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  • How much does a free Will really cost?

    As you are probably well aware, there are commercial entities that offer services regarding the administration of trusts and deceased estates. These entities will often prepare a free Will for you (or virtually no charge). In exchange for preparing your free Will, these entities appoint themselves as the executor of your estate.  So when you die, the entity will administer your estate. This kind of approach to Will-making and estate planning is problematic for a number of reasons. First of all, the Will and the Will-maker are not the primary focus.  Rather, the primary focus is the entities’ business model – i.e. cultivating and maintaining a steady stream of estates-in-waiting. The greater the number of free Wills that the entities hand out, the greater the number of future revenue streams that are locked in for the benefit of those entities. Now of course, when a lawyer prepares a Will for a client, the lawyer (not unreasonably) anticipates/hopes that they (or at least the law firm that employs them) may be engaged to assist with the administration of the Will-maker’s estate. Nonetheless, the Will-maker is completely free to change lawyers, and the executors of the Will-maker’s estate are (usually) equally free to engage a different lawyer and none of this requires any change to the Will itself. But if the Will has been drafted by one of these commercial entities, the only way to end the entities’ involvement – realistically – is for the Will-maker to prepare a new Will. Secondly, the economics of these transactions are more than just a little opaque. While it’s true that the Will itself comes free (or virtually free) of any immediate charge, the commercial entities in question will more than make up for this loss-leading when they begin invoicing the Will-maker’s estate. So while a Will-maker might save themselves anywhere between $200-$1500 (depending on the complexity of their affairs) by getting a ‘free Will’……their estate will incur legal costs that have the potential to be many times greater than whatever savings the Will-maker made by not going to a lawyer who specialises in estate planning and the drafting of Wills.

  • ‘Do it yourself’ Will kits

    Many of us own an automobile.  However, most of us do not engage in DIY engine repairs. Why? Because most of us don’t really know anything about the nuances of the combustion engine, nor of automobile repair in general. Likewise, most of us do not engage in DIY plumbing, electrical repair, or the manufacturing of pharmaceuticals or explosives.  We leave this to the experts. The same wisdom needs to be applied to the drafting of our Wills. At its best, the drafting of a Will that accommodates the circumstances and serve the needs of a given individual, combines technical expertise with creative writing. Online, do-it-yourself Will kits, are the preschool paint-by-numbers equivalent. If you have lived your life in a paint-by-numbers, fill-in-the-blanks, no-special advice-ever-needed kind of way, then you might just get away with a fill-in-the-blanks kind of Will. But most people won’t, because most people are living lives that involve varying degrees of nuance, complexity and uncertainty. Most of us are living lives that are far from simple......and we need Wills that have been written to suit. At Lucas & Lucas, we take the preparation of Wills seriously; not only because we want you to be happy with your Will but because we want those you leave behind to happy as well.

  • Eviction

    Can you be evicted from your own home and forced to sell your interest in the property to your ex-partner, when there has been no misconduct on your part? In short: if you are a registered co-proprietor of the property then no, you cannot. Imagine that, together, Jack and Jill own the family home and a rental property. After a period the relationship is over. Jill wants Jack to move out. Now, Jill can ask the Court to force Jack to sell his interest in the rental property to Jill. However, there are a number of factors which the Court will consider before doing so – in particular the hardship to Jack which may result from the forced sale, versus the hardship to Jill if Jack is not forced to sell. But the rental property is one thing. The family home – Jack’s home – is quite another. The Court will not order Jack to sell his interest in the family home to Jill. All things being equal, if you own the home that you live in, you cannot be evicted from it. If you need advice, give us a call 03 477 8080.

  • Staying the course

    The course of our lives can be boiled down to a simple process: decisions followed by consequences – intended or otherwise – followed by more decisions, followed by more consequences. And so on… You consider the question, goal or obstacle that confronts you, you reckon up the information and resources that are available to you in that moment, you make the best decision that you can in that moment……and then you live with the consequences. Sometimes things can seem as though they aren’t working out……but that doesn’t mean that the decision you made was a bad one. It may simply be that the fruition of your plan needs more time than you initially anticipated. And that’s okay – you can adapt, evolve and survive. But never doubt in moments of stress, decisions which made good sense when your thinking was clear. Part of our job is to provide you with sound advice, so that you can make informed decisions. But an equally important part of our job, is supporting you on the journey that inevitably follows those decisions – helping you to adapt and (hopefully) thrive in what can feel like increasingly uncertain times. We help our clients determine whether it’s the right decision to stay the course. If you need a sounding board or advice regarding decisions you’ve made, give us a call 03 477 8080.

  • Must your children know what you own?

