Category: Asset Planning

When making a will, most people focus on who they want to leave their assets to.  But one of the most important and often overlooked decisions is choosing who will carry out those directions.

Appointing executors and trustees is not simply a matter of adding a name to a document.  These roles come with significant responsibilities that can be both time consuming and costly.  The people you choose will have a major impact on whether your estate is administered smoothly, efficiently, and in line with your intentions.

What do executors and trustees actually do?

An executor and trustee is responsible for managing your estate after you die.  Their duties include:

• Locating your original will.
• Carrying out funeral arrangements and honouring your burial or cremation wishes.
• Identifying and understanding your assets, such as bank accounts, vehicles, and property.
• Paying any debts and taxes if necessary.
• Making any important decisions in respect of your estate.
• Distributing your remaining estate in accordance with your will.

What this means for choosing your executors and trustees

Given the significant responsibilities involved, it is important to appoint individuals who are not only trustworthy but also capable of managing the financial and administrative demands of the role.  When making your selection, consider:

• Location: Appointing executors and trustees who reside overseas can create unintended tax consequences for your estate, including the risk of foreign tax liabilities.

• The number of executors and trustees: Relying on a single person can create problems if they are unable to act due to unforeseen circumstances.  Having at least two appointees helps prevent disruption, additional costs and uncertainty for your loved ones.
• Balancing personal and professional executors and trustees: For larger or more complex estates, combining family members with professional trustees can provide both personal insight and the expertise needed to manage estate administration effectively.
• Conflict management: Executors and trustees must make decisions in the best interests of the beneficiaries of the estate, so choosing people who can act impartially between beneficiaries and who are likely to work well together is essential.

Can your executors and trustees be compensated?

Including clear directions around compensation helps ensure your executors and trustees are willing and able to take on these roles.  In New Zealand, the general rule is that executors and trustees cannot be paid for their role unless:

• Your will specifically allows it; or
• A Court orders it in exceptional circumstances.

If you want executors or trustees to be compensated, clearly stating this in your will helps avoid misunderstandings and disputes.

However, executors and trustees can be reimbursed for reasonable expenses incurred while performing their duties.  These may involve:

• Administrative costs: Court filing fees, legal and accounting fees, and other professional services.
• Travel expenses: Visiting properties, meeting beneficiaries, or attending Court.
• Postage and communication: Correspondence, phone charges, and courier fees.
• Property maintenance: Insurance, repairs, and utilities for estate property until it is sold or transferred.
• Other necessary expenses: Any additional reasonable costs directly linked to administering the estate or trust.

Making the right choice

Choosing the right executors and trustees is a serious decision that requires careful thought.  Making informed choices ensures your estate is managed according to your wishes and offers peace of mind for you and your loved ones.

If you would like assistance reviewing your current appointments or selecting new executors or trustees who are the right fit, the McCaw Lewis team can provide advice and support.

There is no doubt that we live in a world where technology is reshaping the way we live, work and make decisions.  Artificial Intelligence (AI) tools are now able to spit out documents in mere minutes that previously would have taken hours to produce – including wills.  We are spoilt for choice when it comes to will drafting these days and with so many free online templates and DIY options it’s tempting to draft your own will without seeking professional help. Wills are one of the most important legal documents you will ever sign.  In New Zealand, small mistakes in your will can have significant consequences, sometimes leaving loved ones to pick up the pieces instead of the estate being administered smoothly as was intended.

The appeal and limitations of AI

AI offers a low cost, quick and convenient service.  You simply type in a few details and within seconds you have a professional looking will.  Easy as that, right?  While AI can sometimes provide a useful starting point, it does have fairly significant legal limitations, including:

• No understanding of your personal circumstances: AI is not, and never will be, aware of your personal circumstances.  Whether it’s the unspoken complexities of your family dynamics, cultural considerations, a blended family situation or adopted children, these circumstances and many others require more than just a template.
• No risk assessment or explanation of consequences: AI can’t look at clauses in your will and assess whether they may be likely to trigger a claim against your estate and explain how and why this is the case.
• No ability to advise on alternative solutions or structures for you: AI can generate solutions based on the prompts you provide it, but it lacks contextual awareness and cannot think laterally.  AI has no ability to step back, look at the bigger picture and offer creative alternatives which still achieve your desired outcome.
• Risk of invalidity: New Zealand has strict content, signing and witnessing requirements for wills, and the risk of doing this incorrectly may cause the Court to deem your will is invalid, therefore causing significant stress to your family and likely increasing the costs involved to remedy the error.

