+64 7 872 0236 [email protected]

Relationships

Time changed to raise personal grievance for sexual harassment

Commercial, First Job, Relationships, Your Own Business
0

Extended from 90 days to 12 months

The Employment Relations (Extended Time for Personal Grievance for Sexual Harassment) Amendment Act came into force on 13 June 2023. It has extended the timeframe in which a personal grievance (PG) can be raised when sexual harassment has occurred at work.

The timeframe now allows a PG to be raised within 12 months of the harassment occurring or coming to an employee’s attention, rather than the former period of 90 days. The purpose of this amendment is to allow sexual harassment victims more time to come to terms with what has happened before deciding whether or not to raise a PG.

Employment law fundamentals

Employment law in New Zealand is underpinned by the Employment Relations Act 2000; it promotes productive employment relationships and encourages employers and employees to act in good faith in all aspects of the employment environment. This is achieved by specific processes to help parties resolve employment disputes in a quick and flexible way, such as allowing an employee to raise a PG. A PG is a complaint that allows an employer and employee to address, amongst other things, a sexual harassment claim.

What is a personal grievance?

You may raise a PG against your current or former employer if you believe you have been treated unfairly or unreasonably. This includes situations where you think you have been:

  • Unjustifiably dismissed
  • Unjustifiably disadvantaged
  • Discriminated against in your employment
  • Sexually harassed in your employment
  • Treated adversely in your employment on the grounds of family violence, or
  • Racially harassed.

When deciding if an act or dismissal was justified, your employer, the mediator or the Employment Relations Authority must consider what a fair and reasonable employer could have done in all the circumstances at the time the dismissal or action occurred.

You can choose to raise a PG with your employer directly or via the Employment Relations Authority. To raise a PG, you have 90 days, or  12 months for instances of sexual harassment, from the date the action or dismissal occurred or from when you became aware of it. You can, however, raise a PG after the 90-day period has expired in other circumstances if your employer agrees.

Defining sexual harassment

Sexual harassment is unwelcome or offensive sexual behaviour that is either repeated or serious enough to have a harmful effect. It can be direct or indirect. Sexual harassment does not have to be physical; it can also be through written, verbal or visual materials/actions. You may only raise a PG for sexual harassment if it has occurred during the term of your employment. Sexual harassment is defined in sections 108 and 117 of the Employment Relations Act 2000.

Know your rights

It is important for both employees and employers to know their rights and obligations surrounding personal grievances. Employers should ensure their employment agreements are updated to reflect the above amendments.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Advance directives

Health Issues, Relationships, Retirement
0

Right to choose your healthcare

Healthcare choices can influence the quality of our lives. An advance directive can provide direction on the care you consent to, and do not consent to, when you are incapable of expressing your wishes.

An advance directive can be used when you do not wish to consent to a particular form of healthcare or where you wish to receive a certain form of treatment in situations where you are unable to provide instruction such as a blood transfusion or resuscitation. Your healthcare provider will consider your advance directive when you are unconscious, incapacitated or otherwise unable to provide informed consent.

Making an advance directive

There are a variety of ways to make a directive. There are online templates (see the footnote for one example[1]), you may wish to do your own using these as a guide (remember to sign and date!) or you may want to discuss this with us.

Is it valid?

Your advance directive must be expressed in clear terms. Although your advance directive may be made orally or in writing, a written directive will provide greater certainty and clarity.

Advance directives must be made at a time when you have mental capacity and are not unduly influenced by another person. You may have to show that you have received sufficient information from your healthcare provider to understand the implications of your decision, particularly in high-risk situations such as a critical accident. The information you will need to provide to meet these requirements will depend on the circumstances of your care.

You should send your advance directive to your doctor and other health professionals who look after you. Your family should also have a copy.

Not being able to use your advance directive

Your healthcare provider may respect your advance directive if they are aware of it. There are instances, however, where healthcare providers may not use your advance directive even if they are aware of it. An example is when a health professional is obliged to provide compulsory treatment for mental disorders under the Mental Health (Compulsory Assessment and Treatment) Act 1992.

There are also certain forms of treatment that you cannot consent to. For example, your healthcare provider cannot be compelled to assist in your death or to provide treatment that is not clinically available.

