You Have Been Left An Inheritance Under A Will … How Long Until You Actually Receive It?
We recently had a situation where a young woman, Natalie, was left a bequest under her sister’s Will and went ahead and organised the papers to buy a new car, thinking that the funds would come through within a month or so from when the lawyers started dealing with the Estate in order to fund the purchase. She was distressed to find out that the funds would not be available for several months and had to obtain a loan to buy the car. If Natalie had only understood the process for administering an Estate, she wouldn’t have got herself into such a mess.
It’s the question that many feel too guilty to ask: “How long until I receive my inheritance”? It is important to know where you stand financially, and knowing when the funds or gift will be available is often necessary in order to make major decisions, for example in relation to investments. As a rough guide, and for a typical Estate, the short answer is between 6 months and a year, but this of course depends on the nature of the Estate.
In order to demystify what is actually going on behind the scenes and explain why you have to wait usually at least 6 months, we outline the general process for a typical Estate where there is a valid Will below:
1. Locate The Will
The family or someone close to the deceased finds and reads the Will. The original Will will most likely be held by the lawyers who drafted it, but the Will maker should have a copy of the Will held somewhere for safekeeping.
2. Funeral Arrangements
The Will may outline the deceased’s wishes regarding their funeral and/or whether they want to be cremated or buried, and ideally should be checked for any directions about this. Knowing the deceased’s wishes regarding this can save unnecessary and painful family disputes.
3. Contact The Lawyers
The executor, a representative of the family or someone else close to the deceased calls the lawyers they wish to act for the Estate and takes all relevant documents to those lawyers for example:
- Bank statements;
- Details of any shares owned by the deceased;
- Details of any investments;
- Details of any property owned by the deceased;
- Any outstanding bills;
- The deceased’s agreement to occupy a unit in a retirement village (if applicable).
- Deceased’s important documents such as birth & death certificates.
The executors need the High Court’s approval to begin the administration of the Estate. To obtain this approval, called “Probate”, the executors sign an affidavit prepared by the lawyers which is filed along with other documents. Obtaining Probate typically takes around a month but can vary if a more complicated affidavit is required and depending on how busy the High Court is at the time.
If there is no Will, then an application is made to have someone (usually a spouse or child of the deceased) appointed Administrator of the Estate. This court approval is called “Letters of Administration”.
The lawyers write to all the banks and other institutions where the deceased held assets and freeze those assets. Once Probate or Letters of Administration is obtained, the lawyers gather in the proceeds of all those assets. They arrange to pay the funeral expenses and other bills from the Estate, and then deal with any transfers of real estate. The executors organise handing over gifts such as jewellery to those who were entitled to it under the Will. If there are any disputes, regarding for example which piece of jewellery goes to which child (if the Will wasn’t specific enough), the executors help to resolve those disputes.
6. Wait Six Months
By law the executor has to hold onto estate assets for six months after the grant of Probate or Letters of Administration, and cannot pay anything out to beneficiaries before this time is up.
This is in case any claims are made against the estate, eg by long lost children, or in case any creditors emerge who are owed money. The executor of the Estate is personally liable for any claims made on the Estate within that six month period, so if beneficiaries want an earlier payout, they can agree to sign an indemnity so that if any claims are made they will indemnify the executor for those.
7. Pay Gifts And Balance To Beneficiaries
Any specific gifts in the Will are paid out. The balance remaining is then paid out to the beneficiaries who are entitled to the balance of the Estate and the Estate is wound up.
Knowing what goes on behind the scenes, and how long you can expect to wait before you receive your inheritance, will hopefully help you rest easy, plan better and avoid the problem that Natalie faced!
Call us Toll Free on 0800 733 424
We produce regular articles and newsletters to keep our clients up to date with recent developments and to help them avoid the pitfalls in their business and private lives.
- 24 September:
- 16 October:
- 20 November:
You can download free step by step guides for many aspects of law, including Safety Action Plans, Employment guides and guides for Moving House.
Contact Rainey Collins
163-171 Featherston Street
PO Box 689, Wellington 6140
Phone: 04 473 6850
Fax: 04 473 9304