In the wake of two nationwide lockdowns and several localised lockdowns, we should all appreciate that if we enter into a property transaction, that transaction could be interrupted and complicated by Covid-related restrictions. https://www.newstalkzb.co.nz/news/auckland/lockdown-blues-buyer-risks-losing-120k-deposit-because-seller-wont-delay-settlement/ While the first home buyer in this article deserves our sympathy, her predicament was both foreseeable and avoidable. The Agreement for Sale & Purchase which governs the transaction could have included terms that anticipated a lockdown and mitigated the problems that would likely result from it. If you are thinking about selling or (especially) buying a property, we can help you avoid these sorts of inconveniences. If you have an issue with a settlement or for further information contact us or call (03) 477 8080

If you have ever made an offer on a property, then you will be familiar with what many Kiwis refer to as a “standard agreement” – i.e. the ADLS/REINZ Agreement for Sale & Purchase of Real Estate (“ADLS Agreement”). There have been numerous versions of the ADLS Agreement over the years. The most recent of these, the Eleventh Edition 2022, was released on 8 February 2022 (“New Agreement”). This revised version contains a variety of substantive amendments, as well as some formatting changes. The key changes include: Changes in wording to account for the fact that bank cheques no longer exist – i.e. all money transfers are now electronic . Provisions which address recent legislative changes to the rules concerning tax purchase price allocation . This means if a tax obligation attaches to a portion of the property that is being sold, then the Vendor and Purchaser must agree as to the size/value of that portion. Furthermore, the parties’ respective (subsequent) tax returns must mirror such agreement. To assist vendors and purchasers with this issue, a supplementary document has been created, to accompany the New Agreement in applicable circumstances. The document is succinctly entitled the Addendum To Agreement For Sale And Purchase Of Real Estate Further Terms Of Sale And Schedule – Tax Purchase Price Allocation . Clarifications have been added to Clauses 10 and 11 for situations where one of the parties makes a claim against the other. The limitation of liability clause (Clause 16) has been amended in view of the recent Trusts Act 2019. Section 40 of the Trusts Act 2019 states that “ The terms of a trust must not limit or exclude a trustee’s liability for any breach of trust arising from the trustee’s dishonesty, willful misconduct, or gross negligence. ” The New Agreement clarifies the fact that in circumstances where an independent trustee has been stripped of their indemnification – presumably by the Court – the trustee shall be personally liable, but their liability shall be limited to the amount for which they would have been indemnified ……if they had not lost their indemnification. A series of new Covid-19 and pandemic clauses have been included. The sudden onset of the first lockdown in 2020 left Purchasers, Vendors and their lawyers scrambling. Since then, a variety of different “Covid clauses” have been in circulation. The New Agreement contains standardised default clauses that provide certainty for all parties in circumstances where their physical ability to fulfil conditions and/or complete settlement is prevented as a result of Government restrictions in response to Covid or some other pandemic. The warnings and disclaimers have been scaled back and moved from the back page to the signing page. The acknowledgement and warnings on the signing page have been updated. Following the release of the Eleventh Edition 2022, the previous edition of the ADLS Agreement – i.e. the Tenth Edition 2019 (2) – has been rendered obsolete. If you have questions regarding these changes please contact us or call (03) 477 8080

In the 2021 Budget the Ministry of Social Development (MSD) announced that they will implement a Court of Appeal decision on financial means assessments for long-term aged residential care. The Government has provided $20 million over two years to enable the Ministry of Social Development to correct financial means assessments for residential care. What does this mean? In 2019 the Court of Appeal found aspects of the MSD approach to undertaking the financial means assessment for the Residential Care Subsidy were not consistent with the legislation. This related to identifying and assessing the deprivation of assets and income. The key elements of the decision were that: When an asset has been gifted by an applicant within the gifting threshold of $27,000 a year (in the period up to five years prior to the application), any income capable of being generated from that asset should also be considered as gifted, and therefore should not be assessed as ‘deprived’ income as part of the FMA. When exercising its discretion as to where to include ‘deprived’ income or assets, MSD must consider whether financial resources are available to an applicant to help meet the cost of their care. If the financial resources are not found to be available, deprived income or property cannot be included as part of the FMA. This judgment ( Broadbent ) is beneficial to clients in some circumstances and in particular in relation to certain gifting practices concerning family trusts. MSD will be proactively contacting clients and the estate of deceased clients who were in care at any time from the original High Court Judgment in June 2017 . However the executors of estate of people potentially affected before June 2017 will also be able to request a review of their assessment, but we understand that MSD will not be contacting this group . We would encourage all executors of estates of people who potentially may have been affected both after and prior to June 2017 to call Lucas & Lucas, we would be pleased to assist.

