The Law Commission's Review of Succession Law

Overview

The Law Commission released its review of New Zealand’s succession law earlier this year in April 2021 (the Review), seeking submissions from the public which were due by June 2021. This article provides a brief overview of some of the key aspects of the Review.

The Review, “Review of Succession Law: Rights to a person’s property on death”, concentrates on what happens to a person’s property when they die, including situations where the person had a Will or where they died intestate (without a Will).  The Review makes proposals for reform of our current succession laws (found across legislation, common law and equity). 

In large part, the argument in favour of change in this area of the law is based on the evolving state of our society.  Our legal system requires fluidity in order to adapt to changing social norms and values. New Zealand has undergone significant social change since the drafting of much of the legislation that forms our succession law (for example, the Family Protection Act dates back to 1955 and some of the principles of common law and equity were imported from old English law that dates back as far as the late 1800’s). In particular the ways in which New Zealanders now enter into relationships or the way we define ‘family’ have evolved significantly. In addition, there is an emphasis within the Review on updating the law to reflect the Crown’s obligations under Te Tiriti o Waitangi by recognising succession in te ao Māori.

The Review has been structured in the following three parts:

•  Part One examines the basis for good succession law in contemporary Aotearoa/New Zealand.
•  Part Two addresses the entitlements to and claims against estates.
•  Part Three considers making and resolving claims.

Part One

While there is an emphasis on testamentary freedom in our current system (meaning that the deceased person’s wishes should be upheld), this is not an absolute freedom.  The Review finds that although New Zealanders value testamentary freedom, there is also a strong expectation that some family members should be provided for out of deceased’s property, even if they were left out of the Will. 

The law currently provides certain individuals with rights against the estate and the ability to challenge a Will.  The Review considers this position in light of our current society (the Law Commission had undertaken public surveys to ascertain society’s current perspectives on these types of provisions).  

The Review canvasses our current society as compared to when our succession laws were drafted.  Modern New Zealand is a lot more ethnically diverse.  Family structures are also very different, with children less likely to be born to married parents, more people leaving and entering new relationships, and stepfamilies are more common.  Life expectancy has also increased.

The Review considers that any restriction on the property rights individuals enjoy during their life must be supported by clear policy reasons.  Furthermore, for clarity and accessibility, it is proposed that New Zealand’s succession law (found across legislation, common law and equity) should be compounded into a single statute that governs claims against estates (the new Act).

Part Two

Part Two of the Review focuses on claims and entitlements against a deceased person’s estate. This includes an examination of current law and the issues that arise in respect of claims. It also makes proposals for reform.  In particular, it addresses relationship property, family provision and contribution claims, intestacy entitlements, and succession and taonga.

Generally speaking, the requirement that the law should better reflect a Will-maker’s wishes underlies many proposals throughout the Review.  Three examples follow:

Example: Property (Relationships) Act 1976

One example of proposed legislative change within the Review relates to the Property (Relationships) Act 1976 (PRA). Under the PRA currently, upon the death of a partner a surviving partner has the option to choose

a. to divide relationship property in accordance with the PRA (option A); or

b. to take only in accordance with their partner’s Will (option B). 

If the surviving partner chooses option A, any gifts left to them under their partner’s Will are revoked. 

The Review suggests that partners should still have the option to elect either option A or option B, but that any gifts provided for the under the Will are forfeited.  This should better align with a Will-maker’s wishes.  The Review proposes to repeal relevant aspects of the PRA and replace them in the new Act.

Example: Family Protection Act 1955

Legislative change is also suggested in respect of the Family Protection Act 1955 (FPA). 

• Primarily, the FPA allows family members to seek provision out of the deceased person’s estate where they consider they have not been given adequate provision for their proper maintenance and support in the deceased’s Will. 
• The FPA provides redress where the Will-maker has overlooked their ‘moral duty’ to a family member when drafting their Will. 
• Among other things, the Review identifies an issue with the current FPA as being the test of ‘morality,’ given that New Zealand has become a very culturally/socially diverse society with varying perspectives on morality. 

Again, this supports the Review’s purpose that change is required to modernise some of our laws. 

Example: Family Protection Act 1955

The Review also highlights the issue that, quite often, people making claims under the FPA are adults who were not dependent on their deceased parent and may have been financially secure when their parent died.  The Review expresses concerns raised by some legal professionals that the FPA can give effect to awards that are contrary to the public perception of testamentary freedom, in circumstances where an award made in favour of these adult children does not necessarily reflect the Will-makers intentions.

The Review proposes that the FPA should be replaced and the new Act should provide that certain family members may make a claim for a family provision award.  The Review proposes four options within which a family member may be entitled to a provision award, including:

• if a surviving partner has insufficient resource to maintain a reasonable and independent standard of living; 
• to enable a child to be maintained to a reasonable standard;
• if a disabled child does not have sufficient resource available to maintain a reasonable living standard; and
• to recognise the importance of the parent child relationship and to acknowledge that the child belongs to the family.

Part Three

Part Three of the Review considers the process of making and resolving claims.  The Review addresses a range of issues and proposed solutions that arise in respect of matters requiring dispute resolution or Court hearings.  It includes proposals as to what property should be claimable under the new Act and options for accessing property that falls outside an estate. 

Under the PRA currently, parties in relationships are able to reach agreements between them that relate to how their property is to be divided in the event of separation or on death (either before, during or after their relationship).  However, there is not the same ability to contract out of the provisions of the FPA. 

The Review expresses concern that current laws enabling parties to contract out of the PRA but not the FPA undermines parties’ freedom to arrange their affairs in the manner they wish, promoting a certain and final outcome.  The Review recommends changing this to allow for parties to reach agreements between themselves that prevent certain claims arising on death under the FPA (though it explains that these changes would not go so far as to allow people to contract out of family provision claims made by minor children and disabled adults). 

Conclusion

The issues and subsequent proposals discussed above are only some of those included within the Review.  The full Review is available at the link below.  The Law Commission intends to report to the Minister with its recommendations by the end of 2021, and then it is a waiting game to see whether the Law Commission’s recommendations will actually lead to legislative change.

We will be following any furthers updates closely.

Link to full Review: Review of Succession Law: Rights to a person’s property on death

If you require further information or assistance, please contact a member of our Private Client & Trust team.