Ultimately, if something goes wrong, AI isn’t going to be there to help your loved ones fix the problems you have left behind.

Why a having a trusted lawyer still matters

Lawyers do more than just fill in the blanks.  They bring with them experience, skills and knowledge that AI simply does not have.  Among other things, they also bring you:

• Tailored legal advice: this is personalised to your relationships, assets, business interests, and other obligations.  A good lawyer will ask the hard questions to ensure your will is fit for purpose and best suits your circumstances.
• Compliance and certainty: knowledge of appropriate legislation and the expertise to ensure your will includes the right content and is validly executed.
• Foresight: advice to future-proof your will by perhaps contemplating a future marriage, the birth of children or grandchildren, the death of an executor, or identification of potential issues that may arise from your wishes, such as leaving a child out of your will or distributing your estate in unequal portions to your children for example.
• Support: a good lawyer does more than just support you through the making of your will but is also there to help guide your chosen executors through their role after you die.  This isn’t only practical guidance but also includes ensuring that your executors understand their duties to your beneficiaries and the legislation that governs them.

A Better Approach

There is no question AI can be a helpful tool, but it shouldn’t be relied upon to get everything right.  The safest approach to will drafting is to let the experts guide you.  Your will isn’t any old document – it’s likely one of the most important documents you will ever sign.  AI is a great tool to help in certain circumstances, but in terms of will drafting it can’t replace the role of a lawyer, and it can’t provide you with peace of mind knowing your will is valid, legally sound, and is able to stand the test of time.

If you’d like a review of your current will, or to create a new one which reflects your intentions, get in touch with the McCaw Lewis team.  We can help you protect your legacy by combining the efficiency of technology with the precision and judgment that only human experience brings.

Note: This article was thought of, written, and edited by a real human. As we’ve established there’s still no substitute for human intuition, nuance, and that gut feeling that something just “sounds better.” Long live the humans.

Owning and running a business is inherently risky.  Even the most diligent businesspeople can come up against unforeseen trials.  Future planning is critical, so you are well equipped long before your business faces challenging times.  Asset protection isn’t designed exclusively for the corporate giants; it’s a prudent and practical thing that every business owner should consider.

What is a Trust?

Simply put, a trust is a legal arrangement involving three groups of people:

• Settlor(s): the individual(s) who provide assets to the trustees to be held on trust.
• Trustees: the people who hold the assets for the benefit of the beneficiaries. Trustees administer the assets in accordance with the Trust Deed and the Trusts Act 2019.
• Beneficiaries: the individual(s) who receive the benefit of the trust assets.

How does a Trust Protect my Assets?

When you transfer your personal assets into a trust, they are no longer yours but belong to the trustees.  As legal ownership has shifted to the trustees, this can protect your assets from business related creditors, insolvency and legal proceedings.  Furthermore, trusts can be used as an effective succession planning tool, giving you the ability to seamlessly pass your wealth on to future generations whilst managing the risk of the likes of relationship property claims.  This makes trusts an invaluable tool for long-term asset protection and estate planning.

Protecting your family home, investments and other personal assets is vital, especially when you dedicate so much time and effort towards developing your business and building your wealth.  Having a trust can help protect not only your lifestyle, but the legacy you’ve worked so hard to create, ensuring that any unforeseen business related challenges don’t threaten your long-term security and retirement plans.

Is a Trust Right for You?

