The essential estate planning guide for seniors

Estate planning sounds a little grand, but it simply means having a plan for what happens to your assets and finances after you pass away.

You don’t need a vast sprawling estate to have an estate plan. Even if your assets are modest, estate planning ensures everything is protected and distributed according to your wishes, so there’s no room for confusion or disputes.

If you’ve been putting off getting started, a great way to tackle estate planning is to break it down into steps. Here’s a guide to kickstart the process. 

Wills and legal matters

Estate planning starts with writing a will. If you pass away without one, you are considered to have died ‘intestate’. Dying intestate means your assets will be distributed according to New Zealand law.¹

Writing a will is simply a matter of putting in writing to whom you want to leave your money and property. If you have children or there are other people who depend on you, you can use your will to instruct how you would like them to be cared for if you die. You can also provide instructions for your funeral. 

You can write your own will using an online kit or template from a bookshop, but it always pays to have an expert review it. If your affairs are complicated, such as through business interests or blended family situations, it is even more important to get legal and financial advice.

The assets you leave in your will can be:

  • Physical assets: Real estate, vehicles, boats, furniture, musical instruments, jewellery and works of art.
  • Sentimental items: Photo albums and family heirlooms.
  • Financial assets: Bank account savings, investments, shares, KiwiSaver or other retirement savings, and life or funeral insurance policies.

As part of the will-writing process, you will need to appoint an executor. This person – or people (it could be a good idea to have more than one) – should be at least 18 years of age and be someone you can trust to carry out your wishes.
Power of attorney is another important role. Their job is to act and make decisions on your behalf and in your best interest should you become seriously ill or incapacitated. A medical power of attorney can be appointed to make medical decisions, and/or an enduring power of attorney can be appointed to make legal and financial decisions for you.  
Remember to keep your will in a safe place, and to tell your executor or someone close to you where it is. If they can’t find it – and they’ll need the original copy, correctly signed and witnessed – your wishes may not be able to be carried out.

Funeral essentials

Sometimes the thought of planning your funeral can be overwhelming, with things to consider like the service, burial or cremation, and of course the cost. Thankfully, the Funeral Directors Association of New Zealand has a kit to help make the planning easier. 

My Life, My Funeral Kit enables you to:

  • List who to notify of your death.
  • Record legally required personal information.
  • Outline your preferences for your funeral arrangements.

Funeral costs

Even the most basic funeral in New Zealand can cost thousands, with the average being $8,000 to $10,000.² 

Funeral insurance can help cover these costs, with a simple, lump-sum payout when it’s needed most. This is paid to your beneficiary to be used as they see fit for funeral costs, as well as any other costs that may pop up, such as clearing your credit card debt.
Having funeral insurance that covers your funeral plans means your loved ones will have access to that money as soon as possible after you die, so they can focus on what really matters – and not be distressed by money matters at an already difficult time.

Estate planning starts with writing a will. If you die without one, you are considered to have died ‘intestate’. Dying intestate means your assets will be distributed according to New Zealand law.³

Life insurance and KiwiSaver

If you have life insurance and plan to use part of it to cover your funeral, consider this: unless you have nominated a beneficiary for your policy, your life insurance policy will be paid to your estate – but this can take months, up to 18 months in some cases.⁴ That won’t solve the pressing issue of funeral bills that must be paid immediately. Talk to your insurance provider to make sure you know what would happen with your policy payout should you pass away.
It’s a different story with KiwiSaver. You can’t nominate a beneficiary for your KiwiSaver account. KiwiSaver is an investment that is in your name alone. It is not a joint asset with any partner you may have, unlike savings you may have in a joint bank account and will be part of your estate when you die.⁵ 

While there are pros and cons to life insurance and KiwiSaver, considering an insurance plan for funeral expenses that pays out quickly when the time comes with help negate some of the cons. This way you can be sure that your loved ones don’t have to worry about funeral related expenses during an already stressful time.

Considering Funeral Insurance?

Debts, taxes and other costs 

As well as distributing your assets, your executor will need to pay off any debts you may have. These are paid first out of your estate before anything is paid to beneficiaries. You can make your executor’s task easier by filing all your financial and tax records with your will or telling them where to find it.  
It’s important to understand the tax situation around your assets. Talking to a financial advisor about how New Zealand tax law may impact what is passed on to your beneficiaries is highly recommended.  
In New Zealand, there is an income-tax exemption on any insurance claims related to loss of life, or illness.⁶ This means life insurance or funeral insurance policies are not taxed – what you are covered for is what you should get. 

If you have chosen to have an independent executor such as a lawyer or accountant instead of a family member or friend administering your estate, find out how much it is likely to cost as this will come out of your estate.  

Other things to bear in mind

Property or savings held overseas must be considered too. If you have moved from overseas, check with a New Zealand lawyer to ensure your will is valid.⁷ 

Every person’s situation is different. Seeking legal and financial help is a great way to ensure your legal matters are up to date and watertight.