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18 GOOD LAWS OF SUCCESSION should be designed to
19 It is questionable whether laws of succession should be designed to
Some statistics
20 We begin with a brief review of the situation. Each year in New Zealand some 27 000 people die.4 This number is less than 1% of New Zealand’s population.5 A significant proportion of those who die leave assets. The principal form of wealth (for “middle” earners) is the family home,6 which represents, on average, nearly half of what they own. Each year the courts make around 13 000 grants of administration in respect of the estates of dead people.7 In the remaining cases a grant of administration is not sought as the estate is small or the principal assets are not passed on by will (eg, in a joint tenancy the will-maker’s interest passes directly to the surviving joint tenant).8
21 Estate sizes vary. Such figures as there are confirm that a grant of administration is not always sought. From work done in the 1980s, it appears that around 65% of estates will be worth $40 000 or less in March 1996 terms, and 90% worth $168 196 or less.9 Of course, the pattern of values in cases where claims have been worth pursuing is different. A study was made of 235 cases from 1984–1995 where children claimed against their parent’s estates under the Family Protection Act 1955. Of these 235 cases, 52.7% (124) of the estates were worth less than $150 000.10
22 It is not surprising that most of the people who die in New Zealand each year are older people, but significant numbers of younger people also die in New Zealand each year.11 The move to an older society should see changes in these patterns and a longer period of time during which people will not be members of a family with growing children.12 Yet throughout their lives these people will have had relationships with a wide range of communities, friends and family.
23 Statistically, women reach older ages than men, and so have a greater chance of becoming the surviving partner in a couple. In 1994, those 80 years of age and above comprised 34% men, 62% women; those aged 70–79, 43% men, 57% women; those aged 65–69, 49% men, 51% women.13 This means that there may be gender implications in any law which governs the passing of property from one partner to another, even if it is formally neutral as between men and women.
24 An important aim of good laws of succession is to promote family cohesion. By “cohesion” we mean strong social relationships which lend themselves to voluntary co-operation and mutual support amongst family members. “Family” is a difficult term to define, especially as pakeha may have less extensive kinship systems than Mäori or Pacific Islands cultures. We include in the term “family” not only couples, a parent or parents and children, but also those whose association with each other may be more occasional, or “latent” rather than “patent”.
25 Rules which state who should inherit a person’s property may or may not promote family cohesion. The values which best promote cohesion are normally those of the family itself, as long as it is functioning well. In many cases the best person to judge who is family and what duties are owed to family is the will-maker. A right to dispose of property on death allows will-makers freedom to identify and provide for their families as they see them. This right is guaranteed by article 17 of the International Covenant on Civil and Political Rights (1966). It provides for freedom from arbitrary interference with privacy, family, home and correspondence. New Zealand, as a party to this Covenant, is obliged to ensure that New Zealand law protects the rights the Covenant confers.
26 Good laws of succession nevertheless seek to achieve a proper balance between family autonomy and State intervention. Family autonomy is limited, of course, by such national and international human rights laws as the International Convention on the Elimination of All Forms of Discrimination against Women (1979), the United Nations Convention on the Rights of the Child (1989) and the New Zealand Bill of Rights Act 1990 (as amended by the Human Rights Act 1993).14 And states can interfere to protect other legitimate social interests.
27 The law can promote family cohesion in various ways. It can, for example, directly enforce a responsibility (eg, that between parent and child: see chapter 6). It can promote positive ways of thinking about relationships and their consequences (eg, recognising and presuming each partner’s contributions to a partnership to be of equal value: see chapters 4–5). The law may also presume or declare a person to be a member of a family (eg, where will-makers accept parental responsibility for a child on an enduring basis: see chapter 8). And it may provide a sound set of values which operate “in default”; that is, where will-makers have not arranged with their families the status or ultimate destination of property.15 Finally, the law may create an enclave within which the identity and values of will-makers’ many and varied families, friends and communities can be best expressed and respected, untouched by provisions of law (see chapter 7, option 4).