If you are contemplating whether a trust is suitable for you, you’ve already taken an important first step.  The answer really depends on your specific circumstances.  Ask yourself:

• Do I have valuable business or personal assets to protect?
• Am I concerned about future liability or personal exposure?
• Do I want to pass my business to family or beneficiaries?
• Do I want flexibility in managing income and tax planning?

If you answered “yes” to one or more of these, a trust could be worth exploring.

It is important to note that trusts aren’t a one size fits all solution; they require due care and consideration, alongside strategic future planning that is specifically tailored to your individual circumstances.

Our experienced Asset Planning Team understands the complexities involved with business ownership and asset protection and can evaluate your needs to develop a suitable asset protection strategy.  We can guide you through every step, from establishment to day-to-day management.

Contact us to discuss your asset protection requirements and we will work with you to create a strategy to ensure your assets remain protected, giving you peace of mind for the future.

Two recent Supreme Court decisions – Cooper v Pinney and Legler v Formannoij – appear to send conflicting signals about acceptable levels of control over trusts.  On one hand, Legler suggests that a single person effectively controlling a corporate trustee does not, in itself, undermine a trust.  On the other hand, Cooper implies that trust control needs closer scrutiny when considering whether relationship property claims may apply.

For those setting up, managing, or attempting to challenge trusts, this inconsistency raises an important question: when does control over a trust amount to ownership, and when is it simply part of a valid trust structure?

The Tension at a Glance

At the heart of the decisions is a fundamental tension:

1. In Legler the Court upheld a trustee appointment despite allegations that it was made for an improper purpose. The dispute arose when the children of the deceased settlor challenged their stepmother’s decision to appoint a corporate trustee of which she was the sole director and shareholder. The Court ruled that while she effectively controlled the company, this did not necessarily mean the appointment was improper. The result reinforces that controlling a trust alone is not inherently problematic in equity.

2. In Cooper the Court took a different approach when assessing control in the context of relationship property. The dispute centred on whether Mr Pinney’s powers within a family trust—such as the ability to appoint and remove trustees and distribute assets—constituted property under the Property (Relationships) Act.  If classified as property, the powers may have fallen into the relationship property pool to be divided between Mr Pinney and Ms Cooper following the breakdown of their relationship.  However, the Supreme Court ruled that, because the powers were constrained by fiduciary duties, they did not constitute personal property interests.

The rulings certainly appear at odds and highlight the different approaches taken in trust law (often focussed on process rather than effect) and relationship property (designed to prevent unfair outcomes in asset division).

Key Practical Takeaways

How should you approach structuring and administering your trust in light of these decisions?

1. Structure Trust Control Carefully

Carefully consider who will have control over your trust. If you hold extensive powers as a settlor, trustee, beneficiary, and the person having the power to appoint and remove trustees, this could lead to scrutiny under the Property (Relationships) Act, though perhaps not in trust law.  Adding independent trustees and/or requiring unanimous decisions for key trust actions can help reduce this risk.

2. Record and Document Trust Decisions

Courts look to both process and intent, and keeping clear records of trustee decisions can help justify each of these in a situation where a claim is made against your trust.  If a decision is questioned, having a well-documented history of the background and reasoning for the decision will be crucial in proving that a trust has been managed properly. The records should address how the particular decision is ultimately in the beneficiaries’ interests.

3. Recognise and Accept that Relationship Property Law Has a Different Lens than Equity

Just because a structure is legally valid does not make it immune to relationship property claims. Seek legal advice on how your powers could be interpreted under the Property (Relationships) Act.

Final Thoughts – A Balancing Act

The Supreme Court’s recent rulings highlight an ongoing challenge in trust law:  balancing the need to respect valid trust structures while preventing misuse. The key takeaway is that trust control is not a straightforward issue – it depends on the context. The decisions offer a timely reminder that trust structures must be well-thought-out prior to formation and should be regularly reviewed throughout the lifetime of the trust to ensure that they are defendable in different legal scenarios.

