Asset planning for your own future

When circumstances change, such as on the death of a familymember, it’s timely to think about your own strategies for thefuture. If you’re an executor, administrator or beneficiary of anestate you’ll inevitably be thinking about your own situation.Beneficiaries of estates, in particular, will have inherited someproperty and should set some time aside to re-assess their assetplanning arrangements.


Having a Will is an asset planning strategy. Wills should be reviewed andupdated regularly, every three to five years. If you’ve inherited some property,now is a good time to review your Will and make sure it reflects your newfinancial situation and your wishes.

You may want to review the appointment of executors. It may be that one ofyour executors is no longer able to fulfil that role, or you may wish to appointan independent executor.

Your connection with a beneficiary may have changed or there may be a newperson you wish to name as a beneficiary. People named in your Will mayhave died, leaving part of your estate without a beneficiary.

Many people want to leave money to a favourite charity: this is a good timeto think about which charities you may like to name in your Will. If you’reconsidering leaving a significant sum to a charity, you may wish to talk withthem about it during your lifetime to ensure the bequest is channelled to themost appropriate project or fund.

Everyone needs an up-to-date Will. Now is a good time to review your currentWill and make any necessary changes.

Living Wills

A Living Will is sometimes called an ‘advance (healthcare) directive‘ or a‘declaration of wishes regarding life prolonging medical treatment’.

A Living Will allows you to state your wishes about administration of medicaltreatment at a future date. This document will set out what actions should betaken during your lifetime for your health if you’re no longer able to makedecisions or communicate those decisions due to illness or incapacity.

An example of this may be a person with a debilitating disease who maynot want treatment prolonged, and wants only enough medical intervention forthem to remain comfortable and out of pain.

Make sure you’ve talked with your GP or other medical professional about thisdocument. It’s also very important that you talk with your family to ensure theyunderstand and support your wishes.

Your lawyer can prepare this document for you. It’s often signed at the sametime as a Will. When your Living Will is signed, do make sure your family hasa copy of this, as well as your GP and other medical specialists.

Letter of wishes

Rather than having a lengthy Will, you can provide a letter, or memorandum,of wishes to the executors and trustees of your estate about specific things youwant to happen on your death. A letter of wishes isn’t legally binding andshouldn’t be attached to your Will, but it should be kept with your papers atyour lawyer’s office.

It may contain detailed instructions to your executors about your funeral, or listparticular items and how the executors should distribute them. You can explainyour reasons in this document.

Enduring Powers of Attorney

There are two types of Enduring Power of Attorney (EPA): an EPA for personalcare and welfare, and an EPA for property. Both EPAs operate during thelifetime of the person (called the donor) and give the attorney/s authority to acton the donor’s behalf. An EPA cannot be used once the donor has died.

An EPA for personal care and welfare can only take effect if the donor becomesmentally incapable. Assessment of capacity must be undertaken and certifiedby a doctor before the attorney can act. Only one attorney can be appointedat a time.

An EPA for property can take effect immediately the appropriate form is signed,and may be held by more than one person at a time. It may also be held by anorganisation such as a trust company. Alternatively, an EPA for property can takeeffect only if the donor becomes mentally incapable, in which case a medicalcertificate must be obtained (as above). Property covered by the EPA includesreal estate, bank accounts and investments.

EPAs shouldn’t be confused with a simple power of attorney, a document whichnames a person or people who may sign documents or make decisions on yourbehalf but is cancelled if you are no longer mentally competent.


Asset protection

Everyone who owns assets, even if it’s only cash in the bank, should thinkabout asset planning. That may involve regularly reviewing your Will orcompleting EPAs.

For some, asset protection is an important future planning tool. They may be inbusiness and concerned about creditor protection or liability. With the increasein blended families and the impact of relationship property claims, there may beunintended consequences for those whose assets are divided up by separationor death.

Family trusts are useful asset protection tools. You can read more about thebenefits of trusts in To Trust or Not to Trust – A practical guide to family trustspublished by NZ LAW Limited. Please ask us for a copy.

Contracting out agreements

Agreements between couples to contract out of the Property (Relationships) Act1976 (PRA) are another asset protection tool. These agreements, often calledrelationship property agreements, allow couples to decide how their assetsand income are to be divided in the event of separation or death. Couplescan ‘contract out’ of the PRA and decide that they don’t want this law to applyto them. Married or civil union couples, or those in a relationship for morethan three years, can agree to retain some or all of their property as separateproperty. The default position under the PRA for those couples is that theirproperty is relationship property although exceptions do apply, such as whenthe property is inherited or gifted to one of the partners.

If you want to contract out of the PRA, you must each get independent legal advice.

Life insurance and funeral trusts

If you have a mortgage or dependent children, a life insurance policy may helpensure your debts can be paid and those financially dependent on you can beprovided for from your estate.

Funeral trusts can avoid family members having to pay funeral costs themselveswhile estate assets are frozen. These plans are often arranged through funeraldirectors, trustee companies or sometimes through lawyers.

Work and Income will exclude as an asset a funeral plan, with a recognisedprovider, of up to $10,000 in the means assessment for eligibility for aresidential care subsidy.

Some banks will release funds before probate is granted and pay the funeralaccount directly to the funeral director. To enable payment, banks will need acertified death certificate, a copy of the funeral director’s invoice and completedbank forms.

If there are genuinely no funds to pay for a funeral, Work and Income can makea funeral grant. If the death is a result of an accident, ACC may be able to fundsome, or all, of the funeral. There’s more about this in the section ‘Immediatelyafter the death’

Getting your own affairs in order

Dealing with someone else’s death and their estate often acts as a catalyst forgetting your own affairs in better order.

Now is a good time to collate personal and family information such as datesof birth, parents’ names and dates/places of birth, mother’s maiden name,children’s names and dates of birth, and dates of arrival in New Zealand ifyou’re first generation in this country.

Financial information is important – bank account numbers, property owned,shares and other investments.

Remember to note down your service number if you’ve served in a defenceforce. You may have been awarded an honour such as an MNZM, and youmay have degrees or other qualifications that allow you to have letters afteryour name.

You may have been a member of a number of organisations for years: it’s agood idea to write these down, including the dates you were involved withthem, and any office held such as president or chair, and the dates of thoseterms.

It’s useful to review this list every year to ensure it’s up to date.