Some Legal Queries Answered
|Posted on February 23, 2015 at 3:10 PM|
Maintain Control When The Unforeseen Strikes
If you can’t take care of your own financial affairs – who will? A serious accident at any stage of your life, illnesses like strokes or Alzheimer’s disease, or simply old age, can leave you wholly or partially unable to cope. However, you can plan for such unforeseen events now by appointing a person or organisation who can take care of your affairs when you can’t, or don’t want, to do that for yourself. The person or organisation appointed to act for you in this way is called your attorney. The appointment of an attorney is as important as the appointment of the executor and Trustee in your Will. It’s part of protecting your family’s future and assets.
Like your Will, the legal document appointing a person or organisation as your attorney must be prepared in advance. This document is called an “Enduring Power of Attorney” (EPA), and there are two types – in relation to property only, or to personal care and welfare only. You can choose to have one or both of them. You can own joint bank accounts or give your child signing authority and this can suffice in many cases but it is too limited. They cannot sell your house for instance.
Enduring Power of Attorney – Property An Enduring Power of Attorney in relation to property covers activities such as paying your bills, preparing your tax return, managing your investments or collecting rents. You can make the scope as wide or as limited as you wish, and appoint a person, or organisation such as a Trustee Company, to be your attorney. Your attorney can be given the authority to handle all your property matters on your behalf, or you can retain control over parts of your property matters for as long as your want. When completing an EPA you determine when it becomes effective, i.e. immediately or only when you become incapable of handling your own affairs. Your appointed attorney’s power can take effect temporarily, for example if you go overseas, or for the rest of your life, as needed. Your attorney cannot do whatever they like – the law of agency dictates that the attorney can act only as instructed by you within the Power of Attorney, or otherwise as limited by law.
It is important to think carefully about who you will choose as your attorney. It is a big responsibility. Your attorney needs to have a good understanding of your affairs and your spouse or partner is an obvious first choice. A child or a Trust Company can be second choice in case your partner is also unable to manage your affairs. You can appoint a relative, a friend or a trustee organisation as your attorney which offers stability, independence and experience in business and legal matters. An organisation will of course charge fees against your assets.
Enduring Power of Attorney – Personal Care and Welfare This form of EPA comes into effect only if you are no longer able to make important decisions for yourself. It provides for your attorney to make decisions about your personal care and well-being on your behalf, such as where you will reside and your hospital care. Normally, this person would be a relative or close friend. Only one attorney can be appointed.
Taking control of your future If you become incapacitated without an EPA, the Family Court then steps in and helps by arranging for your property and family concerns to be managed. But the arrangements may not be what you would have chosen. For example, the Court may appoint someone you would not have chosen to manage your property. It can also take considerable time to resolve and the delay could be disastrous. It is also expensive.
By executing an Enduring Power of Attorney you can make choices about how you would like your affairs to be handled if you are ever unable to do so yourself.
Recommendation We strongly advise clients over 50 years of agelearn about Powers of attorney and discuss these with the family so they can consider when it is appropriate to give Powers.It is necessary to appoint an attorney while still of sound mind and it should not be left too long.It is a good idea to do so when we review their Wills. Younger people are less prone to need them but an EPA would be insurance in case of a traumatic accident or head injury. Please ensure you have these in place in time as the consequence of failing to do so are inconvenient and expensive .
Preparation for giving an Enduring Powers of Attorney
1. Compile a statement of assets and liabilities, and make a list of all your significant chattels. Include and note any assets that are overseas.
2. Assemble important documents (birth certificates, title deeds, marriage certificate, share certificates, life insurance policies, dates of birthdays etc) in a safe place.
3. Do you wish the attorney to set up or continue a gifting programme when this power of attorney is arranged? Sections 107 of the Protection of Personal and Property Rights Act 1988 enables attorneys to act to the benefit of self and others if you would be expected to provide for those person`s needs. Gifting may be arranged for birthdays and charities.
1. Do you have someone in mind that you would like to manage your property and financial matters? This could be one or more individuals or a trustee company. Remember that an organisation will charge fees. This person should be an adult with a good financial history and character.