If you have questions about how these rulings may affect your trust or have concerns about protecting your assets from the possibility of a claim, our Asset Planning Team is here to help. Contact us to discuss a review of your trust and ensure your structure continues to provide the protections you require.

Many retirement villages in New Zealand provide a continuum of care, allowing residents to access increasing levels of support as their needs change. This model offers peace of mind, but the process of transitioning to higher care within these villages involves important contractual, and financial considerations. For residents and their families, understanding the legal framework is essential to ensure a smooth transition.

The Role of the Occupation Right Agreement (ORA)

An Occupation Right Agreement (ORA) is the foundation of retirement village arrangements.  It outlines the legal rights and obligations of residents and the village operator. When it comes to transferring to higher care levels, the ORA specifies:

• Conditions for Transition: When a resident may be required or permitted to move to a higher level of care, such as a serviced apartment, rest home, or hospital-level care.
• Costs: Additional charges for care services, accommodation, or other fees associated with the new care level.
• Termination and Resale Rights: The ORA sets out the process for terminating the agreement and refunding capital contributions when vacating an independent unit.

It is important to get legal advice to ensure residents and families understand these terms and their implications.

Legal Framework for Care Transitions

The Retirement Villages Act 2003 and the Retirement Villages Code of Practice 2008 regulate the operation of retirement villages and protect residents’ rights. Key legal principles include:

• Good Faith and Consultation: Operators must act in good faith and consult residents about any significant decisions, including care transitions.
• Consent Requirements: Residents generally need to consent to any move, except in cases where health or safety risks necessitate immediate action.
• Health Assessments: Care transitions are often triggered by health assessments conducted by the village’s clinical team or external assessors, such as the NASC (Needs Assessment and Service Coordination) team.
• Notice Periods: Operators must provide reasonable notice if a resident is required to vacate their current unit to transition to higher care.

Financial Implications of Moving to Higher Care

It goes without saying that the financial impact of transitioning to a higher level of care is a critical consideration. The ORA governs costs such as:

• Additional Fees: Higher care levels often involve increased service fees, including meals, personal care, and medical supervision.
• Refunds and Deductions: The ORA sets out when the capital contribution will be refunded and what deductions, if any, will apply when a resident’s independent living unit is vacated.
• Public Subsidies: Residents may be eligible for government support, such as the Residential Care Subsidy, which is means-tested and designed to help cover the cost of rest home or hospital care.

Availability of Care Services

Not all retirement villages offer every level of care on-site. Some villages may only provide independent living and serviced apartments, requiring residents to relocate to another facility for higher care levels.

The ORA will specify the village’s obligations in such scenarios, including:

• Placement Guarantees: Whether residents are guaranteed access to higher care within the village.
• Alternative Arrangements: What assistance the village will provide if care services are unavailable locally.

Operators are expected to act in good faith and facilitate the transition, but families may need to explore other facilities if care options are limited.

Practical Tips for Residents and Families

• Understand the ORA: Before signing, ensure the agreement is reviewed by a lawyer who can explain its terms, especially those related to care transitions and financial implications.
• Plan Ahead: Discuss care preferences and potential transitions early with the village operator and family members.
• Seek Financial Advice: Assess the financial impact of moving to higher care, including eligibility for subsidies.

Conclusion

Taking the time to review agreements, plan finances, and seek professional advice ensures that residents’ rights are protected, and their care needs are met.  The McCaw Lewis team are very experienced in dealing with these situations and are happy to assist at the appropriate time.

Amanda is the Director in our Asset Planning Team and can be contacted on 07 958 7451.

During our lifetime, we are almost certain to experience the death of a loved one.  It can be an overwhelming and challenging time, even more so if you are tasked with sorting their personal affairs.  Understanding what to expect when a loved one dies can help ease the stress you may feel and allow you to take the time to grieve.

Before the Funeral/Tangi/Burial or Cremation

It is common to want to deal with your loved one’s affairs immediately after their death.  We can understand that it can be a little unnerving, especially if your loved one died with debts.  However, take this time to farewell your loved one and spend time with those that were close to them.

