Succession Planning - Parry Field Lawyers

What would happen to your affairs if you lost the capacity to handle them yourself?

If you don’t have an enduring power of attorney (EPA), managing your property or care and welfare can be extremely difficult. Family and friends don’t have an automatic right to make decisions on your behalf. In most cases, if you want someone else to have authority to handle your affairs you need to arrange that ahead of time.

In New Zealand, if you become incapacitated without an EPA in place, your family and/or friends must apply to the Family Court before they can do anything to help with your property or welfare and care. This takes time and is considerably more expensive than making an EPA. It may also provoke family tensions as family members may not always agree on who should be appointed. The Court may also appoint someone who you don’t wish to make decisions on your behalf.

Everyone, regardless of age, should make an EPA. Tomorrow may be too late. A car accident or stroke could leave you incapable of making key decisions for yourself either temporarily or for the rest of your life.

What is an Enduring Power of Attorney?

An EPA is a document where you appoint another person (called your attorney) to make decisions on your behalf if you are unable or (in some circumstances) do not wish to.

There are two types of EPA – one specific to your financial and property matters and the other specific to your personal care and welfare.

How to make an Enduring Power of Attorney

The format of the EPA document is prescribed by statute. The person making the EPA (‘the donor’) must have their signature witnessed by a lawyer, officer of a trustee corporation or a legal executive, all of whom must be “independent” of the attorney. The witness must certify that he or she has fully explained the rights and obligations under the EPA to the donor and that that person was of sound mind and able to understand its effect.

If we act for both you and your attorney, you may need to see a solicitor outside our firm to have the EPA signed (we can still prepare the documents and assist with arranging the independent lawyer appointment if you wish). As noted above, we consider it extremely important that everyone has an EPA. The cost of making an EPA will always be less than the cost involved if you don’t have one and need someone to manage your affairs.

Care and Welfare Enduring Power of Attorney

A personal care and welfare attorney can only act on any “significant matters” relating to the donor’s personal care and welfare where a medical practitioner has certified that the donor is mentally incapable. A “significant matter” is one that is likely to have an important effect on the health, wellbeing or enjoyment of life of the donor – for example, a major medical procedure or change of the donor’s residence. Unless the medical certificate specifies that the donor’s mental incapacity is likely to be ongoing, a new certificate will be required each time the attorney acts under the EPA.

The attorney must consider the financial implications of his or her decisions and must take into account any advance directives given by the donor, especially concerning medical treatment.

You can only appoint one person to act as your attorney at any time but you can appoint a substitute attorney to step in if the first person becomes unable or unwilling to act for you. You can also include a requirement that your attorney consult other people such as family members or give them information about the decisions the attorney is making for you.

Property Enduring Power of Attorney

A property attorney looks after your financial, investment and real estate matters. There are more options for how your property attorney can act compared to the care and welfare attorney. These include:

You can have more than one person acting either together or on their own;
You can appoint substitute attorney(s) to step in if the first person becomes unable or unwilling to act for you;
You can have the attorney able to act on your specific instructions while you have mental capacity and continue if you lose capacity. This can be helpful if you become physically incapacitated. Or you can restrict the authority to only begin if you have been medically assessed as not having mental capacity to make your own decisions.
You can require your attorney to consult with or give information to other people;
You can empower your attorney to make gifts and donations on your behalf if you wish;
You can allow your attorney to act to their own benefit for example if they own property with you jointly or for out of pocket expenses. All other actions must be solely in your best interests;
You can provide the right for your attorney to apply to the Family Court if for some reason your will is out of date and needs to be changed;
You can restrict what property your attorney has power over.

Ending an Enduring Power of Attorney

All EPAs come to an end on the donor’s death. If you have mental capacity you can also revoke an appointment if you change your mind about who you want to act for you. Notice of the cancellation needs to be given to the attorney and we can assist with that. The court can also cancel an EPA if it believes the attorney is not acting appropriately.

If you have been appointed as an attorney you can disclaim that appointment if you want to stop acting. Again we can assist with the appropriate notice.

