Nobody likes to think about their future not going as planned, so it’s important to consider what happens to your KiwiSaver investment when you die or if you become unable to make decisions for yourself.
There are a couple of essential documents you should have in place to make sure your wishes are followed when it comes to your KiwiSaver investment. As far as you and your family are concerned, your Will and an Enduring Power of Attorney could be the most important documents you ever sign.
Why it’s important to have a Will
When you pass away, everything you own, including your KiwiSaver investment, is referred to as your estate. Having a Will allows you to decide what happens to your estate after your death.
In your Will, you appoint a person, known as the executor, to manage your estate. In the event of your death, the executor applies for probate (a legal document required to distribute your estate). Once probate is granted, the executor can then distribute your estate to the people you have chosen as beneficiaries. This includes contacting your KiwiSaver provider to have your KiwiSaver investment released.
What happens to your KiwiSaver investment if you die without a Will
Having a Will becomes even more important if your KiwiSaver investment is $15,000 or more. Since a KiwiSaver account is always held in an individual’s name, if your balance is $15,000 or more and you don’t have a will, the Administration Act 1969 comes into play. This Act sets out the order of priority for those who can apply to administer your estate.
This administrator needs to apply for Letters of Administration, and once these are granted, they can distribute your estate according to the priority rules and proportions outlined in the Act. This process can lead to delays, complexity, and sometimes conflicts within families.
If your KiwiSaver investment is less than $15,000, your KiwiSaver provider can decide to pay it to an authorised person (for example a surviving spouse or partner) without requiring probate or letters of administration.
Who can help you create a Will
Because of its importance, the law says a Will must be made in a prescribed manner, so it’s best to consider someone with experience, like a lawyer or trustee company. Whoever you consult about making your Will, check their services and charges beforehand, including any charges if you also want to appoint them as executor to your estate.
Keep a record of your KiwiSaver provider
Make sure you tell your next of kin who your KiwiSaver provider is. This will help the executor or administrator contact the provider to discuss the documentation needed to release your KiwiSaver investment.
An Enduring Power of Attorney – someone who can make decisions for you if you can’t
Another important legal document to have in place is an Enduring Power of Attorney (EPOA). This lets you nominate someone to manage your care and property if you become incapacitated for any reason. An EPOA must be made before you become incapacitated.
No matter what your age, it’s important to have an EPOA. Life can throw unexpected curveballs, so it’s a good idea to have an EPOA drawn up when you make or update your Will. There are two types of EPOAs: one for property (which covers decisions about your money and assets), and one for personal care and welfare (covering decisions about your health, accommodation and care).
Having an EPOA in place gives you peace of mind that the person you want to make decisions on your behalf can do so without lengthy delays or having to make an application to the Court. It can also simplify managing your KiwiSaver investment.
How to find out more
If you don’t already have these important documents, the best time to get them sorted is now. We recommend you seek legal advice to put them in place. If you’re not sure where to start, visit the Retirement Commissioner’s website for information on , and .