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  • What is Probate?

    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.

  • Things to consider when making a Will

    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.

  • What would happen if your circumstances changed tomorrow?

    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.

  • Residential Care Subsidies – Pt 1

    The need for residential care for the elderly is growing. This care has to be paid for, and so many elderly New Zealanders (or more usually, their children) are applying to the Ministry of Social Development for residential care subsidies. The process sees you wading through paperwork and digging around for copies of ancient records, before you finally send off your application and hope for the best. Then you may receive a letter from the Ministry, which says something about “a Court decision” and how it “clarified what may be considered asset deprivation”. The letter never quite gets around to telling you which Court made the decision, or when it was made, or the actual substance of the clarification. This initial rejection may not feel very encouraging and your first instinct will probably be to give up. Don’t give up. There is no denying that it is not getting any easier to qualify for a residential care subsidy. However, it is often worth questioning the initial response. And while no victory is ever guaranteed, we have been able to help a number of clients ask the right questions and see their application through to success. If you would like to discuss a residential care subsidy application give us a call (03) 477 8080

  • Juggling Too Many Balls

    Stress is what we might feel when trying to process more information than we normally would. Sometimes this can come in the form of a singularly large problem, but more often it involves being overwhelmed by wave upon wave of smaller problems. When you have skin in the game, it is virtually impossible to step back from the storm and assess it dispassionately. This is where we can help. Our job is not simply to magic up some paperwork and say “Sign here”. Rather, our job often involves saying: “Yes, this wheel is squeaking pretty loudly, but that’s ok – it just needs some oil. And all those balls you’re juggling? We can take those three off your hands right now. And as for the rest, we’ll help you sort those too”. When you have a lot going on, acquiring and maintaining a sense of perspective is key……though that can be much easier said than done. If you’re dealing with a number of balls in the air, and need a sounding board, then give us a call (03) 477 8080

  • There goes the neighbourhood…

    Emmy Lou Harris once sang that “Neighbours are fun, I love them everyone. We get along in sweet accord”. It’s a lovely sentiment. If not always accurate… Disputes involving people who live in close proximity to one another are difficult. You can’t ignore your neighbour’s unneighbourly antics because they live right next door to you but you are hesitant about confronting them and risking their wrath because……well, they live right next door to you. You can ask us to help. Depending on the precise nature of the issue, we may or may not be able to solve it. But at the very least, we can help you to not make things worse, by taking the heat out of the conversation. Staying calm, objective and on-topic with someone you are not getting along with is sometimes asking a lot. It's where we can help. If you’re dealing with an unneighbourly situation then give us a call (03) 477 8080

  • Residential Care Subsidies – Pt 2

    When elderly New Zealanders apply for residential care subsidies, the Ministry of Social Development’s initial letter of response often includes reference to “a Court decision” that “clarified what may be considered asset deprivation”. The Ministry never identifies the case, but it is probably the case of the Chief Executive of the Ministry of Social Development vs Broadbent [2019] NZCA 201. It is true that the Broadbent case clarified what may be considered asset deprivation – particularly where family trusts are concerned. But while the Ministry’s mention of the case in its letters suggests that this clarification benefited the Ministry, in fact precisely the opposite is true. What Broadbent clarified was this: The Ministry cannot simply gross up the value of the assets of a Family Trust… … calculate a notional income from that value… … and then assess your application for a residential care subsidy, as if that notional income was your actual income. Also The Ministry cannot ignore the fact that you have validly forgiven debts owed to you by your Family Trust… …in order to adopt a notional and constant interest rate on that debt… …and then assess your application as if that notional income was your actual income. In short, 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. If you would like to discuss a residential care subsidy application give us a call (03) 477 8080

  • ADLS/REINZ Agreement for Sale & Purchase of Real Estate, 11th Edition 2022

    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

  • Ministry of Social Development are to correct financial means assessment for residential care

    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.

  • New relationships

    When people remarry, it is generally a happy occasion for their extended families. Occasionally, however, it creates opposing groups of children 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 the 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

  • Lockdown & Settlement Delays

    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. 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

  • Separating: How the division of your relationship property works

    Separating is difficult. The process involved in reaching an agreement about the division of your relationship property can then take some time to work through, depending on the circumstances of your situation. At Lucas and Lucas, we can help you with the formal process of dividing your relationship property. Firstly, think about all of the items (assets & liabilities/debts) which you and your partner have accumulated during your time together. The starting point from a statutory framework, and legal basis, is that relationship property is divided on a 50/50 split, unless the parties reach an agreement otherwise. Different assets and/or debts can be set off against one-another on a valuation basis to achieve the equal division on a dollar basis. This may involve one party making a lump-sum “adjustment” payment to the other at the conclusion, or settlement, of an Agreement. A written agreement about how your relationship property is divided provides certainty going forward, and defines those assets which will be your separate property. The agreement will also set how debts may be repaid and/or a compensatory adjustment payment. The following list is a general example of the main items couples may own together: Family Home (valuation or ‘agreed property value’) Mortgage/loan amount still owing on property A business which one or both parties may own and/or operate – this may involve i. Limited liability company – ii. Shares owned by partners iii. Partnership iv. Sole trader business Valuation for family vehicles Personal chattels & household items Other ‘vehicles’ – boats, caravan, motorbikes, etc. Kiwisaver amounts Investments (i.e shares) Other lump sum cash pay-outs Personal savings Joint bank accounts and/or separate bank accounts Credit cards i. Personal names and/or ii. Joint CC Other debts e.g higher purchase, laybuys etc. Generally speaking, a schedule of your assets and the values given to these are balanced against a deduction for the debts owed. The difference between the two is your ‘Equity’ and the statutory entitlement is for to this to be equally divided. However, there can be exceptions to this and there may be special circumstances which permit entitlements or compensatory payments for eligible parties. If you are considering a separation, require independent advice, or have any questions about the next steps to formalise an arrangement, call us on 03 477 8080.

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