Please contact us

EPA’s are essential documents for people of all ages and it is much easier to put these in place before they are needed. If you wait until you think you are losing capacity it may be too late and you may not have advance warning of an accident or medical event. We can also assist if you are acting as an attorney and have questions about the role or actions you plan to take.

You should talk to your lawyer at Parry Field about making an Enduring Power of Attorney. To discuss making an EPA or acting as an Attorney please contact Luke Hayward or Jo Mechaelis-Wall (03 348-8480).

The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.

What happens if matters go to Court?

When a claim is made against an Estate, it is made against the Executor as the named party. Usually the Estate is liable for the associated legal costs, not the Executor personally. (There are exceptions if the Court finds that the Executor took inappropriate actions which increased the costs of the proceedings).

The appropriate response for an executor to court proceedings depends on the type of claim being made.

If the claim is under the Family Protection Act 1955, the Executor’s duty is to accurately inform the Court of the Estate’s assets and liabilities and any other relevant information about the Estate. The Courts have held that the Executor should not actively defend the proceedings (i.e. they should not try and prove that the provisions of the will should be followed). It is only other beneficiaries of the will that are able to take that active defence.

For claims made under the Law Reform (Testamentary Promises) Act 1949, the Executor is entitled to defend the proceedings. However, if the beneficiaries of the Estate are opposing the claim, the executor can take a neutral stance.

If the claim is being made by an alleged creditor of the Estate, the Executor should actively defend the proceedings if it considers that the creditor’s claim is not legitimate.

Please see these articles for more information about Family Protection Act and Testamentary Promise claims.

We have experience assisting Executors to manage claims against an Estate, and to assist beneficiaries in negotiating a resolution. Please contact us to see how we can help you.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

What happens if a family member does not provide for you in their will?

It is always difficult when a loved one passes away. But this can be made significantly worse when someone discovers that they have not received the provision under the will that they expected. What can you do if you think you have not been properly provided for?

The law provides for certain family members to challenge a will on the basis that the will-maker did not adequately provide for them under the Family Protection Act 1955.

Who can make a claim?

The Family Protection Act entitles the following people to make a claim:

the spouse or civil union partner of the deceased;
a de facto partner who was living in a de facto relationship with the deceased at the date of his or her death;
the children of the deceased;
the grandchildren of the deceased;
the stepchildren of the deceased (if they were being maintained wholly or partly or were legally entitled to be maintained wholly or partly by the deceased immediately before his or her death); and
the parents of the deceased (in limited circumstances).

There is no provision for siblings of a deceased to make a claim.

What does it take for a claim to succeed?

To succeed, a claimant must convince the Court that the will-maker failed to “provide adequately for the claimant’s proper maintenance and support”. This does not just reflect economic need, but also the importance of recognising a claimant’s importance as part of the family.

It’s important to note that mere unfairness or disparity between beneficiaries is not sufficient to bring a claim under the Family Protection Act (for example, that one sibling got less than the others).

The success of a claim will depend on the particular facts of the case, but relevant factors include:

The economic need of the claimant;
The size of the Estate and the competing moral claims of other family members and beneficiaries under the will;
The duration and nature of the claimant’s relationship with the deceased;
Any gifts made to the claimant during the deceased’s lifetime; and
Whether there was a rift between the deceased and the claimant and, if so, who was responsible for that.

If successful, the Court is still limited to awarding no more than what is necessary to give adequate provision. The Court will not rewrite a will on the basis of what someone else considers to be fair.

Timeframe for a claim

In order to be effective, a claim must be brought against an Estate before the funds of the Estate have been finally distributed to the beneficiaries.

Where an executor has no notice of any claim against the Estate, the executor can distribute the Estate’s assets 6 months after probate is issued.

Under the Administration Act 1969, a potential claimant can prevent distribution of the Estate for 3 months if notice is given to the Executor that he or she intends to challenge the Estate. To get the most out of this 3 month window, notice of intention should be given just prior to 6 months after probate. This extension can only be obtained once, after which the Executor is safe to distribute if no Court proceedings have been served on the Estate.