If your advance directive is uncertain, based on incorrect information or if it is unclear whether it applies to a given situation, your healthcare provider may decide to provide treatment if they believe it is in your best interests. In this instance, your healthcare provider must attempt to obtain your consent. This also applies if there is insufficient time to determine whether you have an advance directive, such as if there is an emergency or an accident. You will be given the appropriate medical care that is required at the time.

Enduring power of attorney

You may have appointed an attorney to make healthcare decisions on your behalf through an enduring power of attorney for personal care and welfare; your attorney must act in your best interests. As your advance directive is a representation of your interests, your attorney is likely to uphold the directive.

However, your attorney has a discretion on whether to uphold your directive. Ultimately, whether your advance directive will be respected will depend on its certainty and on the circumstances of your care. If your attorney decides that treatment or a refusal for treatment will better protect your welfare and best interests, they may instruct your healthcare provider to act contrary to your advance directive. It is, therefore, critical to discuss this with your attorney to ensure they understand your healthcare preferences.

How can we help?

With more healthcare options available, it is important that you have the best opportunity to decide what healthcare you would like to receive. Although there is no requirement for a lawyer to be involved in the process, we can help to ensure that your advance directive is clear, certain and applicable in most circumstances.

If you have not received treatment or have received treatment that you did not consent to, you can lodge a complaint with the Health and Disability Commissioner. If you need further guidance, please do not hesitate to your lawyer.

[1] www.myacp.org.nz/your-plan

 

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Who are the ‘children of the settlors’?

Kids, Property, Relationships, Trusts
0

Make it clear in the trust deed

In the recent case of Re Merona Trustees Ltd[1], the High Court was asked to determine who the beneficiaries of a trust were as it was not clear who was intended by the phrase the ‘children of the settlors’ that was in the trust deed.

Background

The trust settlors, Merv and Rona, had two daughters together – Lilly and Miffy. Rona also had two sons from a previous marriage when she was very young – Rob and Ray. When Rona’s first marriage broke down, and in the absence of social welfare benefits, she could not afford to keep her sons, and they both went to live with different extended family members. Rob had occasional contact with Rona and, after Rona’s marriage to Merv, Rob was raised by them both. Ray, however, was raised by extended family and had no contact with Rona. It was only as an adult that Ray came to know Rona and the wider family.

Interpreting the trust deed

Rona died in 2013. Merv died in 2020. After Merv’s death, a question arose as to who were the beneficiaries of the trust they had settled.

The question for the High Court was interpreting the trust deed that referred to ‘the children of the Settlors’. Did it mean:

  • The two natural children of Merv and Rona together, being Lilly and Miffy
  • The two natural children of Merv and Rona, as well as Rona’s son Rob, who was raised as a member of Merv and Rona’s family, or
  • The two natural children of Merv and Rona, as well as both of Rona’s sons, Rob and Ray?

High Court hearing

The court heard two main competing arguments.

The trustees primarily argued that ‘the children of the settlors’ meant Rob, Lilly, and Miffy; the ‘children’ did not include Ray. They said that the context in which the trust was established was highly relevant to the interpretation of the trust deed. In particular, a predecessor trust had been established in 1986 before Ray connected with Rona as an adult. The trust in question was settled in 2002, when Rob, Lilly and Miffy were in their forties and fifties.

Even in 2002, after coming to know Ray, Merv and Rona presented to their professional advisors as a couple with three children – Rob, Lilly, and Miffy. Their accountants recorded Merv, Rona, Rob, Lilly and Miffy as the beneficiaries of the trust. The family’s lawyers also understood Rob, Lilly and Miffy to be Merv and Rona’s three adult children. Merv and Rona also signed memoranda of guidance in relation to the trust, that were effectively instructions to the trustees as to their wishes. These memoranda recorded their wish that ‘our children’ benefit from the trust; Rob, Lilly, and Miffy were named, but Ray was not.

Finally, Rona’s will left a bequest each to Rob, Lilly, and Miffy as her children, and an equal but separate bequest to Ray who was described as her ‘birth son.’ She also left him a letter which asked that he be content with this bequest. The court found that by implication, she did not see him as eligible to benefit from the family wealth which was otherwise held in the trust.

On the other side, Ray’s lawyers argued that Ray was also a beneficiary of the trust. They said that once Ray had been reunited with Rona, they developed a close relationship with each other and the wider family. Although Ray was not close with Merv, Ray was included in family gatherings including at Christmas and birthdays. Ray was treated equally with Rob, Lilly, and Miffy in Rona’s will, and he was a part of the family.