When people remarry, it is generally a happy occasion for their extended families. Occasionally, however, it creates opposing groups of c hildren and when one of the parents dies, and the couple’s combined property passes to the survivor, simmering tensions can escalate. This can result in a Family Protection or Relationship Property claim against the surviving partner by the deceased partner’s estate. An example of this in the case of Tod v Tod [2015] 3 NZLR 397, where t he deceased husband’s adult children brought relationship property proceedings against their stepmother. If they succeeded, it would bring assets into their father’s estate for a Family Protection claim. The judge held that the estate could not challenge the relationship property agreement entered into by the deceased and his widow. The moral is clear. When people remarry, they should enter into a relationship property agreement. This protects the parties during their lifetimes and the survivor when one of them passes away. For further information contact us or call (03) 477 8080

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

What would happen if your circumstances changed tomorrow? What would happen if your spouse/partner died tomorrow? What would it mean for you in terms of day-to-day living? Would you be able to do simple things……like buy food? There are many questions you may not know the answer to, but are worth giving some attention to. Your Assets If your spouse or partner dies (before you do), any assets that were not jointly owned by yourself and your spouse/partner – i.e. your name was not on the applicable ownership documents – will immediately form part of the deceased’s estate and so be beyond your immediate reach. These include (but may not be limited to…): Bank accounts Investments Insurance policies Real estate Your Family Home If the family home was not owned jointly by you and your spouse/partner, then if spouse/partner dies before you, the property will not automatically become yours. This can create some or all of the following issues: The insurance company might cancel the House Insurance policy. You may not be able to get insurance with another insurance company. If the family home is not left to you in the deceased’s Will, you could (depending on the facts of your situation) find yourself without a roof over your head. Even if the family home is left to you in the Will, it could be six months or more before it can be legally transferred to you. Paying Bills Do you know how to pay for your utility bills? And do you have authority to speak to your utility providers? If your electricity account doesn’t have your name on it, the electricity company may not be willing to speak with you concerning the account. If you need advice, give us a call 03 477 8080.

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.

Executor/Trustee The Executor/Trustee is the person (or persons) responsible for ensuring that the terms of your Will are adhered to – i.e. that your wishes are carried out. In the first instance – unless there is good reason to do otherwise – your spouse or partner is probably the obvious option. However, your spouse/partner may predecease you. So, your Will needs to state who your Executor/Trustee is to be in those circumstances. A family member or close friend will often be best. Whoever they are, they need to be competent, honest and preferably located in New Zealand. Restricted Items If you own firearms or other items that require a licence or permit or some sort, you should address this in your Will. Otherwise, the Police will probably end up with them. Gifts Gifts can take a variety of forms: cash, chattels of financial value, chattels of sentimental value, shares, vehicles, real estate or pets. Since most of us have a lot of ‘stuff’, it is best to only address gifts of significant financial or sentimental value in your Will – everything else can be dealt with via a Memorandum of Wishes. Residual Beneficiaries The Residue is what’s left over after all of the estate bills have been paid and the gifts given. In a typical ‘Ma and Pa’ scenario, the residue will usually be distributed to the survivor or (if both Ma and Pa are now deceased) the deceased’s children. If one or more of the deceased’s children are already dead, the usual procedure is to distribute the deceased child’s share between that child’s own children – i.e. the grandchildren. Alternatively, the Will may state that the deceased child’s share is to be divided amongst the surviving children – i.e. their siblings. Ultimately, it’s your assets and belongings and your Will – so it’s up to you. If you need advice, give us a call 03 477 8080.

Probate is an order from the High Court which confirms a) the identity of the person who has died, and b) the identity of the people who will bear the responsibility of administering the deceased person’s estate. These people are called the executors . When is it needed? Probate is needed when a) the deceased person’s estate looks as though it is going to be worth more than $15,000.00, and b) the deceased person had a Will. If they had more than $15,000 but they didn’t leave a Will, then Letters of Administration are needed (you get these from the High Court too). Why is it needed? Probate is needed by the executors so that they can deal with the deceased person’s assets – i.e. the estate. Without Probate, the executors can’t sell property, close bank accounts, or do much of anything else in respect of the estate. At least, not legally… How do you get it? The executors of the estate – with the assistance of the lawyers who act for the estate – apply to the High Court. How straightforward the application end up being, will depend on other circumstances that surround the estate. For any questions regarding Probate, give us a call 03 477 8080.

