Latest / The Muster on Hokonui / The Muster- Tori Tremaine: Bammerman Cruickshank Pryde

Transcript

The Muster- Tori Tremaine: Bammerman Cruickshank Pryde · The Muster on Hokonui

• 0:07
  Speaker 1: Welcome back to The Muster. Tori Tremaine of Bannerman Crookshank
• 0:10
  Speaker 1: Pride the Lawyers joins us on this mild afternoon down
• 0:14
  Speaker 1: in the Deep South. Good afternoon, Tori.
• 0:17
  Speaker 2: Hi there, Andy.
• 0:17
  Speaker 1: How are you? Yeah, going very well. Look, today's topic's
• 0:22
  Speaker 1: an interesting one for a lot of people, child gifting. Now,
• 0:25
  Speaker 1: we're not talking about giving the kids away as much
• 0:27
  Speaker 1: as you want to every now and then, but there's
• 0:29
  Speaker 1: actually a lot more of a serious side to this.
• 0:32
  Speaker 2: Yes, that's right. We come across this situation quite frequently,
• 0:38
  Speaker 2: especially probably in the case of parents wanting to help
• 0:42
  Speaker 2: their children with their first home or business ventures. family
• 0:47
  Speaker 2: succession can come into it from a lot of aspects.
• 0:50
  Speaker 2: So I thought it would be a good topic to
• 0:53
  Speaker 2: cover today for people to understand, I guess, the ins
• 0:56
  Speaker 2: and outs of that and how you're best to approach it.
• 1:00
  Speaker 1: What's a couple of the biggest misconceptions about gifting to children?
• 1:05
  Speaker 2: I guess one of the main need-to-knows about gifting to
• 1:12
  Speaker 2: children is that there can be some I guess, relationship
• 1:16
  Speaker 2: property implications for gifts being made. So if, for example,
• 1:23
  Speaker 2: your son or daughter wants to buy their first home
• 1:26
  Speaker 2: and you want to help them out with that for
• 1:29
  Speaker 2: their deposit or just to make sure they don't have
• 1:32
  Speaker 2: to borrow as much from the bank, if they end
• 1:36
  Speaker 2: up buying that property and then a partner moves in
• 1:38
  Speaker 2: with them and they've been together for three years or more,
• 1:45
  Speaker 2: regardless of whether that other, I guess, partner has contributed
• 1:49
  Speaker 2: anything financially or non-financially to that property, they would actually
• 1:54
  Speaker 2: become entitled to a share of the value of that property,
• 1:57
  Speaker 2: which would obviously include a share of some of that
• 2:00
  Speaker 2: gift in a roundabout way. And that can catch a
• 2:03
  Speaker 2: lot of people out. And we very commonly have people
• 2:08
  Speaker 2: coming to see us when the worst situation case scenario
• 2:11
  Speaker 2: has happened for them in terms of a relationship separation
• 2:14
  Speaker 2: and there's always a discussion had about well you know
• 2:20
  Speaker 2: my parents have gifted this to me it's mine I
• 2:24
  Speaker 2: want it back out but it's sort of too late
• 2:26
  Speaker 2: to unwind at that point in time especially if the
• 2:30
  Speaker 2: relationship has ended on relatively bad terms which more often
• 2:33
  Speaker 2: than not they do unfortunately so That's a really common
• 2:37
  Speaker 2: misconception that's tied up with relationship property. And I guess
• 2:42
  Speaker 2: the other side of gifting probably comes into that family
• 2:45
  Speaker 2: succession piece where we've got the fair versus equal sort
• 2:51
  Speaker 2: of scenario and whether we're treating things as an early
• 2:55
  Speaker 2: inheritance or not and how we're communicating that to the
• 2:58
  Speaker 2: rest of the family and what the expectations are around
• 3:01
  Speaker 2: a gift versus a loan and just being really clear
• 3:05
  Speaker 2: about what the differences are and what the expectations are.