Any claim must also be brought within 12 months from the date of probate (we explain probate in this article). A claimant can apply to the Court for leave to extend this timeframe, but extensions are rare and will only succeed if the Estate has not already been distributed.

How to make a claim

A Family Protection Act claim can be brought in either the Family Court or the High Court. The appropriate court will depend on the size of the estate, the complexity of issues, and whether there are already other proceedings relating to the Estate.

The documents required to initiate a claim differ depending on which Court is being used.

Once a claim is brought, it will need to be served on the Estate and other beneficiaries, who can then choose to oppose the application. Where a claim is opposed, the Court will usually ensure that the parties have the opportunity to attend some form of mediation to try and resolve the dispute without the need for a full hearing.

We have experience in both bringing and defending claims in both courts, and in resolving disputes between beneficiaries. Please contact us to see how we can be of assistance.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

What duties apply to an executor?

We assist many people to prepare their wills, as well as helping executors to manage estates. A common question we get is “what duties apply to an executor?” To keep you safe, we outline here the key duties you should be aware of.

What is an executor?

An executor is the person a will-maker appoints to carry out their Will when they die.
An administrator is the person appointed by a court to administer a deceased person’s estate (usually where the person died without making a will, this is called dying “intestate”).
This article primarily focuses on executors, but the general duties and comments about resolving Estate disputes will be of equal relevance to administrators.

What are the responsibilities of an executor?

After an executor has been appointed, all property of the deceased will immediately come under the legal ownership of the executor (on behalf of the Estate).

The duties of an executor include:

To gather in all of the deceased’s assets;
To bury the deceased and pay for funeral expenses out of the Estate’s assets;
To pay any debts owed by the will-maker; and
To distribute the remaining assets in accordance with the will or intestacy laws.

In all of your actions as an executor, you owe duties to the beneficiaries of the Estate to act in their interests, rather than your own. An executor must also act even-handedly or fairly between the beneficiaries.

We have assisted many people to manage their responsibilities as executors and are happy to talk with you about how we could help you.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

You may be surprised to be named as an executor in a friend or family member’s will. Hopefully it has been discussed with you in advance as the role brings with it legal duties (see this article for details about those) and, depending on the Estate, may require a significant amount of time from you. While the costs you incur as an executor (such as paying professionals or funeral expenses) will be reimbursed from the Estate, only professional executors (such as lawyers) will be paid for the time they spend managing an estate.

Do I have to be an executor?

If someone appoints you as their executor, you are not required to accept this. However, bear in mind that once you decide to take on the role of executor, you cannot later change your mind.

In order to help you make this decision, you are allowed to investigate the will-maker’s estate (i.e. consider how big the estate is and whether there are any complicating factors). However, you will need to be careful not to take possession of or make decisions about the will-maker’s property, as the Court may treat that as you accepting the position of executor.

Some people will not be legally allowed to become an executor. For example, someone who is not of sound mind or someone who is a bankrupt.

You should not accept an appointment if:

you do not believe that the will which appoints you is legitimate – perhaps because the will-maker may have been of unsound mind at the time it was made. (If you have concerns whether the will-maker was of unsound mind, we can discuss this with you).
you consider that you have a claim against the Estate because you consider that the will does not properly provide for you (See this article for more information about whether you have a potential claim).

There are also circumstances which may suggest you should not take on the appointment. For example, if you live overseas and infrequently return to New Zealand, it will be more complicated for you to carry out your role and would likely result in higher costs for the Estate to bear.

What happens if I decide not to accept an appointment as executor?

If the will appoints multiple executors or a back-up executor, then those individuals can proceed to accept their appointment.

If you are the sole executor named in the will, then someone will need to apply to the Court to be appointed as the administrator (with first preference given to a close family member).

What about my personal interest in the Estate?

It is common for a will-maker to appoint a family member as their executor who is also going to be a significant beneficiary under the will.