The High Court considered that Merv and Rona had brought Rob up as a child of their own, and that it was ‘inconceivable’ that they would have intended to exclude him as a beneficiary of the trust. The documents signed at the time, and subsequently, showed that Merv and Rona thought that Rob was a beneficiary of the trust. In the context of their family, ‘the children of the settlors’ plainly included him. The only question was then whether Ray was also included.

Decision

The court found that the language of the trust deed could be interpreted to include Lilly and Miffy as natural children of the settlors, as well as Rob, who was raised within the family unit as though he was a natural child of both Merv and Rona.

The wording of the trust deed, however, could not be interpreted to include Ray. While Ray enjoyed a good relationship with the family when they reconnected, he was not raised as a part of Merv and Rona’s family unit.

Care must be taken

This decision emphasises the importance of clarifying who is intended to be a beneficiary of a trust at the outset. This is particularly necessary in the context of blended families where there may be reasons to differentiate between classes or groups of children.

In this case, the lawyers and accountants were not necessarily aware that Rob was not a child of Merv and Rona. It is possible that if they had known at the outset, the trust deed would have been drafted in a way that made it clear who the beneficiaries were.

If you are concerned about the wording of your trust deed and how it may affect your children, please be in touch to review your trust deed.

[1] Re Merona Trustees Ltd [2022] NZHC 1971.

 

 

DISCLAIMER: All the information published in Trust eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Trust eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Bank of children

Estate, House, Kids, Property, Relationships, Retirement, Trusts
0

Children helping their parents

Most of us have heard of the expression ‘Bank of Mum and Dad’ where parents help fund their children to get onto the property ladder or with another investment.

 

What happens in the reverse situation, however, where children become the ‘bank’ and assist their parents financially?

 

Why would this happen?

In recent years, parents may have assisted their children in allowing their property to be used as security for borrowings by their children, they could have helped fund the deposit for a child’s first property or provided financial support in a number of other situations.

 

Sometimes, the boot is on the other foot when parents retire or have their income reduced. That may be the time for children to repay the favour and assist their parents.

 

Family-wide discussion

If children are considering helping out their parents financially, we recommend that you have a family-wide discussion on what sort of assistance could be provided.

 

It is important that the entire family is aware of any proposed arrangements, especially if not all of the children are going to be involved. Those children who are assisting may become part-owners of their parents’ property as part of the agreement.

 

There are various family arrangements that could apply but some children may already own their own home. Other children may already be living with or intend moving in with their parents. All of these circumstances will need to be considered.

 

Contact your parents’ lender

Presuming the transaction will be funded by a loan, rather than cash from the children to the parents, the next step is for the parents to contact their lender (usually their bank) to discuss its requirements. The lender may require the current lending for the parents to be discharged and an updated finance application in the name of all of the joint owners with new loan documents. Often, the lender requires the added security and details of a child’s income for the application.

 

See your lawyer

To prevent any future difficulties and dissention in the family, it is important to arrange suitable documents such as a property sharing agreement. This records each party’s responsibility for who and how the family will use the property, loan repayments, maintenance of the property, rates, insurance and a sale process for the property should there be a breakdown in the parties’ relationship or if one of the parties wishes to sell.

 

A property sharing agreement will be the guiding document for the arrangement. As well as ensuring you have a will in place, the agreement can cover what will happen to the parent’s share of the property when they die. The last thing parents want is a falling out between their children.

 

Other things to consider

Other considerations for both parents and children include:

  • The children’s ability to use KiwiSaver funds in the future to purchase their own home
  • Current and future relationships of the children
  • Parents moving into a rest home and how subsidies could be affected
  • The alternative of a reverse mortgage, and
  • Review of wills and enduring powers of attorney.

 

Conclusion

With increases in interest rates and the rise in the cost of living, more retiring parents may face the difficulty of retaining their family home. Rather than the option of a sale, children may be able to assist with the retention of their parents’ home and keeping past memories alive.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Shared parenting

Kids, Property, Relationships
0

Relocating the children without consent

Deciding to move to a new location can be exciting and bring a sense of renewal, particularly after a long cold winter and enduring these Covid years.

 

However, if you are separated with children, what happens to ongoing parenting arrangements in these situations? Can you move with your children without agreement from the other parent?

