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Losing the house – are there alternatives?


If you were to go into long-term residential care, do you fear that all your hard-earned assets will be used to pay for that care? Kannangara Thomson Partner Brent Selwyn fills us in on the alternatives.

 

 

 

Let’s get one thing clear. Senior care is expensive and it is asset and income tested. With an ageing population, coupled with low birth rates, there will be increasingly fewer tax payers compared to the number of people in care. For that reason alone, you should know that asset and income testing for senior residential care is here to stay.

When one of a couple goes into care, the family home is not at risk. The home is exempt as an asset for the purpose of asset testing if a spouse or dependent child lives in it. In addition, the family car and other assets to the value of $126,224 are exempt. Everything else must be used to pay for the care of the partner in long-term residential care.

Another problem for the partner left in the family home is that most of their partner’s pension will now go toward their care. The partner in the family home has to make do on one pension and a living-alone allowance.

When one of a couple dies, traditional property ownership sees the family home and all other jointly owned assets pass to the survivor by ‘survivorship’. If the survivor then goes into care, the problem is exponentially amplified because the family home is no longer exempt.

The survivor of a couple going into residential care in those circumstances is allowed exempt assets of $230,495 including the house and car. Their pension is nearly all used for their care also.

For most seniors, a trust is not the answer. Although gift duty has been abolished, the Ministry of Social Development still imposes an ‘allowable gift’ of $27,000 per application in each 12-month period. Anything above that will be clawed back into your assets and used for your care.

However, there is a possible partial solution for couples. It lies in how you own the family home. If you have your home ownership structured so that you each own a distinct share of it, you can then leave a different type of will, known as a ‘life interest will’ whereby instead of your partner inheriting the whole house, you leave them a life interest in your share of it when you die.

If the survivor then goes into care, they only need to declare among their assets the share of the property they own personally.

If that sounds like a possible solution to a problem for you or an older family member, call Brent Selwyn now on 03 377 4421 to book a no-obligation appointment to see if a simple change of ownership structure could protect your assets.

 

 


 

Understanding Enduring Powers of Attorney: Kannangara Thomson


It is a common misconception that Enduring Powers of Attorneys (EPAs) are only relevant for ‘old people’. The reality is that a health mishap, medical or accident related, can befall anyone at any age. The fact is that everyone should have these important estate planning tools in place. Having EPAs prepared now means that you get to determine who will represent your interests should you lose mental capacity rather than leaving this to chance in court proceedings.

 

 

The other important difference is the cost. At worst, EPAs will cost you a few hundred dollars per document, whereas an application for the appointment of a welfare guardian and/or property managers through the court will cost thousands of dollars.

The process can also become quite prolonged if all family members are not in agreement. If you get the documents right you should not need to redo them for many years to come, whereas court orders need to be renewed at regular intervals, so the expense may be incurred over and again.

Another common misconception is that if we lose mental capacity, our spouse or partner can manage our affairs. That is not the case. This is where the EPA comes in. It’s important to highlight the difference between an EPA and a general power of attorney (GPA). A GPA is a power commonly given to a person during a temporary absence from the country or a temporary physical incapacity. In the event of an unexpected loss of mental capacity, the GPA is revoked and of no further use.

An EPA on the other hand is a power-of-attorney which survives an unexpected loss of capacity for any reason, be it accident, illness or old age. The EPA takes two forms, one for personal care and welfare and another for property. You should not be fooled into thinking that you can do without either form of EPA because, particularly for seniors going into a rest home or retirement village facilities, the operators require residents to have both forms in place.

EPAs are possible because of the Protection of Personal and Property Rights Act 1988. Since the Act was passed into law there have been significant changes on two occasions. The forms are now more than 20 pages long compared to their 1988 predecessors which were two pages long. As a result, the modern forms allow for far more comprehensive documents.

Among the options provided for in the modern forms is the ability to appoint a successor or successors, require your attorney to consult with or provide information to certain specified persons and state whether the power of your attorney relates to all of your welfare or property matters or just certain specified matters.

According to the team at Kannangara Thomson, having EPAs in place is vital but it is equally important that they are well drafted and you get them right first time in order to avoid further expense.

To talk to one of the experienced practitioners at a local law firm about putting EPAs in place, contact Kannangara Thomson on 03 377 4421.

