Relationship property claims

Sign a contracting out agreement

When entering a second or subsequent relationship, it is common to want to keep assets safe from relationship property claims. An effective way to do this can be by transferring assets to a trust. Care needs to be taken, however, to ensure you do this within the law.

A recent case[1] reminds us that transferring assets to trust will generally be ineffective where:

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Trustees’ decisions

Decision-making can be affected by bias

In a recent case[1], trustees’ decision-making came under scrutiny from the High Court.

Lara Unkovich was a young teenager when her grandfather died in 2016, leaving her a share of his estate. Her share was worth around $65,000. Under his will Lara would not receive the funds until she was 21 years old. The trustees, however, had the power to make payments towards her ‘maintenance, education, advancement or benefit.’ The trustees were her aunt Margaret and a lawyer.

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Legal documents signed during lockdown

Best to sign again after lockdown to avoid later complications

During the Covid lockdown, special rules applied to the signing of some legal documents. Obviously it was, and is, not possible to have your signature witnessed by someone outside your bubble in Levels 3 and 4. So the law allowed signing over audio-visual link (AVL) and other similar arrangements. While these documents will remain valid in the future, it may be wise to have wills and enduring powers of attorney (EPAs) signed out of lockdown to avoid any time-consuming queries later on.

Many legal documents need to be signed in a particular way or before a particular person. For example, some documents such as affidavits must be signed in front of a JP or lawyer. As this was, and is, not possible during lockdown, special rules were put in place to enable people to sign documents such as wills, EPAs, affidavits and so on.

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Charities in New Zealand

Charities play an important role in our society to help the disadvantaged, support specific causes or to advance knowledge. In New Zealand we have more than 27,000 registered
charities, with 230,000+ volunteers and 180,000 paid staff [1]. Many of these charities are
structured as trusts which can be incorporated and run as a trust board by the trustees.
Others are structured as incorporated societies or companies, or as unincorporated bodies. These types of charities are run by a board with specific obligations and responsibilities.

The Charities Act 2005 (which is currently under review) regulates the Charities Register and sets out the statutory rules relating to registered charities. Those rules include a re-quirement for registered charities to report, on an annual basis, to Charities Services (a di-vision of the Department of Internal Affairs).

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Family protection and wills

The wise and just will-maker

I need to make a will but I do not want to leave my estate to my son as I never see him. I also do not want to leave my estate to my stepchildren. What can be done?

In some parts of the world, a will-maker can leave their assets to whomever they want, whether that be their children, a distant relative or to the local cats’ home. In New Zealand, however, this is currently not the case. Continue reading “Family protection and wills”

Claims on an estate

How much can a disinherited child expect?

The Family Protection Act 1955 allows children to bring claims against the estate of a deceased parent on the basis that their parent did not adequately provide for their ‘proper maintenance and support’. Exactly what constitutes ‘proper maintenance and support’ is the subject of considerable litigation, as well as extensive commentary in the media.

Since a trio of Court of Appeal decisions in the early 2000s, a general understanding has emerged that awards under the family protection legislation can be quantified by referring to a percentage of the relevant estate. It has long been said that a financially-stable adult child might expect to receive between 10%–20% of the estate of their deceased parent, depending on a number of factors including the size of the estate and the position of others under the will or those people who are entitled to make a claim. In many cases, the 10%–20% threshold has become an informal benchmark when assessing the position of a financially-stable adult child making a claim against a modest, but not insignificant, estate. Continue reading “Claims on an estate”

Trusts Act 2019

Comes into force early 2021

The Trusts Act 2019 will come into effect on 30 January 2021. Much of the Act updates or restates existing law.  However, there are a number of changes about which trustees and people with trusts should be aware.

Trustees’ duties

The Act contains ‘mandatory’ and ‘default’ duties for trustees. Mandatory duties cannot be modified or excluded by the trust deed so all trustees will have to observe them. Mandatory duties are: Continue reading “Trusts Act 2019”

Residential care subsidy thresholds, trusts and gifting

Increasing numbers of elderly New Zealanders are going into residential care and seeking the government’s residential care subsidy. The legislation governing the subsidy is the Residential Care and Disability Support Services Act 2018, and the assessment procedure is overseen by the Ministry of Social Development (MSD).

To receive the subsidy, applicants must satisfy three MSD criteria:

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Grandparent wills

Grandparents often want to give some financial assistance to their grandchildren and great-grandchildren. There can be a number of good reasons for making specific provision for grandchildren in your will or through a family trust. The traditional will-drafting practice is for parents to provide for each other and then when both of them have died, they provide for their children, on the assumption that their children will then in turn acquire assets and provide for grandchildren and great-grandchildren.

First, there is often, in practice, no such provision for grandchildren and great-grandchildren by will-makers. In many cases, the will-maker’s children receive their inheritance and either spend it or provide for their partners or spouses. Little, or sometimes nothing, trickles down to grandchildren and great-grandchildren.

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