The Law Commission published its review of New Zealand inheritance law earlier this year in April 2021 (the article), inviting submissions from the public which were due to be submitted by June 2021. This article provides a brief overview of some of the key aspects of the review.
The article, “Revision of inheritance law: rights to property of a person in the event of deathfocuses on what happens to a person’s assets when they die, including situations where the person had a will or died intestate (without a will). The review makes proposals for reforming our current estate laws (found in statutory, common law and equity).
Much of the argument for change in this area of law is based on the evolving state of our society. Our legal system needs fluidity to adapt to changing social norms and values. New Zealand has undergone significant social change since much of the legislation that constitutes our inheritance law was written (for example, the Family Protection Act dates back to 1955 and some of the common law principles and equity were imported from old English law which dates back as far as the late 1800s). In particular, the way New Zealanders form relationships or the way we define ‘family’ has changed significantly. In addition, the review focuses on updating the law to reflect the Crown’s obligations under Te Tiriti o Waitangi in recognizing te ao Māori succession.
The exam was structured in three parts:
- The first part examines the foundations of good inheritance law in contemporary Aotearoa/New Zealand.
- The second part deals with rights and claims with respect to estates.
- The third part deals with the presentation and settlement of complaints.
Although the emphasis is on testamentary freedom in our current system (which means that the wishes of the deceased person must be respected), it is not an absolute freedom. The review finds that although New Zealanders value testamentary freedom, some family members are also expected to be supported by the estate of the deceased, even if they have been excluded from the will.
The law currently grants certain people rights against inheritance and the ability to challenge a will. The review considers this position in light of our current society (the Law Commission has undertaken public surveys to determine society’s current outlook on these types of provisions).
The review analyzes our current society in relation to when our inheritance laws were written. Modern New Zealand is much more ethnically diverse. Family structures are also very different, with children less likely to be born to married parents, more people leaving and forming new relationships, and stepfamilies are more common. Life expectancy has also increased.
The review considers that any restriction of the property rights that individuals enjoy during their lifetime must be backed by clear policy reasons. In addition, for clarity and accessibility, it is proposed that New Zealand inheritance law (found in statute, common law and equity) be consolidated into one statute governing claims against estates (the new law).
The second part of the review deals with claims and rights with respect to the estate of a deceased person. This includes a review of current law and issues that arise with respect to claims. It also formulates proposals for reform. In particular, it deals with property relations, family provision and contribution claims, intestate rights, and inheritance and taonga.
Generally speaking, the demand that the law should better reflect the wishes of the testamentary underlies many proposals throughout the Review. Three examples follow:
Example: Property (Relations) Act 1976
An example of a legislative change proposed as part of the review concerns the Property (Relations) Act 1976 (ARP). Under the PRA currently, upon the death of a partner, a surviving partner has the option of choosing
a. divide the property of the relationship in accordance with the PRA (option A); or
b. to be taken only in accordance with their partner’s will (option B).
If the surviving partner chooses option A, all gifts left to him by his spouse’s will are revoked.
The review suggests that partners should still be given the option of choosing Option A or Option B, but that any gifts provided for the Will are forfeited. This should better align with the wishes of a will. The review proposes to repeal the relevant aspects of the PRA and replace them in the new law.
Example: Family Protection Act 1955
Legislative changes are also suggested to the Family Protection Act 1955 (FPA).
- Primarily, the FPA allows family members to request provision from the deceased person’s estate when they feel they have not received adequate provision for their proper upkeep and support in the deceased’s will. .
- The FPA provides a remedy when the will has neglected his “moral duty” to a family member when making his will.
- Among other things, the review identifies a problem with the current FPA as being the “morality” test, given that New Zealand has become a very culturally/socially diverse society with varying perspectives on morality.
Again, this supports the Review’s objective that changes are needed to modernize some of our laws.
Example: Family Protection Act 1955
The review also highlights the fact that, very often, people making FPA claims are adults who were not dependent on their deceased relative and who may have been financially secure at the time of their death. their parent. The review expresses concerns raised by some legal professionals that the FPA may give effect to awards contrary to the public perception of testamentary freedom, in circumstances where an award in favor of such adult children does not necessarily reflect the intentions of the testamentaries.
The review proposes that the FPA be replaced and that the new law provide that certain family members may apply for family provision compensation. The review offers four options in which a family member may be eligible for retainer compensation, including:
- if a surviving partner does not have sufficient resources to maintain a reasonable and independent standard of living;
- allow a child to be maintained according to reasonable standards;
- if a disabled child does not have sufficient resources to maintain a reasonable standard of living; and
- recognize the importance of the parent-child relationship and recognize that the child belongs to the family.
The third part of the review focuses on the process for filing and resolving complaints. The review addresses a range of issues and offers solutions that arise with respect to matters requiring dispute resolution or court hearings. It includes proposals as to what assets should be claimed under the new law and options for accessing assets that are not part of an estate.
Under the PRA, parties in a relationship can currently enter into agreements with each other regarding the division of their property in the event of separation or death (either before, during or after their relationship). However, there is not the same possibility to outsource the provisions of the FPA.
The review is concerned that current laws allowing parties to opt out of the PRA but not the FPA undermine the parties’ freedom to organize their affairs as they wish, favoring a certain and definitive outcome. The review recommends changing this to allow parties to enter into agreements with each other that prevent certain claims arising from death under the FPA (although it explains that these changes would not go so far as to allow people to contract claims for family benefits made by minors, children and adults with disabilities).
The questions and subsequent proposals discussed above are just a few of those included in the review. The full review is available at the link below. The Law Commission intends to report back to the Minister with its recommendations by the end of 2021, and then it will be a while to see if the Law Commission’s recommendations will actually lead to legislative change.
We will closely follow all further updates.