 

If you do this, it is referred to as a ‘unilateral relocation’, and it can result in applications filed and court orders sought. Both parents are considered a guardian of the children, regardless of how much contact one of the parents may have. There are certain decisions about a child that are ‘guardianship decisions.’ You must discuss these with the other parent. Topics to talk about include where a child lives, where they go to school, any medical decisions and so on.

 

The process

Whatever the reasons for you considering a move, the best option is to discuss this openly and honestly with the other parent. Understandably, the idea of your children moving away can be difficult for the other parent.

 

It may be that you can reach an agreement between the two of you. If it becomes difficult, you can get help initially with mediation forums outside of the Family Court.

 

If you cannot agree, you can file an ‘application to resolve a dispute between guardians’ in your local Family Court and the court will decide for you. The court will look at specific factors, including:

  • What is in the best interests of your children
  • Your children’s relationship with you both
  • What contact arrangements would look like for the other parent, as the court recognises the importance of your children having a relationship with both of you
  • The ages of your children, and
  • Your children’s views on the move.

 

Don’t want them to move?

If your children have not yet moved, and you don’t want them to, you can file an application in the Family Court to stop the children from being moved within New Zealand. You can also ask the court for an ‘order preventing removal’ to stop the children from leaving New Zealand. These applications can be filed on a ‘without notice’ basis, where you ask the court to consider the application without first hearing from the other party.

In this application, you ask the court to make an order that states the children cannot be removed from a specified location (within New Zealand or from New Zealand). With this order in place, it limits your children being removed until further investigations could occur or agreement is reached.

 

What if they are moved anyway?

If the children are relocated without your consent, you can apply to the Family Court for the children to be returned to where they had been living. You would file again for a guardianship order that your children reside in a particular place, and then file for a parenting order. The court will generally favour the status quo location of your children, which is where they were

living for the most recent period before they moved. In determining these applications, the court will always consider what is in the welfare and best interests of the children. This is a paramount consideration.

 

Children’s best interests come first

It is important that your children are happy and settled, and that their interests come first. Ideally both parents will work together to ensure arrangements for their children’s welfare are agreed harmoniously. If, however, agreements can’t be reached, there are options for court intervention. It is wise to try and avoid that as it can be very expensive and take a long time. Most of all, it can affect your children’s relationship with both parents – and no one wants that.

 

If you are concerned about where your children are living, or that they could be moved without your consent, please be in touch with us straight away so we can avoid too much heartache for everyone.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Attorney vs executor: What is the difference?

Estate, Health Issues, Property, Relationships
0

It can sometimes be confusing when we talk about an attorney (for an Enduring Power of Attorney – EPA) and an executor who is appointed in your will and who looks after your estate when you die. The difference, as outlined below, is literally a matter of life and death.

 

An EPA

An EPA is used when you may not be able to make decisions for yourself. For example, you may become very unwell, or unable to communicate important decisions (you could be away from email or phone access for some time), leading in either case to an inability to make important decisions. Your attorney is the person you trust to act in your best interests – with your property and your wellbeing.

 

There are two types of EPA – property, and personal care and welfare. Your attorney can be the same person/s or you can choose different people for these two roles.

 

An attorney’s role

Your property attorney can manage your finances, they can sell your house if necessary and even buy Christmas and birthday gifts for specific people. Your personal care and welfare attorney can make decisions about your medical care, help choose a rest home if you need to move, and consult with other family members about your health.

 

Most importantly, your attorney makes decisions in your best interests; they only have as much power as you give them in your EPA. Your personal care and welfare attorney cannot, for example, withhold life-saving medical treatment; it is absolutely up to you to decide what your attorney can, and cannot, do.

 

Who needs an EPA?

EPAs aren’t just for the elderly. They are also for the young man who has had serious injuries in a car accident  and struggles with his memory, and for the 50-year-old who is working offshore and wants her partner to sign documents on her behalf.

 

Without an EPA, nobody can make decisions on your behalf if you can’t make them for yourself. Your parents, spouse or children don’t automatically have this right. The only way around this is to spend thousands of dollars working through the Family Court to get an attorney appointed.

 

A will

A will is the document that states where you want your assets to go after you die. Your will appoints an executor, or several executors; they will carry out the wishes that are stated in your will.

