In theory, if a spouse died and his children who are next in line were no longer alive, the blood-grandchildren could miss out with the money going to the surviving spouse and his or her children from a former marriage. Dying without a will is a messy and costly business for those left behind.
One of the big surprises surviving relatives and beneficiaries often get, says Henry Stokes, managing solicitor at the Public Trust, is that the money doesn't all just go to the spouse, de facto or civil union partner.
There is a statutory formula in the Administration Act 1969 for distributing the estate of anyone who dies "intestate", or without a will.
The act defines very clearly who gets the money.
"The surviving spouse gets a shock to find out they are not getting everything," says Stokes.
"That catches so many people out.
"If you have a spouse or a partner and children - irrespective of whose children they are - the spouse gets the first $155,000 of the estate and chattels, personal possessions and furniture, and a third of everything else," says Stokes.
The other two-thirds passes to the children. If they are aged under 20, it has to be held in trust.
On one hand, sharing the estate with the children is not necessarily a bad thing. There are cases where the surviving spouse can't afford to raise a bigger mortgage to release capital, says Stokes, and they end up renting.
There are adult children who are happy for their parent or step-parent to remain in the house until they die. Others may not be so willing and may push for the sale of the house.
Where there are no children involved, surviving spouses can still be blindsided by the law. The act says in this instance that the spouse gets the first $155,000, the chattels and two-thirds of everything else. The remaining third goes to the surviving parents of the deceased person.
"You have just lost your partner and it's a very difficult time moving forward," says Stokes. "You can imagine the parents [or children] saying, 'I want my inheritance and I want it now'."
Stokes says it is a very New Zealand attitude to say "no worries, I will be fine without a will". In reality that isn't the case.
The law often puts square pegs into round holes because not all families are the same.
In theory, if a spouse died and his children who are next in line were no longer alive, the blood-grandchildren could miss out with the money going to the surviving spouse and his or her children from a former marriage.
If there is no spouse or child, the assets will be distributed to siblings, uncles and aunts, or grandparents according to the act's formula.
In theory, it might be possible for a widow, widower or beneficiaries of a person's estate to carry on their financial lives as if that person was alive and take no steps to distribute the estate.
But there are ways that people who do this could be foiled. The first is that the deceased's bank is notified of the death, says Stokes. In that case joint bank accounts will be frozen once the death certificate is signed (usually arranged by a funeral director) and even personal bank accounts in the surviving spouse's name where the deceased has signing authority will suffer the same fate.
Financial necessity then results in the surviving spouse going through the legal processes.
"Letters of administration", similar to probate, are often required from the High Court before accounts are unfrozen.
Trust companies such as the Public Trust and Guardian Trust go through newspaper death notices daily to check if the trust holds wills for any of the people listed.
"We would then write to the family to express our sympathy and to request them to contact us as soon as they feel it is appropriate to do so," says Stokes.
In other cases a family member will contact the person's lawyers looking for a will. Or a trust company or lawyer will get involved because one beneficiary wants the estate finalised because nothing has happened. When there is no will, matters get more difficult. First of all an "administrator", who fulfils the role of executor, needs to be appointed by the High Court.
The administrator distributes the estate according to the rules in the act. The administrator's job, however, is longer and more costly than that of an executor where a will exists.
He or she must, for example, write to any lawyers the person has used in the past asking if there is a will and advertise in the New Zealand Law Journal to determine if a law firm or trustee company holds a copy of a will that wasn't known about by the family. The administrator must wait a set period after publication for possible replies.
If the will has been lost, the rules of intestacy apply, which is a good reason to leave the original with a lawyer or trust company and keep a copy of it at home.
The intestacy process costs both time and money, which isn't good for a spouse who doesn't have access to joint bank accounts in the meantime.
Death isn't all about money. There are things that may be important to the deceased, but which the law disposes of clinically. They include:
Jewellery, art works or family heirlooms.
Wishes for your funeral, burial or cremation.
Bequests to individuals or charitable organisations.
Appointment of guardians for children aged under 18.
The fate of pets.
The situation becomes even more complex when someone who has a family trust dies. It's rare that anyone has every last asset in the trust, says lawyer Ross Holmes, of Ross Holmes Trusts.
It's administratively easier to have just the family home in a trust and keep your income-bearing assets in your personal name, says Holmes. The reason for this is to avoid filling in unnecessary tax returns and paying additional accountancy fees.
What's more, many people's trusts owe them a debt at the time of their death, which becomes part of their personal estate. Despite the change in gifting laws last year, there are reasons not to gift an entire house or assets in one go to a trust because it affects people's ability to claim rest-home subsidies. As a result, when a person dies intestate there are assets that have to go through the administration process, attracting another set of fees.
There are situations where people can challenge the distribution of an intestate estate. A surviving spouse can claim their share of relationship property under the Property (Relationships) Act and family members can claim under the Family Protection Act if they can show that the deceased person had a moral duty to provide for them.
The Law Reform (Testamentary Promises) Act 1949 can also be used to challenge the distribution of an intestate estate if it can be proved that the deceased breached a promise to provide for a person who had performed work or services.
There are also formulas for Maori land interests, which can't be left to non-Maori, although Pakeha spouses can get a life interest. In the case of intestacy the Maori Land Court will determine succession of that land.
One common misconception about intestacy is that the government gets someone's money if they die without a will. That is only the case if none of the relatives mentioned in the act is alive.
"Even then the Crown can make payments to dependants or other persons the intestate might reasonably have been expected to make provision for, such as godchildren," says Tina McLennan, principal at Kaimai Law Bethlehem. "Blended families can be quite a complex scenario."
Stokes says the cost of administering the estate of an intestate person is sometimes double that of a person who has a will.
Another misconception, says Stokes, is that the Public Trust takes a share of the estate, which would be the same whether or not there was a will. "Public Trust's estate administration charges are based on the work we do, not on the value of the estate, and hence charges will be higher to reflect the extra work involved [in intestacy]."
Very small estates, however, with money, shares, life insurance policies or Government stock up to $11,000, do not require an administrator or executor.