Here’s what happens to your KiwiSaver funds when you pass away

A recently retired gentleman passed away in an accident.  He did not have a Will, and his wife assumed that all of his assets would automatically pass to her, as she understood they owned everything jointly. 

He had a KiwiSaver fund that he had built up over the final 10 years of his working life.

She was surprised to find out that it was not the case that she would receive these funds automatically, as they were held in his sole name. 

Her lawyer advised her that she would need to apply to the Court to be appointed the ‘Administrator’ of his Estate, just to deal with his KiwiSaver funds.  If he had a Will, she would have needed to apply for Probate of the Will through the Court.

Why do you need to go through Probate or Letters of Administration to release KiwiSaver funds?

The reasons for this are:

• KiwiSaver accounts are held in an individual’s sole name.  They are therefore not joint assets, and will form part of your individual estate if you die.
• Any asset that is worth over $15,000 triggers the requirement to apply for Probate of a Will, or Letters of Administration (if no Will).  Therefore, if the value of your KiwiSaver account is over $15,000 an application will need to be made to the Court to have access to those funds.  This is the case even if this is the Deceased’s only asset in their sole name.
• Unlike insurance policies, and some overseas superannuation schemes, you cannot nominate beneficiaries to receive your funds directly from your KiwiSaver Scheme.

What is the process?

If you have a Will, then your KiwiSaver will form part of the ‘residue’ of your estate, unless you specifically gift it to someone.  

The Executors of your estate will need to apply to the High Court for a Grant of Probate.

If you do not have a Will, then the Administration Act will apply.  This sets out the priority of who can apply to the Court to be the Administrator (that is the person who will be in charge of your estate) and who will receive your estate.  Applying for Letters of Administration is a much more complicated, time-consuming, and expensive, process than applying for Probate, at what is already a difficult time.

Once the Court has granted Probate or Letters of Administration, the Executor or Administrator will need to sign forms to request release of your KiwiSaver funds.  Your legal advisor will be able to take you through these forms, and explain the expected timeframes for paying out the funds to the beneficiaries under the Will.

You should (if you have not done so already) make a Will, and specify who you want to receive your Estate, including your KiwiSaver funds. You should also let your legal advisor know who your KiwiSaver provider is (along with details of your other assets), as they will need to contact them to discuss the documentation required to release the funds in your account if you were to pass away.