 

Executor’s role

An executor works with us to administer your estate and carry out the terms of your will.

 

Your executor calls in your assets and pays any money you may owe. They ensure, for example, that your daughter gets your engagement ring, your life insurance pays off your mortgage and they invest the rest of your money until your children turn a specified age and can get their inheritance.

 

Get your affairs in order

Without a will, your assets will be distributed according to the intestacy rules that govern who gets what from what your estate. Without a will, your family may not get what they expect or what you want which could be very upsetting for them.

 

The only wrong time to get a will and an EPA is when it’s too late. Take back the power to decide where your assets go when you die, and save yourself and your family much heartache. Get in touch with us about preparing your will and EPA today.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

When Lotto winners fall out

Relationships, Trusts
0

The importance of who gets what

Winning a Lotto prize is always a reason to celebrate; dreams can be realised and life can be more comfortable. Banking a lump sum can, however, give headaches to families as they not only grapple with newfound wealth, but also how it could be distributed amongst family members. A recent case[1] concerned a family that fell out over its $250,000 Lotto win.

The family comprised Mrs Kaniamma Winter, her children Angeline Narain and Ajnesh Chinappa, and Ajnesh’s wife, Vilashni Chinappa.

In January 2009, Angeline bought a Lotto ticket. That ticket was in Mrs Winter’s possession when she went shopping with her daughter-in-law, Vilashni, and checked the ticket numbers at a Lotto shop. Even though Mrs Winter said the ticket was her daughter Angeline’s, she completed a claim form in her own name on the spot; Mrs Winter used Vilashni’s bank account details as she could not remember her own.

When Lotto deposited the winnings, Vilashni transferred $220,000 to a bank account in the names of Mrs Winter and Angeline, leaving $30,000 in her own account. Mrs Winter signed a gifting certificate for this $30,000; this sum was then transferred to the joint bank account that held the rest of the winnings.

 

Property purchase

The family, then living in a Kāinga Ora property, decided to use their Lotto winnings to buy a six-bedroom home in Papatoetoe. The deposit of $36,000 was paid from the joint bank account (in the names of Mrs Winter and Angeline), but the property was purchased in the names of Ajnesh and Vilashni Chinappa, who borrowed $288,000 to assist with the purchase. The balance of $37,046.70 that was required to settle was paid from the joint account.

The four family members moved into the property and lived there harmoniously. Angeline contributed generously to the maintenance costs and improvements – until Angeline’s new partner, Daniel Prasad, moved in. When relations within the family broke down, Angeline registered a caveat; the Chinappas responded by trespassing Mrs Winter, Angeline and Daniel from the property. The three were forced to rent elsewhere for 10 years while the Chinappas enjoyed exclusive occupation of the Papatoetoe property. The situation deteriorated to the point that the Chinappas filed court proceedings in the High Court.

 

High Court

The High Court, “faced with completely contradictory narratives” about who owned the Lotto ticket, the status of the gifting certificate and other contributions, found that:

  • Angeline owned the Lotto ticket
  • Angeline had contributed 20% of the purchase price of the Papatoetoe property
  • It was reasonable for Angeline to expect an interest in the property
  • Angeline had contributed generously to furnish and upgrade the property, and
  • The gifting certificate was drafted solely to meet the bank’s requirements, the money was not intended to be a gift and it could not be used to suggest the ticket was Mrs Winter’s.

The High Court awarded Angeline a 50% interest in the house, after deduction of the mortgage amount, on the basis of a constructive trust. The decision to award 50% rather than 20% was made on the grounds that Angeline had not had the benefit of occupation for 10 years. The Chinappas appealed this decision.

 

Court of Appeal

The Court of Appeal agreed that Angeline owned the Lotto ticket, had contributed 20% of the purchase price, and made further direct and indirect contributions to the property. Angeline’s indirect contributions to the property, however, were not materially greater than that of the Chinappas, meaning Angeline could not reasonably expect a greater share than the 20% (of the full market value) she contributed under a constructive trust.

 

A twist in the tail

The Court of Appeal then took a very interesting step that was to award occupation rent to Angeline. This was to compensate Angeline for the 10 years the Chinappas had excluded her from occupying the property that was in breach of her reasonable expectation that she would both own a share in the property and be able to occupy it.

