Services

Areas of Practice

  • Buying and selling property - residential and commercial.
  • Developments and subdivisions.
  • Trusts and asset protection.
  • Business Sales and Acquisitions.
  • Financing.
  • Commercial leasing.
  • Company incorporation and structuring.
  • Wills and powers of attorney.
  • Intellectual Property and Franchising.
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Wills and Estates

Why you should have a Will

Everyone over the age of 18 should have a will. 
Without a properly drawn and up to date will, your assets could go to the wrong person or to creditors or the IRD. This is even more important for people with family trusts, companies, businesses or blended families.

A well-drawn will can also lessen the risk of claims on your estate and reduce the risk of family disagreements occurring. It is essential, if you have more complex affairs, that your will reflects these.

For instance, where you have a family trust, your will should forgive any outstanding loans owed by the trust to you on your death. It might also cover who is to replace you as settlor of the trust.

It is also possible to have your will leave assets to a family trust rather than to an individual beneficiary to protect the money from creditors or acquisitive partners. An experienced will drafter can assist you in making the right decisions and give your will the best chance of standing up in court.

Some of the things which you need to consider when making a will are:
  • Who your executor or executors will be. It is important this person is trustworthy and capable of dealing with your affairs.
  • Testamentary guardians. For those people with young children, testamentary guardians have legal say in the way that the children are raised. The guardian does not necessarily have custody of the children.
  • What specific gifts do you wish to make to people, e.g. jewellery, money, etc.
  • How do you want the balance of your estate divided?

When should I review my Will?
You should review your will whenever the following occur:
  • Marriage – an existing will is automatically cancelled by marriage, unless the will states it was made in contemplation of marriage. You should also review it if you become separated from your current spouse or partner. While the will is not invalidated, it may no longer express your intentions.
  • Dissolution of marriage (divorce) – cancels any gift to, or appointment in favour of, your former spouse
  • New relationships – if you are entering a new relationship you should review your will taking into consideration the provisions of the Property (Relationships) Act 1976. You may wish to take steps to protect your assets to avoid the application of the Act.
  • Change of property – if you have sold, given away or lost items specifically bequeathed in your will.
  • Change of executor – if your executor or trustee dies, you no longer wish them to act or is otherwise unable to fulfil their responsibilities.
  • Guardianship changes – if your guardian dies, is no longer able to act or is no longer required.
Once you make a will with us, we will contact you approximately every five years to discuss your will and any changes that may be required.

 What happens if I die without a Will?
This is called dying intestate. If you die without a will, your estate will be distributed according to the complex  rules laid out in the Administration Act 1969. De facto and same sex relationships are now treated the same as married couples. The rules are:

  • If your spouse/partner survives but there are no children or parents, your spouse/partner receives everything
  • If children survive but there is no spouse/partner, the children receive everything;
  • If your spouse/partner survives and children are also living, the spouse/partner receives all personal chattels, $121,500.00 and 1/3 of the remainder and the children receive the remaining 2/3;
  • If your parents are living but no spouse/partner or children, your parents receive everything;
  • If your spouse/partner and parents are living but no children, your spouse receives all personal chattels, $121,500.00 and 2/3 of the remainder and your parents receive the remaining 1/3;
  • If you have no spouse/partner or living children or parents but brothers and sisters, everything goes to them or to their children;
  • If you have no brothers and sisters but grandparents, half your estate passes to you maternal grandparents and half to your paternal grandparents. In their absence, to maternal and paternal aunts and uncles;
  • If there is no spouse/partner, children, grandparents or parents surviving, everything goes to certain blood relatives. If none can be located, then as a final resort, the estate goes to the government.
This distribution may not be the way you want your estate divided. Making a will reduces the time and cost required to administer your estate and makes it clear who will administer it.

Definitions and FAQ’s

Executors
The executor is the person(s) you appoint in your will to administer your estate. The executor’s duties include obtaining the High Court’s permission to finalise your estate (called obtaining probate), locating, protecting and valuing your assets, assessing and paying your debts, locating beneficiaries, filing you final tax return and distributing the assets in accordance with your will.

Joint Assets
Any assets that are in joint names pass automatically to the surviving owner(s). This includes land owned as joint tenants. These assets do not form part of your estate and cannot be left in your will.

Property (Relationships) Act
With the introduction of the Property (Relationships) Act on 1 February 2002, the surviving spouse/partner has the right to: 

Elect to contest the will and have their half share of the relationship property paid to them in accordance with the Act.  This is done by application tom the Court. (Option A).