A more practical first step is to locate your loved one’s will, as it may contain important information about their funeral, tangi, burial, or cremation wishes.  If you know which law firm holds the will, the executors may contact them directly to access a copy.  Only the named executor/s have the legal right to access the will and it is at their sole discretion as to whether they share the contents of the will with family or beneficiaries.  Not all wills outline directions for the body or the funeral.  We also note that if there are directions outlined, they are not binding on the executor/s and the executor/s have the ultimate legal responsibility to deal with the body.

Often the deceased’s bank can pay the funeral invoice direct out of funds held in the deceased’s bank accounts, however, each bank will have its own requirements.

After the Funeral/Tangi/Burial or Cremation

Once you have had the opportunity to farewell your loved one, and are ready to deal with their affairs, we recommend that the named executor/s contact the law firm that holds the original will.  This initial conversation with the lawyer will be an information gathering exercise in order for the lawyer to determine whether a grant of probate is necessary.  If your loved one died leaving assets worth $15,000.00 or more in their personal name (not jointly owned), a grant of probate will be required.  Probate is the process of the High Court proving the will as authentic and approving the appointment of the executors for the purposes of administering your loved one’s estate.

Once probate is granted, the administration of an estate can be relatively straightforward (although the ease of the estate administration will vary from estate to estate). The executor’s role is to uplift/gather in the assets of the estate, pay all debts, and attend to the distribution of the remaining assets to the beneficiaries outlined in the will.   Only executors named the will are able to administer the estate, with the assistance of the estate’s lawyer.

What if my loved one died without a will?

If your loved one dies without a will (intestate), the rules of intestacy outlined the Administration Act 1969 apply.  These rules set out who is/are entitled to administer their estate and who has a beneficial interest.  If your loved one owned assets worth $15,000.00 or more, the entitled persons would be required to apply for letters of administration.

The Asset Planning Team at McCaw Lewis are here to guide you through the process and assist in minimising the legal burden for you during this time.  We encourage you to contact our team, so we can assist as much as possible.

Wills and enduring powers of attorney are often discussed and prepared at the same time with your lawyer as a prudent part of a person’s estate planning.  However, the documents have distinct purposes, and the roles of executors and attorneys are often confused.  Understanding how these different documents operate is essential for ensuring that your affairs are managed well, and your wishes are honoured, in life and in death.

Your enduring powers of attorney are valid only while you are alive and, in many situations, only if you lose mental capacity.  Your will, on the other hand, while valid upon signing, the provisions are carried out upon your death.

Will

A will is tailored to each individuals’ unique circumstances but must include who you would like to administer your estate and who you would like to receive your assets once you die.  It can also include your wishes around the appointment of guardians for minor children and burial and/or cremation.  While you are alive and have mental capacity, a will can be updated or amended as many times as you like.

Your executors are persons you appoint under your will to administer your estate once you die in accordance with your will and other legal provisions.  Some duties of your executor/s include:

• applying for probate if you die with over $15,000 worth of assets;
• uplifting your assets and pay off any/all debts; and
• distributing your remaining assets to the beneficiaries as stated in your will.

The executor/s play/s a crucial role in ensuring that your wishes as outlined in your will are carried out, while also managing the estate’s affairs responsibly and in accordance with legal duties. An executor/s authority to act for you only comes into effect upon your death.

Enduring Powers of Attorney 

There are two types of enduring powers of attorney (EPAs): one for personal care and welfare, and one for property. EPAs are a flexible document that allows a trusted person or persons (your attorney/s) to act on your behalf and make decisions for you concerning your property and care and welfare during your lifetime.

A key distinction between the two EPAs is that an attorney’s authority to act for you in relation to your personal care and welfare only comes into effect if you are certified by a medical professional as no longer having the requisite mental capacity to be able to make those decisions yourself. This is to ensure that your right to make your own decisions relating to your health and life are protected and only limited to the extent truly needed, i.e. once you no longer have the ability to make decisions in your own best interests.  With a property EPA, you can elect for it to come into effect immediately upon signing or on mental incapacity, and you should speak to a lawyer about which option would be most appropriate for your circumstances.

