Every adult should have a will. That's because the law is inflexible about what happens to your possessions if you die without one.

Dying without a will

Where there’s no will, your estate will be divided up by the Administration Act:

• Your spouse or partner gets your personal chattels, the first $155,000 of the estate and one-third of the rest. The other two-thirds goes to your children.
• If you have no children, your partner gets the personal chattels, the first $155,000 and two-thirds of the rest. Your parents get the other third. Your partner gets the lot if your parents are deceased.
• If you have children but no partner, the entire estate is left to the children equally.
• If you have no partner or children, your parents inherit. If your parents are deceased, the entire estate is left to blood relatives or to the Crown if no relatives exist.

Making a will

Less than 5 percent of us die intestate. But we're often sluggish about putting pen to paper, fearing the lawyer's bills that may result. Making a will doesn't cost that much. The expensive bit is the will's administration after your death: these costs come out of your estate and vary depending on who administers the will.

Do-it-yourself
You’re legally entitled to make a will yourself – but just 4 percent do, according to a Public Trust survey. A DIY job may be fine if your assets are modest and your family relationships orderly. But if not, you'll probably need legal advice.

There are potential downsides to DIY. Experts say home-made wills may create problems if the will-maker’s intentions aren't clear. Simple errors – for example, the will's not signed or witnessed properly – can also create grounds for challenge.

The professionals
Most people use a law firm or the Public Trust to draw up their will. This doesn’t mean the will can’t be challenged: disgruntled relatives can still pop out of the woodwork to dispute your last wishes. But using a professional should help to ensure the will is legally valid.

Some law firms may also prepare a will for free if you're doing other business with them. However, they usually expect to be named as the executor (that's how they earn an income).

Your executor

You can choose anyone to be your executor. The person doesn't have to be a lawyer: they can be a family member or friend. It's common for people to name a friend or relative and a professional as co-executors (they’ll administer the estate together).

There can be advantages in naming a legal expert as an executor because they can deal with legal matters. Probate (authorisation to administer your estate) will usually need to be obtained from the High Court. Your legal expert can also deal with the transfer of any property.

Administration costs

Friend or family
If you name a friend or family member as executor, they may be willing to do the job for free. But there are still likely to be some costs that have to be met, such as High Court fees for applying for probate. You can specify that these costs are to be met by your estate.

Trustee company
If you choose a trustee company as the executor, it will charge for time plus disbursements such as court filing fees, photocopying and postage. By law, trustee companies are limited to charging a maximum fee of 5 percent of the gross value of your estate.

The Public Trust estimates the cost of administering a simple estate (a $300,000 house in joint ownership, personal savings of $50,000 and a life insurance policy of $100,000) to be $3800 plus disbursements. Another $375 would be payable if the surviving partner asked the Trust to transfer the joint home into their name.

Lawyer
Like trustee companies, lawyers' fees for estate administration can be based on an hourly rate, a task-based rate, a percentage of the gross value of the estate or some combination of these methods.

A 2009 survey by Validatum, a law-firm pricing consultancy, found fees based on time only or a percentage of the gross value of the estate only produced the lowest costs. Validatum's Richard Burcher says firms that use a pricing method of either time plus a percentage of the estate or task-based pricing plus a percentage of the estate invariably produced a higher fee. Reflecting different pricing methods, Validatum's survey found costs for administering a complex estate ranged from $4425 to $16,235.

Before you sign up, you're entitled to ask what the lawyer's fees are likely to be and the scope of the work that will be undertaken. Lawyers must provide you with information in advance about the basis for their charges.

Legal issues

Writing a will doesn’t give you the freedom to do what you want. Otago University law professor Nicola Peart says if you overstep your legal rights, the will can be challenged. And challenges are fairly common, she says.

Adequate provision
The Family Protection Act says you have a moral duty to provide for close family members in your will. If you don’t, they have a right to contest the will because you haven't made adequate provision for them. Cutting a close family member from your will is extremely difficult to do, if they choose to challenge it.

Promises
The Law Reform (Testamentary) Promises Act says if you’ve promised someone a reward in your will for their services and don’t keep that promise, they can contest the will. Say you hire a caregiver, telling her you can’t afford to pay her much but you’ll see her right in your will. If you don’t keep that promise, she may challenge the will.

Significant others
If you've been in a relationship for 3 years or more, the Property (Relationships) Act says your partner is entitled to half your relationship property if you separate or die. This applies to married, civil union and de facto couples, including same-sex couples. You can “contract out” by making an agreement with your partner. If you die, your partner has 6 months to either accept what you leave them in your will or claim their share under the Act.

Report by Jessica Wilson.