For some reason the activity that takes the longest for our clients to do is to ensure that they have an up to date will in place. If you die without a will, you die intestate. This means that your assets will be distributed according to the Administration Act, which may not be what you want to happen with your assets. There are certain rules about who gets how much and in what order. Administering an estate under the Administration Act will also use up money in legal fees. We strongly recommend that you have a will, and that it is up to date.
We also strongly recommend that our clients have Enduring Powers of Attorney in place (at any age). There are two types of Enduring Powers of Attorney (EPA’s), one for Property (where someone has the power to make decisions on your property, like claiming on an insurance policy, selling a property, managing your money) and one for Personal Care and Welfare (where someone has the power to make decisions about your care and support).
You may be familiar with these documents for an elderly relative, but it is important for you as well. Imagine that you are married, you are in a car accident, your spouse dies, and you are in a coma. No-one then has legal status to make these decisions for you, which is why we recommend that you have these documents in place for you as well. If you don’t have these in place, the courts get involved, taking time and money to resolve the issues.
Family Trusts have been popular legal structures in New Zealand, but the value of these is changing. The new Trusts Act 2019 comes in to force in January 2021, changing the responsibilities of Trustees and making Trusts more transparent. There is no guarantee that your assets will be protected in the future against asset testing. There are valid reasons for having a Family Trust in place (to protect assets against future relationships, to protect assets for a child or family member with a disability for example), but there are limited (if any) taxation advantages for having a Family Trust in place. If a Family Trust IS relevant for you, it is important that you manage it properly, and keep all of your minutes, resolutions, accounts and documentation up to date.