As more New Zealanders choose the lifestyle, security, and community of retirement villages, it's important to make sure your estate planning reflects this shift, especially if you or your partner may one day want to enter into an Occupation Right Agreement (ORA) at a retirement village.
An ORA is the most common way people purchase the right to live in a retirement village unit, villa or apartment but here's the catch: your Will may not automatically give your surviving partner the authority to use estate funds to purchase an ORA.
💠A Common Scenario
Margaret and John have Wills that leave each other a life interest in their home. That means when one of them dies, the surviving partner has the right to continue living in the home for as long as they wish until the survivor dies (or upon other conditions stipulated such as re-entering a new relationship), but they don’t actually own the deceased’s half share of the property.
Instead, that half share in the property forms part of the deceased’s estate and is held for the benefit of the children of the deceased, or other beneficiaries.
John passes away first, and Margaret continues living in the home. A few years later, she decides she'd prefer to move into a retirement village to enjoy the social connection, onsite care, and peace of mind, so she applies to enter into an Occupation Right Agreement (ORA).
But there’s a problem: Margaret only has a life interest in John’s share of the home. She can’t sell that share. She can’t use the funds from the sale of John’s share of the home to help pay for the ORA because the executor of John’s estate has no authority under the Will to release those funds to Margaret.
👉 Without a specific clause in the Will expressly allowing the use of estate funds for the purchase of an ORA, Margaret is typically only permitted to sell the home and use the proceeds to purchase a replacement residential property. The Court has held that a Will that provides for the right for the life tenant to buy a replacement property does not include the right for that life tenant to enter into an ORA. This means that Margaret may not have enough funds to enter into an ORA from her half of the sale proceeds of the home.
📌 Why This Matters
Even if you or your partner don’t have immediate plans to enter a retirement village, the reality is that needs change and lifestyle options like ORAs are becoming more common.
Wills that were drafted years ago might not reflect today’s retirement living options. And while you might assume your partner can "just sell the house and move," the law doesn’t always make that easy without clear authority in the Will.
✅ What You Can Do
Review your current Will – especially if it includes a life interest or gives specific instructions about how your home or other assets should be dealt with.
Consider whether you’d want your survivor to have flexibility to enter into a retirement village ORA if needed.
We're Here to Help
At Gallie Miles, we’re seeing more and more clients caught off guard by outdated Wills when it comes to retirement village living.
It’s a simple update that could save your family significant time, cost, and stress in the future.
View our expertise on Wills and Enduring Power of Attorney here
Email - renee@gallie.co.nz
Phone - 07 872 0560
This article was written by Senior Solicitor Renee Dunn.