28 In cases where, because of separation or death, it is necessary to have a law about what happens to family property, that law should in our view promote family cohesion by advancing a vision of the family which is widely shared in society. Any attempt to articulate such a vision is perilous. We nevertheless venture this vision for the family as the one most relevant to the law of succession to property in late 20th century New Zealand. It is a family in which women and men partners share equally in the wealth they have created and growing children are properly cared for and have their needs fulfilled. While in earlier times society may have stressed the importance of handing wealth down from one generation to another, in modern times the emphasis in family law16 has been on the nurture and education of younger children. The law should recognise the demands that emphasis places on those responsible for the nurturing process, and the residual effects on carers once nurture and education are complete.
Differences
29 Not all New Zealand families are the same ethnically, socially or culturally. Within recognised divisions in society, particular families will see themselves in different ways. Different members of the same family may hold sharply different views on their function and role in a family. These views will be based on family members’ different gender, age or personal characteristics and experiences.
30 Even our views on how families are constituted are changing. In the first half of this century, when the laws governing testamentary claims were framed, people had a clearer view of the family than they do now. The family was defined by legal marriage and biology (departures from that – eg, adoption – required strict formalities). Consider the position now:17
31 In these and other ways the nature of family life in New Zealand is changing. The present law of family protection is confined by a narrow view of the family. De facto partners cannot claim support under the Family Protection Act 1955, and the claims of stepchildren are much more limited than those of children. The Commission has taken a wider view of what constitutes the family.
32 In theory, the present law enables courts to take into account cultural differences.19 But courts are unsure how far they should go in treating cultural expectations as a decisive answer to a Family Protection Act 1955 claim. Reference has already been made to the position with Mäori. People of other cultures are also likely to find that it is difficult for their values to be recognised. The following passage comes from a recent High Court judgment:
It appears to be common ground that an explanation for the deceased’s provision for his daughters was [that,] in accordance with Chinese custom and tradition, it was the obligation of the husbands of the daughters to provide for them, not their father. The affidavits referred to this approach as being consistent with Chinese cultural attitudes. Whilst the court should always take appropriate heed of different cultural attitudes and give effect to them wherever it properly can, in the end the court is properly bound to assess the issue of whether the deceased adopted the standards of a wise and just testator by having regard to the moral standards of the New Zealand community. By those standards the approach the deceased adopted, if indeed that was the reason for his making the dispositions he did, cannot be accepted.20
33 The Commission considers that the law of succession should allow more room for ethnic and cultural values in will-making, and the recognition of gender differences.21 Freedom of disposition provides a sphere of respect and protection for the values held by will-makers and their families. Where the law cannot achieve a clear purpose (eg, in resolving intergenerational conflicts), we need to ask whether it is useful to retain the law. Where it is useful to intervene, the law should do so by applying articulate and well-known principles. If families know the principles, they should be able to vary them by well-informed and fairly obtained agreement.
34 In most modern societies, property ownership brings with it the power to dispose of at least part of the owner’s assets at death. This power is often referred to as freedom of testation (or will-making), but the principle is wider than this because it extends to transferring property on death by means other than a will. Many mechanisms other than wills may be used for this purpose (see chapter 10).
35 Where there is a right to dispose of property on death, people can bargain for goods and services and pay for them at death. This benefits will-makers who receive the services, because they retain the use of their assets during their lifetime. It also benefits service providers, who may receive a premium for postponing receipt of payment. The fact that the will-maker carefully selected a preferred beneficiary adds a symbolic value and meaning which is not present if the person succeeds by means only of the order of a court. Further, where charities and community organisations are allowed to be beneficiaries, free testation benefits the community collectively.
36 A widely held view in our society is that, because in many cases a person has accumulated property through hard work and effort, they deserve to have an absolute right to dispose of their property. That right may be exercised without reference to the claims of the will-maker’s family. However the Commission considers, for the reasons elaborated in chapters 4–9, that there must be some restraints on the will-maker’s freedom of choice, where they are supported by clear policy reasons and are reasonably consistent with the legal duties on will-makers during their lifetimes.
37 Where services have been provided to the will-maker, there is a clear case for legislative intervention. People close to the will-maker sometimes provide services expecting recompense for them in the will. The will-maker may not wish to be tied down by legally binding arrangements. Yet, if the expectation is reasonable, it is now well accepted that the will-maker should not be permitted to accept a benefit and give nothing in return. With married couples, the expectations are even clearer. It has been accepted at least since 1976 that partners’ contributions to partnership property, whether in the form of earnings and money, or work or services in the home (including care of children), are of comparable worth.22 Will provisions which deny any such comparability should not be allowed to stand.
