No. It is very dangerous to assume that assets held on trust are automatically protected from relationship property claims.
There are many situations in which an ex-partner may succeed in a relationship property claim against your trust assets. Most examples of this include some form of contribution or improvement to the assets made by the partner.
The best way to guarantee that your assets are protected from a relationship property claim is by entering into a property agreement. This provides certainty over which assets each party can claim upon any future relationship break-up.
If you would like further advice regarding relationship property, please make an appointment with Scott Donaldson or Malcolm McKenzie.
The general rule is that an old will is automatically revoked upon the marriage (or civil union) of the will-maker. Due to this, in most cases your will is invalid upon entering into a new marriage.
However, there are some exceptions. For instance, when the will has been made in contemplation of the marriage/civil union, it may remain valid. There are further exceptions regarding powers of appointment in relation to wills.
For further information on any potential exceptions, please make an appointment with Malcolm McKenzie or Scott Donaldson.
Many people are unsure whether or not their relationship counts as a de facto relationship for the purposes of the Property (Relationships) Act. The standard, but misleading, rule that non-lawyers refer to is the three year test. In reality, there are many more factors that will determine whether or not your relationship counts as de facto.
In deciding whether or not your relationship is de facto, the court will consider:
– the length of the relationship;
– the degree of financial interdependence;
– whether other people regarded you as a couple;
– whether there was a sexual relationship;
– performance of household duties;
– how your property was owned;
– the extent to which you lived together; and
– any other relevant factors.
If you don’t wish to be subject to the provisions of the Property (Relationships) Act – and you are getting into a new relationship – you need to see a lawyer and have a s21 agreement (pre-nuptial) drawn up as soon as possible. Do not rely on the three year test. You may be in a de facto relationship much sooner than you think.
Please contact me if you would like us to prepare a s21 agreement for you.
email@example.com; 03 218 3137
If you decide to put your house into a trust you may still be eligible for a rates rebate – even if you are not one of the trustees.
To be eligible for a rates rebate you must be the ratepayer. The ratepayer is the person who is named as a ratepayer in the rating information database and the district valuation roll. Usually that is the owner of the land.
The Local Government (Rating) Act 2002 says that the person who is entered into the rating information database is either:
1. The registered proprietor; or
2. the lessee, where the lease is for more than 10 years and provides that the that the lessee must be entered in the rating information database and the district valuation roll as the ratepayer in respect of the unit. That lease must also be registered against the title.
You will need a lawyer to set up a registered lease. The cost of setting up a registered lease is likely to be $600-$900 so you will need to weigh up the cost against the likely benefit.
Call us if you would like to arrange a registered lease in order to get a rates rebate.
The current Immigration NZ rules make it almost impossible for a person working on a dairy farm to get NZ residency – even if that person is the manager of their farm.
Skilled migrant visas operate on a points system. Applicants get points for experience, education, having ties to New Zealand as well as a range of other factors. One category is “Skilled Employment” – applicants get 50 points if they can show Immigration New Zealand that they have “Skilled Employment”. Almost everybody needs those 50 points to get across the line.
The only dairy farm job that is on the list of “Skilled Occupations” is “Dairy Cattle Farmer”. Sounds OK right? – wrong. Immigration NZ uses a classification system for skilled occupations that disqualifies almost everyone from being a “Dairy Cattle Farmer”. That classification system is based on the Australian Bureau of Statistics classification of jobs and (surprise, surprise) has little relevance to the way dairy farms operate in New Zealand.
To be a “Dairy Cattle Farmer” applicants must have primary responsibility for a number of tasks on the farm. Those tasks include the following:
• maintaining and evaluating records of farming activities, monitoring market activity and planning production accordingly
• managing business capital including budgeting, taxation, debt and loan management
The problem here I have yet to meet a dairy farm manager who has primary responsibility for those matters. Pretty much all farms have an owner who takes care of those sorts of matters and then gives instructions to the farm manager – often after meeting with farm consultants.
Even if farm manager participates in meetings where production planning and managing business capital etc is decided they still fall short of being “Dairy Cattle Farmers” because they don’t have ‘primary responsibility’ – insane.