 

 


 

Cut through the legal jargon: Kannangara Thomson

By Kannangara Thomson Partner Brent Selwyn 


At Kannangara Thomson we have a point of difference which not all law firms have in that as many as nine different languages are spoken in our offices. As a firm we also have a by-line “we speak your language” which is a play on words in as much as it signifies the point of difference that there are a number of different language speakers at Kannangara Thomson but also, it speaks to the fact that as a law firm our aim is to try to cut through all the legal jargon and explain matters to our clients in plain English.

 

Some of the languages spoken at Kannangara Thomson include Korean, Mandarin, Cantonese, Afrikaans, Malay, Sinhalese, Tamil, Arabic and of course English. As a firm we are delighted to celebrate the cultural diversity of the people who make up our thirty strong contingent of lawyers and legal assistants. The range of services provided within the firm varies from the purchase of residential property, investment property, commercial property, business sales and purchases, family trusts, wills, enduring powers of attorney and with a particular focus on immigration. We have most areas of law covered and anything we cannot assist with we will always recommend to someone appropriate to provide assistance to our client.

We have modern premises at 575 Wairakei Road in Burnside and one feature which clients dealing with our firm love is the easy access to car parking which can be a major issue for our central city colleagues. One of our number of bilingual lawyers is Sandra Iskander who was born in Egypt and came to New Zealand with her family as a child. Sandra is fluent in both English and Arabic. In the immediate aftermath of the horrific events at the Al Noor Mosque and the Linwood Mosque in Christchurch on Friday 15 March 2019, with the full support of the partners, Sandra volunteered to give her time in the week beginning Monday 18 March at both the Hagley Community Centre and the Christchurch hospital to help those affected by this terrible tragedy in any practical way possible.

As a firm we were pleased to be one of the first law firms to offer pro bono services to any of the Christchurch Muslim community who had family or friends killed or injured in the attacks on the two Mosques. This offer remains open and Sandra along with a number of other lawyers in our office have registered their details with the Canterbury District Law Society as being available to assist any affected members of the Christchurch Muslim community with Legal Services, initially free of any charge.


 

Lawrence Wong

A broad legal skillset: Lawrence Wong


Kannangara Thomson partner Lawrence Wong says that joining the firm has been a great move for him and his clients.

 

Lawrence Wong

 

After 40 years in the law mostly at one larger Christchurch firm, Lawrence finds the relaxed and friendly environment at Kannangara Thomson refreshing. Having spent a significant part of his working life as a lawyer in suburban offices, Lawrence is a lawyer with a broad knowledge base across a wide range of areas of law. He assists clients with all of the following – the sale and purchase of residential and commercial property, business sales and purchases, asset protection and estate planning involving the use of family trusts, wills and enduring powers of attorney, company law matters and commercial leasing.

 

Growing up as someone overtly Chinese but as Kiwi as anyone else born in New Zealand, life wasn’t always easy for Lawrence. Born in the 1950s to a New Zealand mother of Chinese descent and a father born in China, he experienced occasional prejudice. As a child in Christchurch, Lawrence attended St Michael’s School where, within the school grounds he was largely insulated from that prejudice which he says he experienced more outside of the school grounds.

 

He then attended Christchurch Boys’ High School before attending Canterbury University, graduating in 1978 with a law degree. His early years in practice coincided with a new wave of Chinese immigrants, many of whom did not speak much English. One of the benefits of growing up in a Chinese/Kiwi family was that Lawrence learned conversational Cantonese, something which his clients were extremely grateful of in the late 1970s and 1980s. To this day, Lawrence retains the ability to converse in Cantonese which is of value to his large Chinese client base. Being at Kannangara Thomson has bought Lawrence back to his ethnic and legal roots. The firm’s byline ‘We Speak Your Language’ signifies the fact that there are as many as nine different languages spoken in the firm, but also the fact that the lawyers at Kannangara Thomson cut through all the traditional legal jargon lawyers are renowned for and explain matters to clients in plain English.

 

Lawrence Wong

 


This is something which Lawrence finds refreshing and which, when added to the relaxed and congenial working environment, tells him that the move was a good one for him and his clients. Lawrence’s clients and former clients are invited to contact him on 03 377 4421 or email lawrence.wong@ktlaw.co.nz


 

Kannangara Thomson

Enduring Powers of Attorney: Kannangara Thomson

As we age, we must eventually turn our minds to what happens if because of accident, illness or just plain old age, we can no longer manage our own affairs.