38 Despite all of that, wills are an exercise of a will-maker’s personal autonomy. Except when responding to just claims against will-makers, a court should
not decide that a will is wrong merely because the court would have done
things differently.
39 The present law of family protection, particularly as it applies to children’s claims, clashes with the principle of will-maker autonomy. It also makes it more difficult for the will-maker to give effect to family expectations. While courts say that their function is not to remake the will for the will-maker, in fact their powers to do so are extensive. They are often exercised. For example, Peart’s study suggests that as many as 91.5% of children’s claims are successful when contested in court.23 This can hamper will-makers who want to make lifetime arrangements which can be followed through when they die. For example, a retiring farmer, who intends one of his or her children to take over a farm, may be unable to leave that child enough of his or her estate by will to ensure that the farm is an economic unit.24
40 Good laws of succession allow people to administer estates efficiently and resolve disputes quickly. Clear and simple law helps. It should be reasonably clear to will-makers what they must do, and what proportion of their estates they can dispose of according to their own wishes. It should also be clear to those administering the estate what is to be done with the property and what claims might be properly admitted. In many cases there will be no claims, and the estate can be quickly administered. Where there is a claim, it should be able to be made and determined within a reasonable time.
41 When disputes arise and the law is clear, parties can quickly ascertain the relevant facts, and efficiently explore the possibility of resolving the dispute out of court. Courts should strongly encourage claimants to test what mediation can do for them before bringing disputes before the court.25 Testamentary claimants and beneficiaries should have the benefit of dispute resolution services. Where a family is close-knit, members often have an interest in taking a wider view of the dispute and preserving close ties. Families may successfully mediate grievances even where claimants have no legal rights at all.
42 It is sometimes suggested that the threat of legal proceedings whose outcome is uncertain helps families to mediate agreed solutions to disputes. No doubt this threat plays an informal part in current practice. But it is doubtful whether extensive judicial powers and an uncertain law of testamentary claims are useful here. Where the family is close-knit, there may be little need to use the law as a bargaining lever. Where, on the other hand, the family is distant, parties may more readily disagree on who has a legal claim to what, and there will be less incentive to resolve disputes amicably.26 In such cases it is better that the law is clear, so that the scope of the dispute is reduced.
43 If a dispute is taken to court, there is room to improve existing procedures. All related disputes should be commenced and heard in one process.27 Embittering and inflammatory adversarial aspects of adjudication could be reduced. For example, proceedings might begin with a simple notice of the basis of the claim. The notice would allege no specific complaints, permitting the parties, before the matter is taken further, to agree on what facts should be put before the court.28 Liability for the costs of unsuccessful claims is also an important issue. Currently, courts often order that legal costs be paid out of the estate.29 This can reduce the perceived risks of litigation and parties’ inclination to settle out of court. By contrast, orders that unsuccessful parties pay court costs would encourage claimants to investigate mediation, and discourage weak claims.30
44 The present law of testamentary claims does not meet efficiency criteria in a number of respects. It is not certain in its application. It can result in slower administration even for straightforward estates.31 No provision is made for mediation services, and such negotiation as there is appears to be in the hands of lawyers. Not all lawyers are skilled in the art of mediation amongst family members. It is also known that when proceedings are issued, they take a form which can increase ill-feeling within the family.
45 Some of these procedural matters can be dealt with in the detail of new legislation, regulations and court rules.32 But the Commission considers that the problem has more fundamental causes. These are best dealt with by providing clearer rules about what testamentary claims will succeed.
46 In the previous section we set out the main objectives of good laws of succession and commented on whether the present law meets those objectives. We now consider two objectives which in our view are suspect but which influence the shape of the present law.