Some people who are in their first year or two of dairy farming come to see me to get immigration advice. They want to know how they can go about becoming New Zealand residents. They often seem hard working and reliable people who want to make the best for their families. I tell them to go and work in a different industry. There is no pathway to residency for them in dairy farming.
Contact me if you need assistance with your visa application.
What is are powers of attorney?
Sometimes in life we need somebody else to manage our affairs: either because we are unable to due to a sudden or long-term illness, or for other reasons, such as being abroad. A power of attorney gives another person the authority to act on your behalf.
There are two types of powers of attorney: a general power of attorney and an enduring power of attorney.
Enduring power of attorney (EPA)
An enduring power of attorney gives another person (the attorney) the right to make decisions for you if you become mentally incapable.
If you become mentally incapable, then your attorney will made decisions for you such as what treatment you should get and where.
Most people think that if they become mentally incapable then their partner or spouse can make decisions for them. That is not the case. In fact, for those decisions to be made a lengthy and expensive court process is required if no EPA is in place.
General power of attorney
A general power of attorney gives another person power to look after your affairs for the matters specified in the power of attorney. For example, if you are going overseas for an extended period you might wish to appoint a family member as attorney to look after your home. That person can sign documents on your behalf and deal with the property – say to let it out – while you’re away. You can appoint more than one attorney, who can be anyone over the age of 20 and you are not prevented from continuing to act on your own behalf while an attorney is appointed.
Give us a call for a no cost discussion about whether or not powers of attorney are right for you.
Transferring assets into a family trust is something many individuals could benefit from, however, it can be difficult to understand exactly what a family trust is and the advantages of setting one up. Why would an individual put their property and assets into a trust for a third party’s benefit?
What is a Family Trust?
A trust is designed to protect your assets now and in the future. The person who sets up the trust (known as the settlor) transfers their property to another person (know as a trustee), who administers the asset/s according to the trust deed for the benefit of a third party/parties (known as beneficiaries).
For example, John and Mary transfer their family home into a trust for the benefit of their children. Their family solicitor acts as the trustee and administers the property according to the trust deed, which has been written by John and Mary. One of the provisions of the trust deed is that John and Mary can live in the house for the duration of their lifetime.
Trusts have been used to protect property and assets since the Middle Ages, when crusading knights leaving for the Holy Land entrusted the management of their property to another person until they returned. Nowadays people set up family trusts for perhaps less intrepid reasons but the advantages for doing so are numerous, including:
Protecting your personal property from creditors
If you are an entrepreneur or a director of a company, you may wish to place your personal assets in trust so they cannot be claimed by creditors to pay off business debts. However, you cannot set up a trust with the specific aim of avoiding paying existing debts. Insolvency legislation allows the Official Assignee to claw back gifts made to a trust up to five years prior to bankruptcy.
Protecting separate property
Under the Property (Relationships) Act 1976 if a relationship breaks down, the assumption is that all ‘relationship property’ will be split 50/50 between the parties. However, if you are not yet in a relationship, but may wish to enter one in the future, you can ensure your property is kept separate by transferring everything into a trust, perhaps for the benefit of your children. If you are already in a relationship you would need to enter a ‘contracting-out’ agreement as the courts can claw back assets from a trust if they were set up to defeat a future claim.
Similarly, you can set up a trust to ensure that assets such as a family farm are kept for your children only, thereby protecting any claims from future in-laws.
Protection from claims against your estate
Once property becomes part of a trust it ceases to be part of your estate, therefore there can be no bitter family feuds over who gets what when you pass away. Gift duty was abolished on the 1st October 2011, which means that you can gift all your property to a trust in your lifetime without paying tax. This allows you to have full control over who will benefit from your property as additional claims cannot be made against a trust.
It is important to seek legal advice and have your trust set up properly as there can be serious ramifications if managed incorrectly.
Depending on your situation setting up a family trust may be easier than you anticipated. If you wish to find out more, contact us and one of our solicitors will talk you through the process.