The Chinappas were directed to compensate Angeline by paying her occupation rental, calculated at 20% of the market rental for the property, for the period of her exclusion. At the average weekly rental for Papatoetoe, that would amount to an additional $67,600 – a much lower amount than that awarded by the High Court.

 

Multi-generational housing is becoming increasingly common as it provides an excellent opportunity for families to support each (for example, through providing child care and, later, elder care). Caution is needed, however, to ensure there is a written agreement that records:

  • The basis on which funds are contributed to the purchase, maintenance and outgoings on the property
  • Who is occupying the property, and, most importantly
  • How the parties will exit the arrangement.

If you are considering multi-generational housing, do talk with us early on so we can advise on an agreement that is fair to all parties.

[1] Chinappa v Narain [2022] NZCA 183.

 

DISCLAIMER: All the information published in Trust eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Trust eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Love, heartbreak and … death?

Estate, Relationships, Retirement
0

Make a new will and EPAs when you separate

Many people who have endured a relationship break up know it can be exhausting – mentally, emotionally, physically and, ultimately, financially. You could be forgiven, then, for thinking the priority is to get the agreements signed or Court Orders made. However, what is often overlooked as one of the first steps, and yet so imperative to protect your assets and your new spouse, partner or children in the future, is updating your will and enduring powers of attorney (EPA) to reflect your new relationship status.

 

Why update your will?

There are some very good reasons why you should update your will if you separate, including:

  • Your ex-spouse/partner may still benefit under your will as it continues to be effective after you separate unless:
  • You remarry or form a civil union
  • You make a new will, or
  • The court orders otherwise.
  • If your marriage or civil union hasn’t been formally dissolved, everything remains the same (which is why you need to change your will after separation). If your marriage or civil union has been dissolved, however, your ex-spouse/partner can neither be an executor nor a beneficiary.

 

Those people whom you would like to benefit (such as your new spouse or partner, children or grandchildren) may have to share your estate with your ex-spouse/partner unless they can persuade them to waive their entitlement under your will by entering a deed of family arrangement. If your ex-spouse/partner refuses to waive their entitlement then your family would need to resort to a claim in the Family Court for additional provision from your estate, such as:

  • A claim by your new spouse/partner, children or grandchildren under the Family Protection Act 1955, or
  • A claim by your new spouse/partner under the Property (Relationships) Act 1976.

 

None of the above options will be easy, and all of them could be lengthy, litigious and expensive. If you wish to ensure those people you would like to benefit when you die do in fact benefit, your first task should be to instruct your lawyer to make a new will that reflects your newly separated situation.

 

Appointing a testamentary guardian?

If you separate, you can ensure someone you trust will look after your children’s best interests and welfare after you die by appointing a ‘testamentary guardian’ in your will. Your testamentary guardian will have the power to make guardianship decisions about your children.

 

This is particularly important if any other legal guardians (such as your children’s other parent or existing court-appointed guardians) are not so suitable.

 

Appointing a testamentary guardian gives that guardian the right to apply for day-to-day care, it does not necessarily mean they will have the day-to-day care of your children after you die. However, if the testamentary guardian was the primary caregiver prior to your death, and it is not in the children’s best interests and welfare to be placed in the care of any other legal guardians, then the court may well grant the testamentary guardian day-to-day care.

 

A testamentary guardian should be someone you consider a good role model for your children. That person should be in the best position, financially and emotionally, to help care for them, be in good health and be able to ensure continuity of care for your children so they are not uplifted from their education, social group or community. Make sure you talk with your proposed guardian to ensure they can tick all these boxes before making this appointment in your will.

 

Why update your EPA?

If you appointed your ex-spouse/partner as your attorney in respect of EPAs for personal care and welfare and/or property, this is also not automatically revoked when you separate. It’s a similar situation as overlooking making a new will when you separate – retaining an out-of-date EPA could create a very awkward family reunion if your ex spouse/partner remains responsible for making decisions about your personal matters (which doesn’t include decisions about your children) if you lose mental capacity.

 

If you do not revoke your EPA after you separate, and subsequently lose mental capacity, unless the appointment of your ex spouse/partner ceases (because your ex dies, becomes mentally incapable, bankrupt, or files a notice in court under the Protection of Personal and Property Rights Act 1988), the only option to remove an attorney is for your family to apply to the Family Court.

 

The better option? Revoke your EPAs and make new ones with your lawyer at the same time you update your will.

