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01 Jun 2016

Administrators gone bad

A recent high-profile New Zealand court case highlights the things that can go horribly wrong when a person dies intestate (without a Will).

The deceased man, a murder victim, hadn’t made a Will when he was killed so the High Court had to appoint an administrator to manage his estate. The man’s brother (one of ten siblings) applied and was appointed temporarily.

It quickly transpired that the brother was not suitable for the role. He had previously been declared bankrupt and had mismanaged business activities. Administrators and executors are not entitled to any compensation for the duties they must perform, but the brother paid himself a $9,500 ‘administrator’s fee’ and took the deceased man’s belongings for his own use.

He was also accused of telling one sister he would disinherit her, despite her legal entitlement to part of the estate. The sister’s affidavit mentioned that her brother had sold assets undervalue, not completed documentation correctly and had not disclosed all of the assets of the estate (including a car which he helped himself to).

After a further High Court hearing, the brother was removed from his role with the judge commenting, “He appears to have a somewhat limited understanding of aspects of his role and his legal obligations and has failed to seek legal advice when such advice was clearly called for.”

This stressful series of events is the last thing you would want to place upon a family at what is likely to be the worst time of their lives.

There are two clear messages from this story. If we die without a Will:

  • We have no control over who looks after our estate and whether this person is capable of dealing with it properly. Being an administrator or executor is a difficult, time-consuming job with no pay. A Will allows us to nominate a person who is up to the task. And as this case highlights, you might end up relying on someone who does not have the right skills.
  • We also have no say over who receives what. In cases of intestacy, the law is very prescriptive over who receives what — this might not include the people we would have wanted to benefit, and might include those we definitely wouldn’t want to get anything.

You may remember from our previous newsletter the story of the step-father who also got administering the estate terribly wrong. That particular case goes to show that even people who have advanced warning they are dying get it wrong. If your clients do not have an up-to-date Will, this might become their story.

Make a Will and have your say.

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Perpetual Guardian is a trading name of The New Zealand Guardian Trust Company Limited and Perpetual Trust Limited. For Authorised Financial Advisers, a disclosure statement is available upon request and free of charge.