Kannangara Thomson
One of the most important and valuable estate planning tools available

 

Enter the Protection of Personal and Property Rights Act 1988, which allows us to appoint people we trust to manage our affairs under documents known as Enduring Powers of Attorney. These documents come in two forms, one for personal care and welfare; a second for property matters.
In relation to personal care and welfare, you can only appoint one person at any given time, while in relation to property matters, you can appoint one or more attorneys and can specify whether they can only act jointly, or jointly and severally, meaning any one of them can act as your attorney on his or her own.
An Enduring Power of Attorney in relation to property can be created to also act as a general power of attorney which can be used by your attorney(s) while you have mental capacity. Alternatively, you can choose to set up the Enduring Power of Attorney for property so it only comes into effect if you lose mental capacity. However, an Enduring Power of Attorney in relation to personal care and welfare can only be activated if you have lost mental capacity. You are presumed to be competent unless an assessment by a registered medical practitioner shows otherwise.
Significant changes were made with the passing of the Protection of Personal and Property Rights Amendment Act 2007 and, in 2016, new standardised forms were introduced. The 2007 changes included:

• The ability to appoint a successor attorney, in the event the original attorney is unwilling or unable to act
• The capacity to authorise your attorney to act on certain specified matters or all matters
• The ability to require your attorney to consult with or provide information to specified persons
• The power to authorise your attorney to ask the court to make or amend your will.

If you wish to change your appointed attorney while you have mental capacity, you can revoke the attorney’s appointment at any time. If however, you have lost mental capacity and family or friends are concerned about an attorney’s actions, the only redress is through the courts.
Similarly, if you lose mental capacity and do not have Enduring Powers of Attorney in place, an application may be made to the Family Court for someone to be appointed as your welfare guardian and/or your property manager. This is more expensive, both in time and cost. Adding insult to injury, the process must be repeated after the first three years and every two years thereafter. It is much cheaper to put Enduring Powers of Attorney in place of your own choice while you still have the capacity.
Retirement villages insist on all residents having valid Enduring Powers of Attorney, so if you are contemplating this type of community, it is essential your Enduring Powers of Attorney are in place, up to date and meet your needs.
Enduring Powers of Attorney are one of the most important and valuable estate planning tools available that everyone should have in place, regardless of age, so in the event of an unforeseen loss of capacity, your affairs can be managed by someone you trust. Kannangara Thomson has a specialist senior law team. Contact Brent Selwyn on 03-377 4421 to discuss putting Enduring Powers of Attorney in place.

Kannangara Thomson

A law firm with a difference: Kannangara Thomson

Kannangara Thomson isn’t your average law firm. Formed only 10 years ago by founding partner, Stephen Kannangara, the firm has grown to be over 30 strong and occupies a modern premises at 575 Wairakei Road.

Kannangara Thomson

The firm enjoys a point of difference which the partners believe makes it unique among law firms in Christchurch. Rich in diverse cultures with staff from all corners of the globe, there are an astonishing ten languages spoken at the firm which, at least in part explains the firm’s by-line, ‘We speak your language’.
The by-line is also something of a play on words and intended to portray the fact that the lawyers and support staff at Kannangara Thomson break down the often complicated language of the law and explain your legal issues to you in plain English (or Mandarin, Cantonese, Japanese, Korean and Afrikaans to name just a few of the other languages spoken at the firm).
As well as being culturally diverse, the firm provides a wide range of legal services to its divergent client base, with lawyers specialising in business sales and purchases, commercial property transactions, investment property, residential property sales and purchases, estates, asset protection and estate planning involving the use of family trusts, wills, company law, family law and much more beyond.
The partners at Kannangara Thomson have a good grounding in the law having all served their time at much bigger law firms. Part of the ethos of the firm is that it does not wish to replicate the typical law office environment of those larger firms and, with that in mind, staff and partners are not burdened with such mundane daily tasks as time recording in six minute units or fee budgets, as is the case at almost all larger law firms.
Another factor which sets the firm apart from its larger counterparts is that once a fee range is quoted, it will very rarely be departed from, thereby giving clients certainty.

Kannangara ThomsonThe staff at Kannangara Thomson is respected and well looked after, with occasional unexpected gifts from the partners in recognition of stellar performance, frequent morning teas, flexibility of work hours and arrangements and almost fortnightly lunches provided by the partnership. As a result, the team at Kannangara Thomson is a settled and happy one, able to function at its absolute best to provide excellent legal results for clients.
With ample off street parking available and a convenient location near the airport, the gateway to the south, the new western Belfast bypass and the motorway north, the Wairakei Road location has proven to be one which is very popular with the firm’s client base.
The team at Kannangara Thomson look forward to being part of the Canterbury legal landscape for many decades to come and assisting you with your legal needs.