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Death, KiwiSaver and the Government

Q.        I was talking to a friend about KiwiSaver the other day and we were debating what happens to our KiwiSaver when we die. My friend thought that the money went to the Government but I am sure it goes to my next of kin. Who is right?
A.        KiwiSaver is an asset like your car, your jewellery and anything else you own – it will be part of your estate when you die. If you have a valid Will then your assets, including the proceeds of your KiwiSaver, will be distributed to your beneficiaries by the person or persons named as executors (after payment of all your debts).

Your fund manager will have a Deceased Member Withdrawal Form for the executors to complete. They will need a certified copy of the deceased’s Death Certificate as well as a certified copy of the Will and grant of Probate or if there is no Will, a certified copy of the Letters of Administration. They will also require some form of identification for the deceased such as a certified copy of their passport or drivers licence.

There is an exception for KiwiSaver funds where the balance is less than $15,000 and no Will has been left. In this situation certain authorised persons can claim the deceased’s KiwiSaver funds without providing Probate or
Letters of Administration. These may include the surviving spouse, surviving children, or any person who is providing day-to-day care for any of the children of the deceased person who are minors. 
Everyone should have a valid Will, if for no other reason than it makes things slightly easier for those left behind at a difficult time. You can find instructions online to draw up your own Will or better still, get help from a lawyer. A Will needs to follow a particular format to be valid. I knew a lawyer who would not let a client out of her office without a valid Will, in case they ‘got run over by a bus’. If there wasn’t time for it to be typed up that day, she would scribble out a temporary one for them on the spot which they would sign correctly in front of two witnesses. 

What happens to your KiwiSaver and other assets if you don’t have a valid Will? The law sets out an order of priority in which certain people receive the deceased person's property and in what proportion. All those people are family members.

The basic order of priority is: spouse, civil union partner or de facto partner, then children, parents, brothers and sisters, grandparents, uncles and aunts. 
If there is a spouse/partner and children, the spouse/ partner gets all the personal chattels, a set amount (currently $155,000) and one third of the rest, and the children take the other two thirds. Only if there is no spouse/partner or children do the parents get anything. Likewise, brothers and sisters will only get something if they are the closest living relatives, and so on down the list. If the family home is owned jointly, then it will become the property of the surviving joint owner. KiwiSaver, however, cannot be owned jointly – each account is held by one individual.

Only if a person dies without a valid Will and has no close relatives do their assets – including their KiwiSaver – go to the Government.