Enforcing will-makers’ “moral duties” to family
47 Enforcing “moral duties” that will-makers owe to family is not a good objective of laws of succession. These “duties” vary according to the views of individual judges. Judicial practice then ceases to be transparent. Yet such an approach has traditionally been given high priority by the courts. In Allen v Manchester [1922] NZLR 218, 220–221 the court said that
[t]he provision which the court may properly make in default of testamentary provision is that which a just and wise father would have thought it his moral duty to make in the interests of his widow and children had he been fully aware of all the relevant circumstances.33
48 “Moral duties” are, moreover, personal to each will-maker and difficult to generalise. Although most people do want to pass their assets to members of their family, a research study undertaken in New Zealand suggests that older people value their freedom of disposition and the right to decide who their beneficiaries will be.34
49 The legislature has never used the language of “moral duty” to describe what family protection legislation is about; nor have the courts, where the issue is crucial to the decision of a particular case. Even where it is accepted that a will-maker has acted unfairly, a claimant will need to establish more than that to justify a testamentary claim:
Even in many cases where the court comes to a decision that the will is most unjust from a moral point of view, that is not enough to make the court alter the testator’s disposition of his property.35
It was not until 1967 that a New Zealand family protection statute contained the term “moral duty” (and then only as a shorthand description of courts’ deliberations concerning one class of eligible claimant).36
50 The concept of a “moral duty” to family is too vague to ensure that the purpose, meaning and effect of the law are clearly communicated.37 Reverting to the language of “moral duty” avoids the need to express uniform and certain reasons why freedom of testation should be restricted. Courts become uncertain about who should get an award and how much they should be awarded. Will-makers are unable to ascertain and comply with their duties.
51 The term “moral duty” might be acceptable (but unnecessary) if it were merely a code for a coherent, precise and widely accepted set of criteria. In the case of widows and widowers, dealt with in chapter 4, there are now reasonably
clear and accepted criteria (although they are not used in applying the
present legislation). But in the case of children, the problem is intractable (see
chapter 7).
Protecting the welfare purse
52 In earliest times, family protection legislation was designed to save the State the cost of social welfare claims. If other family members could meet that cost, they should.38 A wider view of testamentary claims legislation prevails today. But social welfare considerations are still important (especially in view of the changing pattern of State support for older persons: see Appendix D). They can be seen at work in two different types of legislative provision:
53 Protecting the welfare purse should not, however, be the first objective of laws of succession. Good laws of succession, as we have already said, will recognise family responsibilities which are widely accepted within the community and will respond to changes in the community’s view of the family (para 28). They will also allow for the expression of a variety of family values (para 33). These objectives may conflict with the State’s concern to limit public expenditure on welfare.
54 For example, where an elderly parent in residential care is being supported voluntarily by her son, the State has an interest in ensuring that the support continues even after the son’s death. It does not follow that the parent ought to have a testamentary claim against the son. Society no longer requires children by law to support their parents, but leaves that to individual choice and family arrangement.41 Yet in the case of Re Covich42 the judge said:
It is entirely appropriate that a testator in the position of the deceased whose estate benefits substantially by the abolition of death duties should apply the savings from that source towards ensuring that the plaintiff does not become a charge on the State. This is entirely consistent with the modern policy brought about by an ageing population and the urgent need of any Government to reduce State expenditure. It is also consistent with the change in social policy which I have referred to earlier.
55 This is certainly consistent with the intentions of the original Act. But it is not a sufficient answer to those who would otherwise have benefited under a will. Justice as between family members depends on the nature of the family relationship. If it is widely accepted in the community that particular ties and family obligations justify a duty of support, the State too can rely on that in framing its own welfare provisions. But fiscal considerations should not influence the existence and extent of these obligations. Otherwise, the social welfare system will be designed around support networks which do not exist, or which are overridden by other obligations; for example, to a spouse, partner or child.
56 The relationship between family policy and social welfare policy therefore has to be handled very carefully. Not all testamentary claims are the same. Some depend on property rights which are no different from any other form of wealth received by a welfare beneficiary (see, eg, partners’ property entitlements: chapters 3–5). Others do not (see, eg, support claims: chapters 3, 5 and 8). Nor do all welfare benefits raise the same issues. These questions need to be asked about each particular benefit:
57 The last question causes the most difficulty. While frequently the State considers itself the provider of last resort, it does not always follow that family members of a welfare beneficiary should be asked to meet the costs of support. As regards will-makers, it is necessary to consider three things:
58 Good laws of succession promote family cohesion and, when this objective permits, recognise will-makers’ and others’ autonomy and freedom to dispose of their own property. Good laws of succession also allow efficient estate administration and dispute resolution. But supposed “moral duties” to family, and protecting the welfare purse, are questionable objectives of good laws of succession. They should not determine the fundamental shape of the legislation.
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