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Lawyer petitions for probate tweak on KiwiSaver funds

A Canterbury law firm specialising in wills and estates is petitioning parliament to enable executors of wills to access funds of up to $25,000 without needing High Court paperwork.

Monday, April 24th 2023, 3:51PM 7 Comments

When a person dies with $15,000 or more in their KiwiSaver fund,  executors have to apply to the High Court for probate (of a valid will) or letters of administration (if there is no will or executor) before then can uplift the funds from any financial institution.

Kiwilaw partner Cheryl Simes says the current probate/letters of administration threshold of $15,000 is too low and executors are having to pay thousands of dollars to access funds, especially from KiwiSaver accounts. She is asking for the threshold, which was set in 2009, to be adjusted for inflation to $25,000.

Simes says the threshold applies to any account held with a financial institution, but KiwiSaver tends to catch people out.

“Generally if people have any wealth they may have it in a family trust or joint account. KiwiSaver accounts are always held in a person’s individual name, and often the balance is not very much but more than $15,000.”

Simes says most lawyers charge more than $2,000 and applicants must also pay a High Court fee of $200. Unless the deceased made separate financial provision for their funeral expenses, that $15,000 includes the funeral costs, as well as any debts.

“Getting High Court approval can cost up to $6000 or more in legal fees, especially if there is no will and there are legal complications. When there is no valid will, legal complications can include your loved one’s permanent home being overseas, or next of kin not speaking English, or the surviving spouse or de facto partner needing a compulsory ‘notice of choice of option’ to choose between the law of inheritance and the law of relationship property.”

Simes says she often deals with cases involving young men who statistically are more likely to die through accident (car or work) or suicide. In one case the balance of the KiwiSaver account was $15,013.

She says she is asking for an inflation adjustment to the threshold rather than for the level to be raised as that would mean a policy change.

The Administration [Prescribed Amount] Regulations 2009 which prescribes the actual figure for the purposes of several sections of the Administration Act says financial institutions can’t release anything above the prescribed amount without probate or letter of administration.

“The law of inheritance is being reviewed and big changes are coming but in the meantime this small change could and should be made. It involves a short, simple, regulation.”

“When someone dies, their Kiwisaver should go to their loved ones, not to lawyers.”

Tags: KiwiSaver

« Fisher Funds to jettison feesEmployers including KiwiSaver as part of pay packets instead of on top »

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Comments from our readers

On 26 April 2023 at 2:43 pm Rachelle Bland said:
This makes good sense. Below is a link to Cheryl's Parliamentary petition where you can sign it online:
https://petitions.parliament.nz/079a449c-4e2b-48d7-2ae8-08db3ebbf9f3
On 27 April 2023 at 8:43 am Ross Sheerin said:
Cheryl Simes' comments make a lot of sense and align with my experience. I have signed the petition already and urge others, including advisers, to do the same.
On 28 April 2023 at 8:12 am Gordon Gecko said:
I'm sure if it was $25,000 we would be having the same conversations again in another 10 years when KiwiSaver balances are significantly higher. I don't think just lifting the level at which probate is required is going to solve what is a wider issue. We also can't have it taking 3 -6 months to get probate, there must be a quicker and more efficient process.
On 28 April 2023 at 11:56 am Murray Weatherston said:
It would be interesting to know exactly what percentage of estates that need probate are valued between $15001 and $25000. The proposed rise in probate levels (and I think the proposition is for all assets and not just Kiwisaver) may affect a few estates but may not really make a material difference. Maybe $50,000 would make more sense?
The slowness in professionals handling distribution of estates probably is affected more by the executors general 6 months delay to ensure she/he/they have no personal liability for errors, and a possible 12 month hold to see whether any relationship property or family protection claims raise their ugly heads.
On 28 April 2023 at 2:42 pm w k said:
best keep it simple - monies in kiwisaver be protected from all creditors and pass on to beneficiaries only. if member dies intestate, the next of kin gets it.
if there are too many rules, it may end up only one party benefiting from it all.
On 30 April 2023 at 11:34 pm Cheryl_Simes said:
Gordon and Murray make good points. It’s not only about KiwiSaver, but KiwiSaver is what people mention to me most often when they have just been told they need probate or letters of administration. I haven’t reviewed my files to see how many estates would come below $25,000. I see merit in having a higher threshold eg $50k but that would be a policy change - far more complicated than a simple tweak by regulation, for inflation. There are numerous ways the whole system could be improved - and my services do make things easier and less expensive for people - but, again, anything that I can’t do myself would require major decisions. With this petition I’m just trying to prompt the relevant decision-makers to fix one small thing that causes unnecessary grief and delays and is overdue.
On 2 May 2023 at 8:55 am Ross Sheerin said:
One option for KiwiSaver would be to introduce a provision whereby a beneficiary could be nominated in the event of the account holder's death. This used to be a feature of many corporate superannuation schemes.

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