This means that if a claim is made against the Estate, you will have obligations in your role as an Executor, but also a personal interest in how you want the dispute to be resolved. In these situations, it is crucial to get independent legal advice in your personal capacity. The lawyers acting for the Estate can only advise you as to how the Estate should proceed. The same lawyer acting for the Estate will not be able to provide you with advice personally.

If I do agree to be the executor, what happens next?

One of the first steps for an executor is usually to apply to the High Court for probate. We explain more about that process in this article.

We have experience in assisting executors, and providing advice to people in their personal capacity. Please contact us to discuss how we can help you.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

If you are able to demonstrate that a deceased person failed to fulfil a promise to leave you something after they die, how much will the Court give you?

All claims under the Law Reform (Testamentary Promises) Act (“TPA claim”) are fact-specific. If a claimant succeeds in convincing a court that they have a valid claim (see this article for details on what that requires), the Court will make an award out of the assets of the Estate.

When assessing what size of an award is appropriate, the Court takes into account:

The value of the services or work;
The value of what was promised;
The amount of the estate; and
The nature and amounts of the claims of other persons in respect of the estate.

It can be difficult to assess the commercial or market value of the services performed, especially where they are intangible.

The Court will principally focus on the deceased’s perception of their value. However, there cannot be a major disproportion between the award and the value of the services.

The Court will also take into account any reciprocal benefits that the claimant received from the deceased – whether those are tangible things like payment of groceries, or intangible such as a return of companionship and support.

All TPA cases are heavily influenced by their unique context. Please contact us for specific advice. We have experience in both bringing and defending TPA claims.

For more details about what it takes to succeed in a TPA claim, see this article.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

What happens if someone promises to leave you something after they die, but then fails to actually do so? If you performed services for the deceased person in reliance on that promise then you may have a claim under the Law Reform (Testamentary Promises) Act 1949 (“TPA claim”).

To succeed in a TPA claim, you would need to prove that:

You rendered services to, or performed work for, the deceased person during their lifetime;
The deceased person made a promise to you , either express or implied, to reward the claimant for the services provided;
There is a nexus between your services rendered or work performed and the promise; and
The deceased person failed to make the promised testamentary provision or to otherwise remunerate you .

What is a promise?

Promises are defined broadly in the Act. It includes statements or representations of fact or intention. The promise may be made either before or after the services were rendered or the work performed.

It is not necessary that the deceased person ever specified an amount or particular piece of property as the reward. In one case, the Court found that statements such as “I will see you right” and “I will look after you” were sufficient.

In determining whether or not a promise has been made, the Courts may place more emphasis on what you could reasonably have understood by the deceased’s statement than on what the deceased actually intended. However, promises made “in the heat of the moment” and fuelled by emotion may not amount to a promise in terms of the TPA.

Additional evidence of the promise, such as written statements or confirmation by others, will strengthen your claim that the promise was made. However, claims without supporting evidence can still succeed. The Courts also consider the circumstances in which the promise was said to have been made.

Did you perform services for the deceased?

Services can be a variety of things. Cases have recognised things like:

farm work and supervision;
housekeeping and domestic services;
financial advice and assistance with tax returns; or
companionship, affection and emotional support.

If the claimant is a family member, they must show that this kind of support was “something extra” over and above what could normally be expected of a relative.

For example, the Court has found that a stepson’s frequent calls and visits to his stepfather and “odd jobs” around the house were normal in the context of the relationship. By contrast, carrying out significant maintenance and improvements to a house and providing full-time care is usually considered to be beyond what is normally expected.

Were the services related to the promise?

You must show that the promises was made, at least in part, to reward the you for services or work, either performed in the past or expected in the future.

That connection may be expressly stated by the deceased or more commonly inferred from the circumstances. The greater the services or work, the more likely the court is to infer that the promise was made as a reward for the services or work.

All TPA cases are depend by their distinctive facts. We are happy to discuss with you the merits of a potential claim that you have, or that someone else has made against an estate.

For more details on how much you might receive in a successful claim, see this article.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

One of an executor’s duties is to obtain probate. But what is probate and how does it work?