2. Does this person have the skills to manage both your affairs and theirs?
3. For what purpose do you seek this power of attorney to be set up? Do you:
(a) want someone to take charge of your financial affairs from now on? You might be going overseas or moving into a rest home; or
(b) want someone to take charge of your financial affairs only when you are no longer of sound mind and not able to do this?
4. Do you need someone to take charge of all your financial affairs or just some of them? Which specific assets or matters would you like taken care of? For example, filing tax returns, collecting rents, paying your mortgage, or looking after your house or car.Authority can be given at your bank for someone to have authority to sign cheques on your behalf without having a Power of attorney. This is commonly given to a son or daughter by elderly parents until a full Power is required.
5. What steps do you wish to be taken to determine that you are no longer able to manage your own affairs?
6. Have you thought about extra protection with your power of attorney for property?
a) You could appoint one person to take charge of your property and financial affairs and a different one for your personal care and welfare.
(b) You could appoint more than one attorney to act together.They can be appointed as joint property attorneys. This could be jointly and severally otherwise an enduring power of attorney shall cease to have effect when more than one attorney is appointed with joint but not several authority and one of the attorneys dies. You may also provide for successive attorneys under .
(c) You could arrange to have a third party such as another child or your lawyer to be kept informed or even consulted so they can make make regular checks on the financial and property decisions made by your attorney? The Family Court does not automatically monitor the attorney’s performances and has to be specifically notified of any concerns. A wise attorney always acts openly and with transparency and accountability.
Personal care and well-being
1. Is there one person whom you would completely trust to assume responsibility for your personal care and welfare? Is this person over 20 and not a bankrupt?
2. Would you like this person to attend to all matters regarding your personal care and welfare or just some? For example, you could appoint someone to take care of all your medical care or just that in relation to a nursing home. Remember you may only have one attorney for your personal care.
3. What steps do you wish to be taken to determine that you are no longer able to manage your own affairs? This is important because this sort of power of attorney only comes into effect once you have become incapacitated.
4. Is there anyone you would particularly like to act in this role .They should have your welfare and your needs in mind and be able to deal with resthomes and medical professionals.
5. Does your family have a history of mental illness?
6. Remember: Any person you appoint as a personal care attorney is given no power to use or commit any funds so will have to work closely with your property attorney.
Possible conditions to be added to Enduring Power of Attorney form where the attorney is not family.:
1. My attorney shall consult with or keep informed (family member or lawyer) at least annually to review actions taken and proposed and prior to taking action shall report any proposed major transaction not already reported or recorded by such reviews. A “major transaction” is, for the purposes of this condition:
a) any new purchase or sale of land; or
b) any gift; or
c) any loan; or
d) any payment of $5000 or moreor payments totalling over $5000 in any month.
You may envisage a "granny-flat" being built on land owned by a family member. There may be a long-term lease, or major improvements/developments of a house required?
2. The (family member or lawyer) may apply to the Family Court for a review of the decisions or payments and any order as appropriate and may notify any bank or person of such application.
3. The Attorney being a professional such as a lawyer may charge my estate for any work undertaken as attorney in their professional capacity.
4. The Attorney shall consult with close family and any welfare guardian and may be reimbursed for reasonable expenses incurred including travel.
|Posted on February 7, 2015 at 10:10 PM|
An Estate Plan is:
The legal structure and documents to create and order the operation of a scheme to use your assets effectively while alive and a efficient succession to your family, upon your death, and after the death of your spouse. It is designed to ensure the right people own or access the assets for the appropriate periods of time and to protect the family' s rights against creditors and bankrupcy or insolvency and the claims of separated spouses or partners.
The main pieces of an estate plan (but not necessarily all ) are:
- Relationship Property Areement.
- Life Insurance or asset plan such as forestry.
- Enduring Powers of Attorney.
- Deed of Delegation and attorney for directors and trustees.
- Interest free family loans.
- Gifting programme.
- Company shareholders agreement or partnership agreement.
- Exit agreements for partnerships, company business.
- Memorandum of Wishes to Trustees.
- Investment Plan.
- A simple plan may involve a will leaving asets to Trust.
A good plan can be vital where you have a child with mental or physical disabilty or a family member (ortheir partner) requiring protection from their own alcoholism,drug dependancy,or spendthrift habits.