    The Trusts Act 2019 came into force on 30 January 2021. If you are a trustee you already know that you have few rights and that trust law is there to protect beneficiaries. Reading the new Act, you realise it’s all about beneficiaries. Thus, from next year information must be given to beneficiaries so they can understand what the trust owns and what each trustee is doing. Beneficiaries will be better able to measure this against what they should be doing, and be better able to make trustees act properly. Giving information to families and others will be an unforeseen burden for some. Many trusts were settled when family breakups were less common, when people still accepted that parents knew best, and when the beneficiaries were infants. But if you have a trust and still think about the property as yours, you may see the sharing of trust documents and financials as an invitation to others to talk about your affairs. That is the point. The trust property is not yours, it’s held by you as trustee precisely for the beneficiaries, not just for yourself. The new Act is about transparency. Beneficiaries (with some exceptions) should know what is owned by the Trust and how it is being administered. If you have any disquiet about the new obligations or for further information contact us or call (03) 477 8080

  • Has my trust become obsolete?

    The Trusts Act 2019 came into force on 30 January 2021. These legal changes mean that the reasons for retaining a trust may now be marginal. For these clients it would be right to be thinking has my Trust become obsolete? While the return on capital is less, the administrative and compliance costs of trusts has grown. It may be time to ask if your trust has served its purpose and should be dissolved. By the disclosure rules of the Trusts Act 2019 and other laws we know that in the future there will be more focus on trustees’ performance. Anti-Money Laundering procedures flag family trusts for extra attention. Professional trustees demand more paper reporting and more communication with clients’ families. Cases indicate that family members who live on or work on trust property may have rights never before dreamed of. Families by definition, change in the generation since their trusts were settled. Everywhere there is more administrative cost, more record keeping, and more compliance. If you have a trust, ask yourself: Do you absolutely know that the trust settlement you made will do the job for your family now and into the future? Who will run the trust and will they do this properly? For further information contact us or call (03) 477 8080

  • Are you still OK about being a trustee?

    For some trustees the new disclosure obligations from 30 January 2021 will not be a surprise. Others may need to consider if they are comfortable as trustees with the new obligations. Each duty is personal to each trustee, whether the beneficiaries are your own children or not. Your personal obligations include looking after trust property, insurance, accounting, knowing who the beneficiaries are, and considering their needs. As a trustee, you are required to know what the trust is up to, and everything your co-trustees are doing. If its your own family it’s not about checking that the trust still fits your original purpose – it’s about whether it serves the interests of all the beneficiaries. New Zealanders traditionally settled trusts to protect their families and lifestyles that their property supported; business people to limit risk to business assets, families to protect a home against expensive rest home costs, and others to stop assets being sold to meet demands perhaps of an adult child’s partner. Some legal and family changes argue compellingly for having or retaining a trust. But, ominously, it is growing area of law. The Courts are scrutinising trusts as never before, and judges comments in cases we have presented disclose a willingness to make highly intrusive rulings on trustees. It is not too soon to call us if your trust has not been reviewed in the last 10 years, or your circumstances have changed in that time. Call us and we can talk through these things including what the new Act may mean for you. For further information contact us or call (03) 477 8080

  • Glossary of Trust Terms

    Appointer The Appointer generally holds the power to appoint and remove trustees, but occasionally they are also given supervisory powers. The trustee may need the Appointor's consent, for example, to add or exclude beneficiaries or to vary the Trust Deed. An Appointer has same duties of honesty and fidelity as a trustee. Beneficiary A person or entity entitled to benefit from the trust. Beneficiaries can be further subdivided into fixed beneficiaries and discretionary beneficiaries: A fixed beneficiary has a legal interest in the assets of the trust. A discretionary beneficiary merely has the hope that the trustees will exercise their discretion in his or her favour. Discretionary Trust A discretionary trust is a trust in which the beneficiaries can only benefit if the trustees’ decide to exercise their discretion in their favour. Family Trust A family trust is not a separate category of trust. Generally speaking, it is a discretionary trust settled for the benefit or a particular family. Gifting When property (particularly a house) is sold to a trust, it is rarely paid for immediately. A debt is created, which is progressively forgiven by the seller. Prior to 2011, the maximum gift you could make to a trust was $27,000.00 per year. The debt can now be forgiven in full, but the gift will be brought into account when assessing any application for a residential care subsidy. Memorandum of Wishes (occasionally referred to as a Memorandum of Guidance) A document in which the settlor of a trust suggests, recommends or requests that the trust property be dealt with in a particular way. Minutes Minutes are the written record of a meeting. Minutes of meetings between trustees are not generally accessible to beneficiaries. Perpetuity (now referred to as “the maximum duration of a trust”). A trust can only remain in existence for a certain period. Trust Deeds generally fix this at 80 years. The Trusts Act 2019 extended the maximum duration of a trust to 125 years. Resettlement Resettlement is where assets are removed from one trust and resettled on another trust. Resettlement can also occur where a trust is changed so much that the original trust effectively ceases to exist. Resolution A Resolution is a decision made by the trustees pursuant to a power set out in the Trust Deed. Settlor The person or persons who set up a trust. Trust A trust is an arrangement whereby a person (the Settlor) transfers legal ownership of assets to others (Trustees) to be held for the benefit of persons named by the settlor (the Beneficiaries). Trust Deed A document that records the Settlor, Trustees and Beneficiaries, the terms of the trust and the powers the trustees can exercise when administering it. Trustee A person or entity who holds legal title to the trust assets for the benefit of the beneficiaries. Trustee Duties Trustees are required to administer the trust honestly and in good faith for the benefit of the beneficiaries. These duties are imposed on them by the general law. Vesting Vesting occurs when a person obtains an absolute right to some present or future interest in property. For further information please send us a message or contact us on 477 8080

