express duty on personal representatives to assist the court, including by requiring personal representatives in proceedings to place before the court all relevant information in their possession or knowledge. In proceedings for the division of relationship property, the surviving partner and the personal representative should have a duty to disclose each partner’s assets and liabilities. To assist parties to make available all appropriate information, we recommend that affidavit forms are created for applications under the new Act.
Evidence
80. Currently an anomaly exists about how evidence is given in TPA proceedings. In the High Court, evidence is presumed to be given orally unless the judge directs otherwise. In FPA and PRA proceedings and in TPA proceedings in the Family Court, evidence is usually given by affidavit. We recommend that affidavit evidence is preferred across all claims under the new Act unless a judge directs otherwise.
Representation of minors, unascertained parties and persons deemed by law to lack capacity
81. It is not always clear under the current law how the interests of minors, unascertained parties or parties deemed by law to lack capacity should be given effect. We think that it is important that these parties have their interests represented. The court should appoint representatives for such parties in proceedings under the new Act to facilitate this.
Costs
82. Costs in proceedings are at the discretion of the court. Historically, in FPA proceedings it was common for the court to order costs to be paid from the estate. That approach has been criticised for sometimes encouraging unmeritorious claims. We consider that the court’s current flexible approach to awarding costs is appropriate for the proceedings under the new Act. The new Act should confirm the court’s power to make cost orders as it thinks fit.
83. The new Act should also confirm the court’s power to impose costs for non-compliance with procedural requirements. Parties to proceedings should be helped to understand what is required of them and should have it signalled to them the potential repercussions for failing to meet these requirements.
84. In the PRA review, we recommended the establishment of a scale of costs for relationship property proceedings. We see merit in such a scale being established for claims under the new Act too.
Tikanga Māori and dispute resolution in court
85. We have received feedback that many Māori feel that the Māori Land Court is a more attractive forum for resolving disputes than the general courts. This can be attributed to a range of factors but the expertise of judges and staff in tikanga and te reo Māori in particular can make the Māori Land Court a supportive and positive place to go for dispute resolution. There is a drive to improve diversity amongst the judiciary and to educate judges to understand and appreciate te ao Māori through education programmes such as the ones offered by Te Kura Kaiwhakawā | Institute of Judicial Studies. Education on tikanga Māori, including on tikanga Māori specific to whānau, should be an important aspect of education for Family Court and High Court judges who are not already knowledgeable in these areas. Additionally, the courts should be able to appoint a person to inquire into such matters the court considers may assist it to deal effectively with the matters before it, including matters of tikanga Māori, and this power should be specified in the new Act.
RESOLVING DISPUTES OUT OF COURT
86. A significant proportion of claims against estates are resolved out of court. There are good reasons to promote the resolution of matters outside of court. It is generally quicker and less expensive. It can result in better outcomes for the families involved because resolution processes can focus on reaching agreement rather than adversarial court proceedings. The most common ways of resolving disputed claims against estates out of court are:
(a) party or lawyer-led negotiation;
(b) mediation;
(c) arbitration; and
(d) judicial settlement conferences.
87. The Trusts Act provides that the trustees or the court may refer a matter to an “ADR process”, even if there is no provision in the terms of the trust that would allow for it. If a matter is one in which the only parties are the trustees or beneficiaries, it can be referred to ADR even if there are beneficiaries who are unascertained or are deemed by law to lack capacity. The court must appoint a representative who must act in the best interests of those beneficiaries. Except in relation to arbitral awards, the court must approve an ADR settlement in order for it to take effect.
88. Part 3A of TTWMA provides for a statutory mediation process to assist parties to resolve any disputed issues quickly and effectively between themselves in accordance with the law, and as far as possible, in accordance with the relevant tikanga of the whānau or hapū, for both the process and the substance of the resolution. The mediator can follow any procedures the mediator thinks appropriate.
89. Differences between the PRA, FPA and TPA regarding out-of-court resolution mean that it is unclear whether parties are able to comprehensively settle claims against an estate without going to court. There are also questions regarding the recognition of tikanga-based dispute resolution in the new Act and safeguards for parties who are unascertained, minors or persons who are deemed by law to lack capacity.
90. In our view, out-of-court resolution may be particularly beneficial for the types of family disputes that would arise under the new Act. A process that allows the parties to arrive at an agreed settlement may be more helpful at diffusing family hostilities than an adversarial court process. Out-of-court resolution processes may also allow other family matters to be addressed that may not be strictly relevant to the legal issues before the court. We therefore recommend that the new Act should expressly endorse out-of-court dispute resolution and tikanga-based resolution. In addition, the new Act and the Administration Act should provide that parties can enter an agreement to settle any differences arising between them (see Chapter 10).