I have always enjoyed the creative aspects of designing estate plans and the satisfaction of knowing clients receive a strong sense of security.
I have practised in this area since 1979 under the Estate Duty regime and before the Relationship Property code and its heme of sccommunal property sharing. I Have seen the accountancy profession enter into the fray in the last 10 years or so and their wholesale promotion of total gifting to family trusts.
There are probably too many trusts in New Zealand. I believe an era of litigious beneficiaries will arrive when the current children of the settlors who are alive today eventually pass on. All those discretionary trusts and decisions made for tax-relief rather than good family succession are going to be prone to questioning and legal probing.
|Posted on January 23, 2015 at 10:50 AM|
Why make a will?
We all die.When you do so you will in all likelyhood own some assets.These can take a variety of forms from an inheritance not received by you yet to even airpoints on your credit card.
Your will is your opportunity to:
- say who is recive and own your assets after your death.
- there may be someone you wish to exclude as well.
- who could recieve just the income from your assets for their lifetime.
- who gets to live in home or beach-house.
- who will be guardian of your children until they are 18.
- to complete all your gifting to a Trust you have set up.to forgive debts or loans owing to you from family member.
If your documents ,banking arrangements and will are organised you will not leave a headache for your family to sort out. The likelyhood of a dispute is reduced and legal expenses are much less that if you die with no will.
If you have a will but have remarried or entered into a Civil Union that will is revoked automatically.
make chartable donations and gift money with less complication than during your lifetime.
What happens if I die with no will? (dying intestate)
The law says what happens in this situation. The assets will usually go the surviving spouse or partner and immediate family in set proportions.
This may not be what you or your family want to happen.
The basic rules are as follows:
- If there is a legal or de facto spouse or civil union partner but no surviving parents or direct descendants (children) then that spouse or partner receives all your estate.
- If in addition to such a spouse there are children the spouse receives all your personal chattels ,the first $121,500 of your estate and 1/3 of thee rest of your property.The remaining 2/3 of your estste will go to your direct descendants.
- if there is a spousal partner, no children but surviving parent(s)the spousal partner will receive all chattels, the first $121,500 and also 2/3 of the estate after that. All the remaining 1/3 goes to the parents.
- If there are children but no spousal parner the children receive all the estate.
- If there are no spouse or children any surviving parents will receive all your estate.
- If those parents do not survive either ;then if you have siblings your brothers and sisters (or their children if they have died) will share all your estate
- If there are no siblings as well then your estate will go your Grandparents if they survive
- If there are none of these a well then the last destination before the government taking it all is your Aunts and Uncles.
- A de facto partner can be disqualiied from recieving if together less than 3 years and there is no child but there can be redress.
- Also if a child inherits but dies before attaining age 20 and taking the propertyi it can pass on to their children.
(See- Administration Act 1969 s77)
Your will may not guarantee your property will be inherited as you wish as there are a few ways family and creditors can challenge a will.It is still the best way. A trust is another way.
Advice is available here to ensure you minimise challenges to your will.
|Posted on January 15, 2015 at 5:35 PM|
A Trust can be a very good Will
It is important to know why you have a trust and to maintain this focus on this over the years. Too many trusts are formed without the settlors of those trusts being able to summon up a reason why they have one.
There can be specific reasons such as a charity , education funds or ACC payouts to be protected for infants. A trust is very valuable in the sitauation where disabled children need to be cared for after the death of the parents.
They can own holiday homes for wider family, or in some cases used as asset protection in second marriages or to keep assets in the family.
The most common one I relate to is that trusts make very good wills in some cases. They are flexibleas as to timing and distributions when they need to be in ways a will cannot be.They can better ensure your family do in fact receive what you want them to have.
A will is made a little bit as a guess into the future of how things will be when you die, but a trust is able to make decisions within your guidelines at from time to time, and with all the advantages of hindsight.
A will is still adviseable, of course. It will deal with your personal assets, while the trust may hold to bulk of your assets. A will can have the trust as a beneficiary.
A trust can rarely do you harm and could be very useful in your overall estate and succession planning. A discussion on future planning will quickly show whether you and your family may benefit from a trust.