  • Succession Planning – it's all in the detail

    Most parents want to help their kids. Often this help involves money. As kids get older, the sums of money involved tend to get bigger. Significant assets may be co-owned or transferred. Businesses may be purchased or passed on. Maintaining good family relationships can challenging at the best of times – even within the context of an otherwise loving and functional family. Throw some money into the mix, or perhaps an unexpected death, and you potentially have an emotional cocktail. When things are – or feel like they are – going awry, sound advice, accurate information and clear communication are amongst your greatest allies. So, if you are thinking about: 1. Purchasing a property with or for one (or more) or your kids; 2. Letting one of your kids join in the family business; or 3. Lending/gifting them money… …then let us help you to formulate, plan and execute a smooth transaction. Furthermore, we can help you to document the transaction in such a way, that if things do start to go awry further down the track, you and your children will be able to communicate clearly with each other, because you will have accurate information to work with.

  • Joint Tenants vs Tenants in Common – Part 2

    If you are the co-owner of a property as joint tenants and you die, the property will pass to the surviving co-owner(s) by survivorship – that is, automatically as a matter of law. On the other hand, if you are the co-owner of a property as tenants in common and you die, your share of the property will form part of your estate and be dealt with in accordance with the terms of your Will (or if you don’t have a Will, the Administration Act 1969). Obviously, it is really important for you to a) know how you own your property, and b) understand the legal and practical consequences that will be triggered by your death and/or the death(s) of your co-owner(s). We regularly talk with people who don’t know how they own their property (or if they own it at all…), and who are worried about what the future might hold – especially if their partner dies before they do. There may not be a (simple) solution to the problems/challenges that you think you might be facing. But at the very least, we can a) ensure that you fully understand them, and b) help you take steps to mitigate or minimise them. If you have questions around joint tenants and tenants in common, please call us 03 4778080.

  • Joint Tenants vs Tenants in Common – Part 1

    You can own property (or a share in a property) with other people in one of two ways: as joint tenants or as tenants in common. Being joint tenants is a bit like having a joint bank account – i.e. you both/all own the whole property together. If one or more of the owners dies, their interest in the property does not form part of their estate. Instead, the surviving owner(s) simply continues to own the whole property. Being tenants in common is different, and the difference is very important. If you own a property with one or more other people as tenants in common, then you each own an identifiable share of the property. If you take a look at the applicable Record of Title, you will see that it says: John Smith as to a ½ share. Sarah Black as to a ½ share. Or if there are three owners: John Smith as to a 1/3 share. Sarah Black as to a 1/3 share. Paul Doe as to a 1/3 share. Because the respective shares of the owners are identifiable, if one of the owners dies, then their share forms part of their estate. If you have questions around joint tenants and tenants in common, please call us.

  • Residential Care Subsidies – Part 2

    Being a discretionary beneficiary of a trust – as many older New Zealanders are – can have a lot of upsides. It can also have downsides – especially if you’re applying for a Residential Care Subsidy (as many older New Zealanders are or are going to). The short version is this: if you are applying for a Residential Care Subsidy and you have any connection to a trust, then the Ministry of Social Development will want to know. And once they know, then they will want to know more. Most of us do not enjoy being asked probing questions concerning our finances, especially when the answers may have significant financial consequences. This can be stressful at best and positively frightening at worst. Ask for help. When assessing your application for a residential care subsidy, the Ministry of Social Development is required to make calculations that are accurate and precise. We can help you to make sure that it does. Qualifying for a residential care subsidy is not as easy as it used to be. But we have been able to help a number of clients see their application through to success. If you would like to discuss a residential care subsidy application give us a call (03) 477 8080

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