91. We recommend the new Act prescribe a process that is consistent with the alternative dispute resolution provisions of the Trusts Act for parties who are unascertained, minors or persons deemed by law to lack capacity. The process will require the court to appoint representatives for those parties to look after their best interests. The representative would be able to agree on their behalf to participate in an out-of-court resolution process and agree to any settlement reached. Court approval of the settlement should be required (unless the settlement is an arbitral award) and the court should be able to vary or set aside any agreement that would cause serious injustice.
92. Our recommendations about settlement agreements mean that parties could engage in an out-of-court or tikanga-based dispute resolution process of their own accord, without court involvement, and come to a resolution. It may also be beneficial for the Government to consider whether the mediation process under Part 3A of TTWMA could have broader application.
ROLE OF PERSONAL REPRESENTATIVES
93. “Personal representatives” is the term we use to refer to executors of a will or administrators of an intestate estate. Personal representatives have a duty to administer the estate and distribute it according to the deceased’s will or the intestacy regime.
94. Personal representatives have a duty to be even-handed between beneficiaries. However, the extent of their duty to notify potential claimants is not clear under the current law. We recommend that this is clarified in the new Act. The new Act should require a personal representative to give notice in a prescribed form to a surviving partner or any person that the personal representative could reasonably apprehend was in an intimate relationship with the deceased at the time of death. The prescribed notice should contain information about relationship property entitlements and family provision claims, criteria for qualifying relationships, relevant time limits and obtaining independent legal advice. We think that a similar duty should apply in respect of children if the Government accepts Option Two of our family provision proposals limiting eligible children to those under 25 or who meet the definition of disabled within the new Act.
95. Personal representatives will be the named defendants in proceedings against the estate but the role that they are expected to take may differ depending on the nature of the claim. For example, in FPA proceedings, the personal representative is generally expected to maintain a neutral role but, in PRA and TPA proceedings, they are often expected to actively defend claims. In our view the varied nature of claims makes it difficult to prescribe in statute the role that personal representatives should take in all proceedings. We instead recommend that the new Act includes a duty on personal representatives to place before the Court all relevant information in their possession or knowledge.
96. At times, personal representatives may have a conflict of interest. It is not unusual, for example, for a personal representative to be a claimant against the estate or a beneficiary who intends to defend a claim as a beneficiary. In most cases, personal representatives and their legal counsel will know how to manage the conflict consistently with their legal duties and there is no need for the new Act to provide further guidance. In some cases, the court will need to intervene to remove or replace a personal representative. The current process for doing so is cumbersome because it requires a separate application to the High Court under the Administration Act. We recommend that this power be contained within the new Act so both the High Court and the Family Court are able to remove or replace personal representatives where necessary or expedient.
CROSS-BORDER MATTERS
97. Conflicts of laws may arise when the deceased has property in more than one country or is closely connected to more than one country. Currently, Aotearoa New Zealand’s choice of law rules for administration and succession are primarily governed by common law. Matters of administration (including claims under the TPA) are governed by the law of the country in which the assets are located and a grant of administration is made. Succession to movable property is determined by the law of the deceased’s domicile whereas succession to immovable property is determined by the law of the country where the property is situated. This includes claims under the FPA. Similar rules set out in the PRA apply to relationship property disputes, however, the PRA is silent on which country’s laws apply when the PRA does not apply. This creates uncertainty and risks leaving gaps in the law if no other country’s law applies.
98. The distinction between movable and immovable property is heavily criticised. It prevents the succession of an estate being dealt with under a single legal regime. In FPA cases it can frustrate the court’s ability to award the level of provision the court thinks fit. In intestacy, it might result in a windfall to a partner because the partner is entitled to more than one statutory legacy.
99. It can be difficult to identify the deceased’s domicile and may come as a surprise in some cases, particularly because acquiring a new domicile relies on the individual’s intention to reside permanently in that country. The different treatment between the TPA and the FPA also places artificial constraints on courts when making awards.
100. We conclude that the law that should be applied to the succession of a deceased’s estate should be the law of the deceased’s last habitual residence, the country with which the deceased had the closest and most stable connection. This would be determined with reference to an overall assessment of the specific circumstances of the case, including the deceased’s social, professional and economic ties to the country. The inquiry should engage the most relevant law for that case to give effect to the interests of the deceased, of people close to the deceased and of creditors. Disputes over relationship property following the death of a partner should also be governed by the law of the deceased’s last habitual residence to avoid fragmenting the law governing a deceased’s estate.
101. We recommend that habitual residence is used instead of domicile when determining the relevant law applying to the construction or interpretation of a will and the capacity to make a will or take under a will. We also recommend that the Government considers substituting “domicile” with “habitual residence” in section 22 of the Wills Act 2007.