• 3:08
  Speaker 2: So that can be, yeah, a whole other kettle of fish.
• 3:13
  Speaker 1: Regarding the de facto situation there and a partner being
• 3:17
  Speaker 1: entitled to half, is there any way this can be
• 3:19
  Speaker 1: avoided when gifting?
• 3:21
  Speaker 2: Yes, absolutely. So our recommendation to 99% of our clients
• 3:27
  Speaker 2: is that you would be best placed to have what's
• 3:31
  Speaker 2: called a contracting out agreement, which is based on the
• 3:35
  Speaker 2: Property Relationships Act, and that can be a really simple
• 3:39
  Speaker 2: agreement that says this money that this person has received
• 3:43
  Speaker 2: by way of gift from their parents or whoever is
• 3:46
  Speaker 2: providing them with the gift is theirs, and if we
• 3:50
  Speaker 2: are to separate from one another, that person will keep
• 3:54
  Speaker 2: that gift, so they'll take that back out before anything
• 3:57
  Speaker 2: else is divided equally. So there's a bit of a
• 3:59
  Speaker 2: process around doing... these contracting yard agreements. But it can
• 4:04
  Speaker 2: be really simple and it doesn't have to be complicated.
• 4:06
  Speaker 2: And then on the flip side, some people's situations are
• 4:10
  Speaker 2: a bit more, I guess, complicated and not as straightforward.
• 4:15
  Speaker 2: So there's a bit more, I guess, discussion that needs
• 4:17
  Speaker 2: to be had if we're including, you know, different aspects
• 4:20
  Speaker 2: and elements of property ownership and different entities. But they
• 4:24
  Speaker 2: can be simple, but a lot of people hear the
• 4:26
  Speaker 2: word contracting yard agreement or prenup agreement and they it
• 4:30
  Speaker 2: instantly brings to mind what you see on the movies
• 4:35
  Speaker 2: in terms of a stressful process and what have you.
• 4:38
  Speaker 2: But it actually can save you a lot of stress
• 4:41
  Speaker 2: in the long run when things don't pan out the
• 4:45
  Speaker 2: way everyone hopes they will.
• 4:46
  Speaker 1: So when you say 99% of the time this is
• 4:49
  Speaker 1: what people are recommended to do, is that like the 1%
• 4:52
  Speaker 1: where it isn't, like special circumstances?
• 4:56
  Speaker 2: Yeah, that would be really out of the ordinary situation
• 4:59
  Speaker 2: where there was adequate protection in other ways, but it's
• 5:03
  Speaker 2: becoming less and less likely that there is another way
• 5:08
  Speaker 2: that you can protect, I guess, property that you want
• 5:12
  Speaker 2: to be separate, like a gift, for example. So, yeah,
• 5:17
  Speaker 2: that would come down to your specific circumstances as to
• 5:19
  Speaker 2: whether you fell into that 1%. But, yeah, the majority
• 5:23
  Speaker 2: of people, it would be, you know, contractual agreement is
• 5:27
  Speaker 2: the most protective way that you can manage that.
• 5:31
  Speaker 1: What about tax implications around gifting?