 

Do it sooner rather than later

Understandably, the idea of more legalities after a separation can be daunting and easily pushed to the back of your mind. Ignoring these issues may be easy to justify after the rigours of a separation. Ultimately, however, by not being thorough post-separation, which includes re-arranging your estate planning, you are leaving a potentially complex and expensive legal headache behind for your loved ones and much uncertainty for your children.

 

Get onto this sooner rather than later – the risk isn’t worth it.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Gift or loan?

Estate, House, Kids, Latest news, Relationships, Retirement
0

The importance of properly documenting advances between family members

The trusty Kiwi “She’ll be right” approach is often manifested in a reluctance to formally document intra-family lending arrangements. Catch cries of “I trust the kids to sort things out between themselves after I’m gone” and “My new partner says she will never make a claim and I believe her” are common, but all too often lead to disputes down the track.

In this article, we look at three different scenarios that are based on Maddy’s story.

Maddy’s parents help out

In 2016, Maddy’s parents decide to help her buy her first home. The bank will not lend to Maddy without a 20% deposit; her parents offer to lend her $250,000 to make up the 20%. The bank’s rules also require her parents to sign a gifting certificate, confirming that they will not require repayment of the money. Despite that, Maddy and her parents agree verbally that the money is a loan, not a gift, and Maddy will pay them back when she can. This is important to Maddy’s parents, as they also want to help their younger daughter, Sarah, into her first home in a few years’ time once Maddy has enough equity in her home to repay them. Maddy takes out a bank loan, secured by a first ranking all obligations mortgage in favour of the bank and buys her first home. Exciting times.

Let’s look at three different ways in which the failure to document that loan could play out.

Scenario 1: Insolvency

Maddy also owns a hospitality business, which she operates as a sole trader. Maddy doesn’t really understand how it all works, but is pleased that having a mortgage means she gets better lending rates for the business, which improves her caé’s cash flow no end.

Unfortunately, in 2020 Covid hits. While the business manages to hang in there for some time thanks to the Covid business loan and the wage subsidy, the recent removal of all government financial assistance and the move to red level in the traffic light system tip the business over the edge. It owes more than $500,000 to the bank, as well as the debt to the government and various suppliers. Maddy’s creditors file bankruptcy proceedings.

Maddy receive a demand from the bank to pay the $500,000-plus it is owed, which means she must sell her house. There is just enough money left after doing that to repay the bank and all the unsecured creditors.

In an attempt to salvage something from the situation, Maddy argues that the amount her parents contributed to the equity was a loan and not a gift. Unfortunately, there is no documentation to support that; the only documentation is the signed gifting certificate. The creditors rightly say that there is no evidence the money was a loan, and therefore they require repayment of their debts in full.

Scenario 2: Succession

Maddy’s parents died shortly after lending her the $250,000 house deposit. Younger sister, Sarah, is shocked when the estate lawyer says that there is only a house property to divide; Sarah says that she knows her parents had more than $250,000 in the bank which they had lent to Maddy to help buy her house.

Sarah appeals to Maddy, saying that they both know their parents lent Maddy the money. Maddy disagrees, pointing to the bank gifting certificate: she says that it was clearly a gift and she refuses to pay anything back. Lacking any evidence of the arrangements between her parents and Maddy, Sarah is forced to reluctantly accept a lesser inheritance than she believes she was entitled to.

Scenario 3: Relationship property

Maddy’s boyfriend Tom moved into her new home shortly after she bought it. Their relationship broke down four years later in 2020 and Tom claims half the equity in the home under the Property (Relationships) Act 1976.

Maddy accepts that the home is their ‘family home’ and that the equity must be divided equally. She argues, however, that in addition to the bank loan they need to take into account the $250,000 owed to her parents.

Tom says that is the first he heard of any loan from Maddy’s parents, and points to the gifting certificate that he found when he was cleaning out some drawers. Maddy is unable to produce any evidence to support her argument that money is owed to her parents, and has to divide the equity without factoring that in.

The lesson

In every scenario outlined above, a dispute could have been avoided, or minimised, had Maddy and her parents entered into a simple agreement recording the existence of the loan. A deed of acknowledgment of debt, prepared at the time that Maddy bought her house, could have been produced for a minimal fee, thus preventing a multitude of unintended consequences later on.