102. We think that it is important for courts to have some flexibility to interpret or adapt rules where the combination of choice of law rules or decisions taken in different jurisdictions produces an unacceptable outcome that would differ from the common outcome in a purely domestic case. We also recommend that courts retain the power to refuse to apply a foreign rule where doing so would be contrary to public policy.
103. Consistent with our recommendations in the PRA review, we consider that partners should be entitled to agree that the law of a nominated country should apply to some or all of their property on death. Agreements should need to satisfy certain requirements, including that the agreement is valid under the law of the country that is chosen under the agreement, or under the law of the country with which the relationship had its closest connection. Courts would also retain discretion not to give effect to a valid agreement where doing so would be contrary to public policy.
104. The choice of law rules should not apply to whenua Māori or taonga, meaning that the succession to these should always be determined according to the law of Aotearoa New Zealand.
105. If property is situated outside Aotearoa New Zealand and is immovable (for example, land), a court should be able to make orders against a person rather than against the property directly. The court may order the person to transfer property or pay a sum of money to another party. We recommend that the new Act confirms that the Moçambique rule has no application in matters covered under that Act. We do not recommend bespoke jurisdictional rules be included within the new Act, nor do we recommend that the new Act or the Wills Act refer to the application of renvoi.
OTHER REFORM MATTERS
The need for education about the law relating to succession
106. The low levels of awareness and understanding of the law relating to succession, both among the public and professional advisers, has been a key theme emerging from our research and consultation throughout this review. We think there is a need for greater awareness and education about the law related to succession and the importance of making wills. We recommend the Government consider ways to improve awareness and understanding of the law and the new Act.
Power to validate wills
107. Section 14 of the Wills Act provides the High Court with the power to validate a document that appears to be a will but does not comply with the validity requirements within the Wills Act. The reference to “document” in section 14 is criticised because it has generally prohibited the validation of audio or visual recordings of testamentary intentions. We recommend the Government consider reviewing the validation powers under section 14.
Ōhākī
108. Loosely understood as an oral will, the Māori practice of ōhākī has not been recognised in state law. This fails to recognise tikanga as an independent source of rights and obligations in Aotearoa New Zealand. We recommend the Government consider recognising ōhākī as an expression of testamentary wishes enforceable under state law.
Sections 18 and 19 of the Wills Act
109. Sections 18 of the Wills Act revokes a will in its entirety when a person marries or enters a civil union and has not made that will in contemplation of the marriage or civil union. Section 18 presumes that the will would no longer reflect the person’s testamentary intentions, failing to take into account that today many couples are in a de facto relationship before they get married. We recommend that section 18 is repealed.
110. When a couple divorces, section 19 of the Wills Act revokes certain dispositions and powers given to the former spouse in the will on the assumption that the deceased would no longer want these to apply. We think this is a reasonable assumption to make. Section 19, however, does not apply to dispositions made to de facto partners. We recommend section 19 be amended to apply two years after the point when the partners in any qualifying relationship type ceased to live together in a relationship. This is because we have heard that it is not uncommon for couples to separate but not get around to formally divorcing or updating their wills.
Multi-partner relationships
111. The PRA is based on the notion of “coupledom”. Although the Act has special rules for when a partner maintains two separate relationships, it does not apply to multi-partner relationships. Multi-partner relationships may share many of the hallmarks of a qualifying relationship. However, we do not recommend any change at this time to recognise multi-partner relationships in the property sharing regime. We think that such changes would need to be considered within a broader context about how family law should recognise and provide for adult relationships that do not fit the mould of an intimate relationship between two people. We recommend further research and consultation be undertaken.
Distributing an estate without probate or letters of administration
112. Section 65 of the Administration Act provides that certain entities, such as superannuation funds, banks, or the employer of the deceased, can pay money to certain relatives of the deceased, such as a surviving partner, without the need for a grant of administration. The amount of money cannot exceed the prescribed amount, currently $15,000. Additionally, Public Trust and Trustee companies have powers to distribute estates without a grant of administration, where the total value of the estate does not exceed $120,000. We have heard that the administration process is complex and costly, and people would like to see these monetary thresholds increased. We recommend that the Government consider whether to increase the threshold for distributing estate money without a grant of administration.
Social security and the Family Protection Act
113. Section 203 of the Social Security Act 2018 enables Te Manatū Whakahiato Ora | Ministry of Social Development to refuse to grant a benefit, grant a benefit at a reduced rate or cancel a benefit already granted where a person has failed to take steps to advance a tenable FPA claim. It is an historic power that is now rarely used and we recommend it be repealed.