Probate is the process by which a Court officially recognises a deceased person’s will and the executors of that will.

Probate is required to ensure that:

The will being relied on is actually the last valid will created by the deceased;
Those applying for probate are the executors named in the will; and
The executors will carry out the deceased’s wishes in line with the law.

Once the High Court grants probate, the executors are legally authorised to deal with the deceased’s property.

Is probate required?

Probate is required for an executor to deal with any asset which exceeds $15,000. If the deceased person did not have any assets in excess of $15,000, the executors do not need to apply for probate. If you are not sure whether an estate is in that category, we are happy to discuss this with you.

If the person died without a will, they are referred to as dying “intestate”. A different process, called seeking letters of administration, is required in that situation.

Have you got the right will?

The first step is to locate the deceased’s last will. A will is often held by the deceased’s lawyer or another entity like the Public Trust.
If you suspect that there is a will but cannot locate it, it is possible to ‘advertise’ for a will. This alerts lawyers and similar entities who will then check their records to see if they hold the will.
There are various legal requirements for making a valid will, including that it be in writing, signed by the will-maker and signed by two or more witnesses.
There is a process by which the Court can validate a document that does not meet the legal requirements but nevertheless sets out the deceased’s testamentary intentions.
A probate application generally requires the original will. However, there are some exceptions to this if the original will has been lost or destroyed.
You must also be confident that the deceased had sufficient mental capacity to make the will.
If you think any of these situations may apply in your situation, please contact us so we can help you work through your options.

Making the application

Once you have the correct will, one or more of the executors named in that will can apply for probate.

You will need to make an affidavit (a statement sworn before a lawyer, registrar or JP) which:

Contains evidence that the will-maker has died (such as a death certificate or an affidavit from someone who went to the funeral);

Contains evidence of where the deceased was living just before they died; and

States that the will is the deceased’s last will.

You may need to file an affidavit that deals with the physical condition of the will, for example if the will has a mark, is crumpled, or has staple holes. The Court will be concerned that the document has been tampered with or previously had something else attached to it. The lawyer who looked after the will can swear an affidavit about the original condition of the will.

Other evidence may be required in some situations, such as where the will-maker had a visual impairment or a shaky signature.

Time frames

Once all the necessary documents have been filed, the High Court will review them. The Court aims to process a standard application within 6-8 weeks, but this may take longer if the Court is busy or the application is complex.

If the Court has any concerns about the application, it may ask for further information or an amended application. This will impact the time it takes to receive probate.

Receiving the grant of probate

Once you have obtained probate, you can proceed to gather in the estate’s assets and act out the will’s directions. For more information about the duties of an executor, see this article.

The grant of probate is important for starting off the timeframe for potential claimants to bring various claims against the estate, such as those under the Family Protection Act or the Property (Relationships) Act, testamentary promises claims and claims by creditors.

We have assisted many people obtain probate and to manage their responsibilities as executors and are happy to talk with you about how we could help you.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

Trustee Duties

The Trustees have certain duties and liabilities placed on them under the relevant Trust Deed, New Zealand Legislation and Common Law (decisions of the Courts in New Zealand and Overseas). These duties include:

– to know the trust deed, the trust assets and liabilities;
– to advance charitable purposes;
– fiduciary duties of honesty and loyalty and acting in the best interests of the trust;
– exercise care, skill and prudent diligence;
– act impartially amongst beneficiaries;
– to sell wasting property;
– to exercise reasonable care;
– to insure assets and keep property safe;
– to keep inventories;
– to invest within a reasonable time;
– to repair trust property;
– to invest prudently;
– to not delegate;
– to act jointly where there is more than one trustee;
– to not profit from trust property;
– to be accountable; and
– to be honest, loyal, diligent and prudent in carrying out the terms of the trust.

If you would like further explanation of any of these duties, please get in touch with us.

Generally a charitable trust will have between 3 to 7 trustees. Usually trustees are a mix of professional executives and non-executives. They will be held to the same standard of care in their actions as applies to directors of a business (there is not a lower standard due to it being a charitable trust).