You have the ability to define any restrictions of the authority granted in the EPAs, including specifying whether you would like your attorney to consult with any other persons about decisions they are making on your behalf.

If you do not have EPAs in place and lose the mental capacity to make your own decisions, then as an adult, no one has the automatic right to make decisions on your behalf in relation to your property and personal care and welfare.  If this situation arises, your family will be required to apply to the Family Court to have a welfare guardian appointed and property manager appointed so that someone can make decisions for you.  This process is costly and can be lengthy.  If you do not have a will when you die, the law sets out who is entitled to administer your estate and benefit from your estate meaning you do not control who you would like to administer your estate or benefit from your estate.

Once you die, your EPAs become void and your attorney/s no longer have the power to act on your behalf.  The power to make decisions in relation to your estate passes to your executors to administer your estate in accordance with the directions/wishes set out in your will.

Our Asset Planning team is available and dedicated to offering expert advice and guidance regarding inquiries related to your will and enduring powers of attorney.  If you have any questions about such matters, please feel free to get in touch.

The Charities Amendment Bill (the Bill) was introduced to Parliament on 21 September 2022.  The Bill is the result of a process to review and modernise the Charities Act 2005 (the Act) which began in 2018 and, like many things, experienced delays due to the COVID-19 pandemic.  The intention of the Bill is to increase transparency within the charities sector, improve access to justice services, and reduce the barriers faced by smaller charities.  Below, we set out some of the amendments proposed by the Bill.

• The appeals framework is expanded to allow appeals against the decisions of the Charities Registration Board (or certain decisions of the Chief Executive) to be heard by the Taxation Review Authority (the Authority). It is intended that the Authority will be a faster, less formal, and cheaper avenue than the High Court.  The High Court would remain as an appeal court for the Authority’s decisions.  Charities would be able to represent themselves, further reducing legal costs, and the timeframe to lodge an appeal is increased from 20 working days to two months.  Appealable decisions are also expanded to include, among other things, all decisions of the Charities Registration Board.
• The Chief Executive of the Department of Internal Affairs will be able to exempt ‘very small charities’ from meeting the current reporting standards. Exempt charities would still be required to provide an annual return with ‘minimum information’.  What constitutes a very small charity and minimum information will be defined by future, supplementary regulations.  This is a particularly welcome change as even the tier 4 reporting standards can be onerous in terms of time and cost for very small charities.
• The roles and responsibilities of officers is also clarified within the Bill. The grounds for disqualification of officers are outlined and expanded on, and the Charities Registration Board is given the power to disqualify officers for serious wrongdoing or significant/consistent failures to meet their obligations.
• One key change to be aware of is that the Bill would require charities to review their rules/governance procedures annually. Many charities may already undertake such reviews as a matter of good practice, however for smaller charities this may become a more onerous task.  This does present a timely reminder to charities to ensure that they are both following their rules and that their rules are fit for purpose.

Notably, amendments relating to the definition of charitable purposes or around political purposes are not considered by the Bill. The sector has been calling for a more thorough review for some time, and such a review is still intended to be undertaken in the future alongside additional non-legislative changes to improve the sector.  In the meantime, the Bill – if passed in its current form – does provide practical improvements to reporting requirements, appeals, governance, decision-making and compliance.

Public submissions are now open until 10 November 2022, and more information around making a submission can be found here Charities Amendment Bill – New Zealand Parliament (www.parliament.nz).  The Bill does not propose significant changes to the Charities Act 2005, therefore there is little required of charities while the Bill is in its early stages.  It will be worth reviewing the Bill as it progresses through Parliament to consider whether action is required at a later date.  The McCaw Lewis team can assist you in reviewing your charity’s rules and understanding what changes apply to your charity.

Kaylee is a Senior Solicitor in our Asset Planning Team and can be contacted on 07 808 6066.