Attorney The Attorney is obliged to act in the best interests of the Donor. They also have a duty to consult the Donor whenever possible, and to encourage the Donor to act for themselves. In the case of a husband and wife, it may be appropriate for them to appoint each other in the first instance as their attorney and to appoint an adult child as their successor attorney. There are two kinds of Enduring Power of Attorney: in respect of Care & Welfare, and in respect of Property. If different Attorneys are appointed for Care & Welfare and Property, then they have an obligation to consider each other when making decisions. The Property Attorney needs to provide funding for the Welfare decisions, and the Welfare Attorney should consider the financial impact of their decisions. The Deed of EPOA can stipulate that certain people are to be consulted in any decisions regarding the Donor’s Property or Welfare. This is particularly useful if one child has been appointed as Attorney and the remaining children need to be kept advised of any decision making. Attorney Rights and Obligations The rights and obligations of an Attorney are governed by the Protection of Personal and Property Rights Act 1988 (“PPPR”), the PPPR Amendment Act 2007 and the Deeds of Enduring Power of Attorney themselves. An Attorney is required to: Act in the best interests of the Donor, while encouraging the Donor to develop the Donor’s competence to manage the Donor’s own affairs in property and personal care and welfare decision making. The Court can revoke the appointment as Attorney for failure to act in the best interests of the Donor; Encourage the Donor to understand the nature and foresee the consequences of decisions, and to communicate such decisions; Facilitate integration into the Community; Keep records of financial transactions as the property Attorney. Failure to do so is punishable by a fine not exceeding $1,000 for each separate offence; and Must not act for the benefit of themselves or others unless authorised by the Court or the Enduring Power of Attorney document. An Attorney is able to make investments, loans, advances under the Trustee Act 1956, and claim out of pocket expenses. Once a Donor has become mentally incapable the Family Court has the power to review an Attorney’s decisions. There are a number of people who can request the Court to review an Attorney’s decisions, these people are: Donor Relative or another Attorney of the Donor Social worker/Medical practitioner Trustee Corporation Manager of the hospital or rest home in which the Donor resides Donor’s Welfare guardian Elder abuse and neglect prevention service representative Any other person with the Court’s permission Suitability of Attorney The Legal requirements are that an Attorney must be: At least 20 years; Not bankrupt Not subject to a personal or property order under PPPR Act 1988. For an EPOA in relation to Property, the Donor can appoint a Trustee Company, but for an EPOA in relation to Welfare, the Donor cannot appoint Trustee Company – i.e. they have to appoint a person. Presumption of Competence Under the Act all Donor’s are presumed competent until proven otherwise. There is no longer any provision for partial lack of capacity; a Donor must wholly lack capacity before the Attorney can exercise their powers. Mental Incapacity – Proof Proof of mental incapacity is provided by medical certificate (prescribed) completed by a relevant health practitioner whose scope of practice includes assessment of a person’s mental capacity. The NZ Medical Council has confirmed GP’s and Psychiatrists qualify and has reserved its position, subject to legal opinion, as to what other health practitioners qualify. For an Enduring Power of Attorney in Relation to Property – a medical certificate is required before the Attorney can begin exercising any powers, unless the Donor has chosen to put the Property EPOA in effect immediately in which case mental incapacity is not relevant. For an Enduring Power of Attorney in Relation to Personal Care & Welfare – a medical certificate is required prior to making decisions on significant care & welfare matters; on other non-significant matters, mental incapacity is assessed by the Attorney based on reasonable grounds i.e. an evidence based assessment. The Donor’s mental capacity must be determined afresh, and for each of the significant matters, medically certified. If there are any doubts regarding the Donor’s mental capacity, obtain the medical opinion. The Attorney pays for the medical assessment and recovers the costs from the Donor. Suspend or Revoke Should the Donor lose but then subsequently regain mental capacity, they can suspend authority of the Attorney by written notice. The suspension does not terminate the Enduring Powers of Attorney and it can be re-activated if the Donor subsequently becomes mentally incapable again. The Donor can also revoke the authority by written notice. A revocation terminates the Enduring Powers of Attorney. If you need advice, give us a call 03 477 8080.

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.

Who will be your executor? When choosing executors and trustees for your will, we encourage our clients to take time to think who will be best suited for the role and also who would be good substitute executors and trustees should your first choice have predeceased you, or be living at the time of your death but are unwilling or unable to act. Why is it important to consider where your executor and trustee lives? It is increasingly common to have family members living permanently overseas, returning only occasional to see family. We encourage our will-makers to consider where your executor lives. If possible, we recommend that you consider choosing executors who live in New Zealand. However, we know that most parents usually like to treat all their children equally and often wish for all of their children to be appointed as executors and trustees in their will, so they are all the decision-makers. We do encourage will-makers to think how best to ensure their wishes in their will are carried out. The responsibility of dealing with different financial institutions is increasingly onerous, because of the increased compliance required by banks etc. Whilst we are skilled at assisting executors and trustees carry out their role, cutting through the red-tape, often our New Zealand based executors are able to navigate the processes more quickly whilst still keeping all the family informed throughout. Careful thought should be given when choosing executors and trustees who live overseas, especially if there will be a testamentary trust in the will, for example a share held for a child to the age of 25 years. This is because there will be a trust for the longer term and this potentially may have some tax implications if 25% or more of the trustees live overseas. Is it time for a review? We also encourage all our clients to regularly review their will, especially at different life stages. Importantly, when you get married then your pre-marriage will becomes void (unless made in contemplation of marriage) and you should have a new will. Also, if you separate or divorce you should review your will as soon as possible. If you need advice, and would like to review your will please give us a call 03 477 8080.