Trustee Liability

Trustees are representatives of the Trust. As noted above when discussing duties, they act as fiduciaries who hold the trust property for the benefit of the charitable purpose set out in the deed. It is important that trustees clearly understand what those purposes are and do not overreach and act in a way that is further than what was set out in the deed. If trustees fail to perform their duties then they may be subject to proceedings taken out by interested persons. Ultimately the New Zealand Attorney General has certain rights as the ultimate power ensuring accountability. It is common for trust deeds to include some limits on trustee liability. However, as mentioned before it is possible that trustees will be jointly and severally liable where a trust fails to account for GST, ACC levies or PAYE payments.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. We offer advice on all aspects of charitable trusts and are happy to answer any questions that you might have. Contact Steven Moe at stevenmoe@parryfield.com or 03-348-8480 for more information.

This article is the second in a series on charitable trusts. To have a look at our first article which sets out the advantages and disadvantages of charitable trusts, click here.

KiwiSaver is a superannuation scheme in New Zealand that is popular with many Kiwis not only for saving for retirement, but also for first home buyers saving for a deposit. But have you ever considered what happens if you pass away before you have withdrawn your KiwiSaver funds? What happens to the money in your KiwiSaver account when you die?

Where you have signed a Will, upon your death the full balance of your KiwiSaver will be paid to your estate. If the balance in your account is less than $15,000.00, it will be able to be paid automatically. If the balance is more than $15,000.00, however, probate (an order from the court allowing the distribution of your account funds) will need to be issued.

What happens if you don’t have a Will?

It is important to note that if you pass away without a Will (this is called “intestate”), the process will be more complicated and expensive. You should also be aware that without a Will, you cannot be assured that your assets will be distributed to those whom you intend. For more information on the importance of having a Will and what happens if you pass away intestate, see our article here.

Example:

Jane is in her early twenties and is saving up for a deposit for her first home. Jane currently has $16,000.00 in her KiwiSaver. She also has $12,000.00 in a savings account. She has never really considered signing a Will, and is planning to look into it once she has purchased her home and is all settled in. However, Jane is in a tragic car accident and is killed instantly. Because she passed away intestate, her assets were distributed in accordance with the Administration Act 1969. Several issues arose from Jane passing away without a Will that could have been avoided:

1. Jane had intended for her assets to be distributed to her niece upon her death. Because she had not expressly stated those wishes in a Will, her assets were instead distributed equally to her parents.

2. Secondly, because Jane’s assets exceeded the $15,000.00 threshold, her family had to apply to the court for probate. Because she had not signed a Will appointing an executor, her family also had to apply to the court for the appointment of an administrator – someone who is given authority by the court in the absence of a Will to deal with the estate. This was a costly process (both financially and time-wise) and caused a lot of stress for her family that could have been avoided if she had signed a Will.

How can we help you?

We would advise that you sign a Will if you are over 18 years old, even if you only have a few assets.

If you would like any assistance with drafting and signing a Will, reviewing your existing Will, or if you have any questions in relation the issues raised in this article, please feel free to get in touch. We have teams in our Riccarton, Rolleston and Hokitika offices that would be happy to assist you.

For more information, please feel free to contact Paul Owens – paulowens@parryfield.com or Luke Hayward – lukehayward@parryfield.com or give us a ring on 03 348 848

What happens if matters go to Court?

What happens if a family member does not provide for you in their will?

Who can make a claim?

What does it take for a claim to succeed?

Timeframe for a claim

How to make a claim

What duties apply to an executor?

What is an executor?

What are the responsibilities of an executor?

Do I have to be an executor?

What happens if I decide not to accept an appointment as executor?

What about my personal interest in the Estate?

If I do agree to be the executor, what happens next?

Is probate required?

Have you got the right will?

Making the application

Time frames

Receiving the grant of probate

Trustee Duties

Trustee Liability

What happens if you don’t have a Will?

Example:

How can we help you?

Christchurch CBD

Christchurch

Rolleston

Hokitika