• 5:36
  Speaker 2: There isn't any I guess off the bat tax issues
• 5:41
  Speaker 2: in relation to providing gifts. What you can run into
• 5:47
  Speaker 2: though in terms of issues are if you are looking
• 5:52
  Speaker 2: at going into a rest home and you have done
• 5:56
  Speaker 2: some gifting prior to going into that rest home within
• 6:00
  Speaker 2: certain time periods but even if it's a really large
• 6:02
  Speaker 2: gift sometimes it doesn't matter how long ago that gift
• 6:06
  Speaker 2: was the Ministry of Social Development can what we call
• 6:13
  Speaker 2: in legal terms claw that back and say well you've
• 6:15
  Speaker 2: given your money away so you should be paying for
• 6:19
  Speaker 2: your own residential care because if you hadn't given that
• 6:21
  Speaker 2: away you'd be in a position to be able to
• 6:24
  Speaker 2: meet that. So while there's no tax implications, it can
• 6:27
  Speaker 2: have some other legal consequences, you know, quite a long
• 6:31
  Speaker 2: way in the future. Those rules for residential care subsidies are,
• 6:37
  Speaker 2: I guess, a moving feast to an extent because there's
• 6:40
  Speaker 2: always new ways that people are trying to structure their
• 6:44
  Speaker 2: property affairs, I guess, to maximise what they can from
• 6:49
  Speaker 2: what's available. But... Yeah, the Ministry of Social Development is
• 6:54
  Speaker 2: catching up on those things. So it's, yeah, that's something
• 6:58
  Speaker 2: to bear in mind, that that can have some implications.
• 7:00
  Speaker 1: Interesting. Regarding the residential care, Tori, you don't really think
• 7:04
  Speaker 1: about these things?
• 7:05
  Speaker 2: No, but that is definitely a consideration that we, yeah,
• 7:12
  Speaker 2: definitely crosses their mind whenever we're giving people advice about
• 7:15
  Speaker 2: how they're structuring things and how that might make a difference.
• 7:21
  Speaker 2: in the future because historically, you know, people have set
• 7:24
  Speaker 2: up trusts and other property structures because there has been,
• 7:28
  Speaker 2: I guess, those alternative ways to own property rather than
• 7:33
  Speaker 2: in personal names. But, yeah, the way that the legislation
• 7:38
  Speaker 2: has moved in relation to that has meant that there's
• 7:42
  Speaker 2: probably less advantages for having certain property ownership structures than
• 7:46
  Speaker 2: what there once was. So... Yeah, definitely an important consideration. Yeah.
• 7:52
  Speaker 2: It's really about when you are sitting down with, whether
• 7:56
  Speaker 2: it's me or Hilary or your listeners' own lawyers, it's
• 8:01
  Speaker 2: a matter of making sure that there is a really
• 8:04
  Speaker 2: good full conversation about everything because, you know, as we've
• 8:07
  Speaker 2: just talked about, there can be some, I guess, more...
• 8:12
  Speaker 2: future consequences of certain decisions that you make now, which,
• 8:17
  Speaker 2: you know, you might not cross your mind. It might
• 8:19
  Speaker 2: be as simple as, well, I want to give my
• 8:21
  Speaker 2: son or daughter $ 100, 000 to buy a house, but you
• 8:23
  Speaker 2: don't necessarily realise what consequence that's going to have going forward.
• 8:27
  Speaker 2: So it's sort of, yeah, I guess about having that
• 8:31
  Speaker 2: full and open discussion with your lawyers or other advisors
• 8:34
  Speaker 2: about what your long-term intentions are, even if it really
• 8:37
  Speaker 2: seems like this is just a really simple thing we
• 8:39
  Speaker 2: want to do, often it's not actually as simple once
• 8:43
  Speaker 2: you scratch the surface.
• 8:44
  Speaker 1: Interesting, Tori. Now, the team at Bannerman Crookshank Pride, the lawyers,
• 8:47
  Speaker 1: how do people get in touch?
• 8:49
  Speaker 2: Sure, so they can give us a call on 032090183,
• 8:52
  Speaker 2: or we've got a website with all of our contact
• 8:56
  Speaker 2: details as well, which is www.cplaw.co.nz.
• 9:01
  Speaker 1: Good on you, Tori. Always good to catch up.
• 9:03
  Speaker 2: Thanks, Andy.
• 9:06
  Speaker 1: Tory Tremaine of Bannerman Crookshank Pride the Lawyers based here
• 9:10
  Speaker 1: in Gore. Gifting to the children. Not always as easy
• 9:14
  Speaker 1: as it seems. Don Morrison's up next based at Willowbank.