Elect to take the provision that is made for them under the will or intestacy (Option B).

Elections must be made within 6 months of death or grant of administration otherwise the options default to B. The survivor must obtain legal advice before making an election.

Asset Protection
Abernethy Broatch Law can assist you with all aspects of asset protection from company formation, family trusts, wills, property sharing agreement and relationship property agreements.

Family Trusts

What is a Family Trust?
A family trust is  created when the person setting up the trust (settlor) transfers assets to the trustees.

The trustees hold these assets subject to the terms of the trust deed for the benefit of certain defined people (beneficiaries).

Once the assets have been transferred to your trust you no longer own them. They are owned by the trustees. 

Most family trusts are Discretionary Trusts meaning the beneficiaries' right to benefit from the trust is dependent on the discretion of the trustees.

Why set up a Trust?
There are a number of reasons to set up a trust but the main purpose is to protect and preserve your assets. The main reasons are:
  • Creditors - the trust can provide protection from personal creditors as the trust owns the assets rather than you. A creditor suing you may not therefore be able to get access to the trust assets to satisfy the debt.
  • Matrimonial Property - a trust can provide some degree of protection for assets from claims under the Property Relationships Act 1976. This Act provides for 50/50 sharing of assets not only between married couples but also for civil union and de facto relationships. This is a complex area and specific legal advice is needed.
  • Asset Planning - trusts provide a valuable tool in estate planning, succession of family wealth and asset management.

Parties to a Trust
A trust deed is a document signed between the settlor and the trustees. There are a number of parties involved in a trust:
  • Settlor – these people set up the trust and generally have the final say with hiring/firing of trustees and adding or removing beneficiaries.
  • Trustees – the trustees control the day to day operation of the trust and are the legal owners of all property in the trust. Independent trustees are generally professional and are appointed to ensure that the trust operates properly and to show that the trust is not a sham.
  • Discretionary Beneficiaries – these are the people that can benefit from a trust. It is set up for their benefit. The trustees are only permitted to give assets/income to beneficiaries.
  • Final Beneficiaries – these are the people who are entitled to the assets of the trust when it comes to an end.
In a typical family trust involving a couple and their children, the couple will be the settlors as well as the trustees (together with an independent trustee) and the couple and their children will be the beneficiaries.

Establishing a Trust
If you wish to establish a trust then competent legal advice needs to be sought. Every trust is different and your personal circumstances need to be considered. 

We can assist you in preparing a trust document that will fit your requirements and needs.

Transferring Assets to a Trust
In order to be effective an asset needs to be sold to the trust at market value. In a typical situation involving the family home being transferred to the trust, a home is valued and then sold at that value.

The trustees then sign a deed of acknowledgement of debt back to the settlors for the purchase price. The debt can then either be gifted off at a rate of $27,000.00 per annum (gifting programme) or can be gifted in full.

Gifting in full can have major consequences for any entitlement to claim a rest home subsidy from the Government and you should discuss this with us before proceeding.

Wills and Memorandum of Wishes
It is important when creating a trust to review your wills at the same time.

For instance, where you have a family trust your will should forgive any outstanding loans owed by the trust to you.

It might also cover who is to have the appointment of new trustees on your death. It is also common to leave the balance of your assets directly to the trust in your will.

A memorandum of wishes is similar to a will for the trust. The memorandum sets out your intentions with regard to the trust once you have died, e.g. wind the trust up and distribute the assets to the children or, maybe, to retain assets, such as a family bach, as an asset for the beneficiaries for the future.

The memorandum is not binding on trustees and they are free to make the most appropriate decision at the time.

How should a Trust be managed?
It is important for trusts to be properly managed to be effective. The trustees are responsible for the management of the trusts assets. Their powers and responsibilities are set out in the trust deed. We consider the following matters need to be addressed in all trusts: 
  • Apply the terms of the trust deed and the standards set out in the Trustee Act and by the Courts;
  • Active management and administration of the trust by trustees, such as an annual review and passing resolutions to all significant decisions;
  • A plan for the management of the trust and the investment of the trust assets.
  • If these requirements are not met then the trust may be open to challenge. We can assist you in making sure you and your trust meet all of your requirements.
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Disclaimer

The information set out in these pages is for general information purposes only. No responsibility is accepted for the information contained in the pages and it is not intended to replace legal advice on any matter. Please contact one of our staff for specific legal advice on any of the matters covered.
Need to Know More? Give Us a Call Today On 07 574 8752
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