If you are lending money within your family, do contact us to ensure the loan is documented in a way that protects everyone — both now and in the future.

 

 

DISCLAIMER: All the information published in Rural eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Rural eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Defining a de facto relationship

House, Latest news, Relationships
0

Not that straightforward when it comes to property

You may have heard that ‘Marriage is betting someone half your stuff that you’ll love them forever’. But what happens about the ‘stuff’ you own before you formally say “I do”?

The law providing equal sharing of relationship property automatically begins after three years in a de facto relationship. However, what a de facto relationship looks like, and when it starts, isn’t always obvious and is often the subject of a dispute.

We take a closer look at de facto relationships as defined in the Property (Relationships) Act 1976 (PRA for short). This is key if you and your partner separate and have a dispute over property.

Harry and Kahurangi

If Harry and Kahurangi had been dating casually for a while before moving in together, we’d all agree their relationship evolved into a de facto relationship when they set up home as a couple. But what if Harry and Kahu were flatmates first? Would we assume they were in a de facto relationship from their first kiss?

The landscape changes again if Harry and Kahu each own their own home and want to keep their independence, or if Harry lives in Auckland away from Kahu in Tauranga? Does it matter that Harry hasn’t told Kahu about his significant credit card debt? Or that Kahu’s children think Harry is a ‘friend’?

Partners in relationships come with their unique experiences and backgrounds, forming bonds in any number of ways. Determining when a relationship becomes de facto requires an analysis of many factors.

The easy parts

A de facto relationship is a romantic relationship between two adults, who are not married or in a civil union, who live together as a couple. Many de facto relationships start when couples begin living together, as the legal term suggests. However, when couples have other commitments such as children or jobs in different cities requiring them to live apart, the science of determining when two people start living together as a couple becomes harder.

Living together as a couple

The PRA sets out nine factors to consider when determining whether two people are living together as a couple. The simplest factors are whether the couple lives together, the duration of the relationship and if a sexual relationship exists. Exclusivity is not a requirement of a de facto relationship: partners may be in more than one relationship or be having a sexual relationship with other people.

The nature and extent of the relationship must be taken into account. You should think about whether you would rely on your partner in an emergency and the level of dependency you have on your partner. A couple may date for many months or years before considering themselves to be serious or update their social media relationship status. It is also relevant whether the relationship is public or known to family and social circles of the couple when looking at whether a de facto relationship exists.

There are practical considerations: do the partners care for and support their partner’s family or children? Do they look after their partner’s home, including performing household chores and cooking? Entering a relationship with children from a previous relationship provides layers of complexity — deciding when to introduce partners to children, and navigating living arrangements, further complicates things.

The analysis of whether a de facto relationship exists also looks at whether there are financial commitments together such as owning joint property or bank accounts, and any support provided from one partner to the other. Some de facto partners retain separate accounts for their independence or security, but this alone will not stop a relationship from becoming de facto.

Ultimately, it is the degree of commitment and investment that each partner has to their shared life that is the tipping point of whether they are living together as a couple. They do not need to own property together and, on the other side of the coin, they can live in the same property without living together as a couple.

Why the fuss?

Many couples do not consider it relevant to define their relationship; and for many this is perfectly fine.

If, however, a couple is living in a property that was owned by one partner before the relationship began it will be classified as relationship property after the couple reaches its three-year anniversary, or earlier in some situations. If they separate, the property will be divided equally, rather than remaining the property of the original owner.

Protecting personal assets from a relationship property division is best done before reaching the three-year threshold, but can be done at any time. This is called ‘contracting out’. Independent legal advice for both parties is essential and should be obtained before entering into any formal agreement.

Conclusion

It is never too late to define your relationship with your partner. Whether you are introducing your partner to your family or buying some furniture together (or a house!), take a moment to consider whether you think you may have crossed into de facto, and potentially equal sharing, territory.

Whatever the stage of your relationship, it is wise to think about the longer-term impact this could have for both your futures.

 

NB: The Property (Relationships) Act 1976 has been reviewed by the Law Commission which recommended significant changes to this piece of legislation. However, in late November 2019, the government responded by stating it would not implement nearly all of those recommendations until the Commission has carried out a review of succession law.

 

DISCLAIMER: All the information published in Fineprint is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Fineprint may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2021.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Get in touch today, we’d love to talk.

+64 7 872 0236 [email protected]