Significant changes for Succession Law ahead

The Law Commission (the Commission) completed its review of the Law of Succession in New Zealand and presented its Report (the Report) to Government on 15 December 2021.  The Report includes 140 recommended changes to our succession laws currently in place.  The Commission’s understanding that much of our current succession law is archaic and does not support contemporary family arrangements and values, underpins the 140 recommendations put forward. On 18 July 2022, the Government released its response to the Report (discussed further below), ultimately accepting that change is needed.

Perhaps the most significant change recommended by the Commission is to repeal Part 8 of the Property (Relationships) Act 1976 (PRA), the Family Protection Act 1955 (FPA), and the Law Reform (Testamentary Promises) Act 1949 (TPA) and replace them with a new piece of legislation, the “Inheritance (Claims Against Estates) Act” (the new Inheritance Act).  The new Inheritance Act is to be clear and accessible and among other things it must reflect the New Zealand Bill of Rights Act and the Crown’s obligations under te Tiriti O Waitangi.  The law of intestacy is set to change, but remain under the Administration Act as at present. Importantly for tangata whenua, the Report provides that the succession of taonga should not be defined by state law but rather defined within a tikanga Māori construct.

Relationships and succession law

The Commission has recommended numerous changes that affect succession law as it relates to relationships between couples.  At present, the PRA provides a surviving partner the option to either take under the deceased’s Will (Option B of Part 8) or to elect to divide relationship property under the PRA.  This is proposed to be removed and excluded from new Inheritances Act.  Instead, a surviving partner shall keep whatever gifts are given to them under the deceased’s Will, and then they may elect to divide relationship property.  If the deceased person and surviving partner had separated prior to the death, the surviving ex-partner would have to bring a claim to divide relationship property before 2 years from the date of separation has elapsed. 

Importantly for people in relationships the Report has identified that the current situation with the law is problematic insofar as it prevents couples from entering into their own agreements to contract out of estate claims against each other.  There will be strict requirements that these Agreements must comply with, similar to those requirements already in place for Contracting Out Agreements pursuant to section 21F of the PRA (i.e. that it must be in writing, each party must receive independent legal advice and a lawyer of each party must witness and certify the Agreement).

Interestingly, the Report comments on the application of laws of succession as it relates to multi-partner relationships (i.e. relationships that involve more than two people).  The Commission makes no suggested changes to the law in this regard, stating that “…such changes 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”. 

Claims against estates for further provision

At present, the FPA provides an avenue for family members (including spouses, children, grandchildren, stepchildren and parents) to make claims against a deceased’s estate for adequate provision for their proper maintenance and support.  The Report states that “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”.  Consequently, it is proposed that the FPA is repealed.  Where a surviving partner makes a claim against an estate, an award should be able to be made where the partner has insufficient resources to maintain a reasonable and independent living standard.  However, where a child or grandchild/ren claims against an estate, the Commission was less clear as to what the new Inheritance Act should award those persons, given the diverging opinions of New Zealander’s who were surveyed on the matter.  Two different options were put forward for Government to consider:

- Option One - an award should be made for children/grandchildren who are in financial need or to recognise them, or
- Option Two – an award should be made for children under 25 years old if the child does not have sufficient resources to maintain them to a reasonable standard, to be educated  or attain economic independence.  The best interest of the child will be relevant to the Court’s determination.

Dying without a Will

When a person dies without a Will, they have died ‘intestate’.  In this situation, their estate is distributed in accordance with section 77 of the Administration Act.  The Report provides that the current intestacy regime is old and needs reform.  The Commission makes 22 recommendations to the intestacy regime, including for example that whāngai arrangements should be eligible to inherit under intestate estates (such inheritance being determined in accordance with the tikanga of the relevant whanau), which is not currently the case. Other changes are suggested to the eligibility of certain family relationships and the proportion of the estate certain family members (including spouses) should inherit.

The Government’s response

On 18 July 2022, the Government released its response to the Commission’s Report and accepted in principle that reform, including new legislation, is required.  It noted that the changes will enable the law to reflect te ao Māori perspectives in succession and recognise a more diverse range of family structures and relationships.  However, the Government anticipates that it will take some years before we see these changes made.   We will remain alive to the issues and any changes that may occur in light of the Commission’s recommendations.

The above summary of the Report is only a brief oversight of a few of the Commission’s recommendations. There is significant reform suggested across all aspects of succession law.  For more information, or if you require any legal assistance in respect of succession law matters, please contact a member of our Private Client & Trust team and we would be happy to assist.

Link to Full Report: https://www.lawcom.govt.nz/sites/default/files/projectAvailableFormats/NZLC-SUL-FinalReport145.pdf
  

Link to Full Government’s Response: https://www.lawcom.govt.nz/sites/default/files/governmentResponseAttachments/Government-Response-to-Law-Commission-report-Review-of-Succession-Law---rights-to-a-persons-property-on-death.pdf

UPDATED: 31 August 2022