Ep 14 - Covering Off Legal Matters

What you need to know about Wills and Enduring Powers of Attorney, in New Zealand
An interview with Jenny Guthrie, a senior partner at Wilkinson Rogers Law. Jenny has also been involved with the board of Otago Hospice for the last 25 year.

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Transcript

 Ep 14: Legal Matters

 Kia Ora and welcome to The Ending Life Well Podcast. This podcast series for carers focuses on advice and practical solutions for carers who have been thrown into the deep end looking after a  loved family member or friend in their last days, weeks or months of life. 

 Our episode today is Covering Off Legal Matters

 Denise
Hi, I'm Denise van Aalst, a senior palliative care nurse and educator at the Otago Community Hospice. Today, I'll be talking with Jenny Guthrie, a senior partner at Wilkinson Rogers Law. Jenny has also been involved with Hospice on the board for the last 25 years, so has a good understanding of what's really important legally at the end of life. Hi, Jenny.

Jenny
Hi, there, Denise and everybody else. 

Denise
Jenny, There's a couple of key legal things that really come up when people are more imminently aware of the end of life and I thought it'd be really good to talk through those things today – about why they're important and what we need to be doing about them. So those two things are wills, and enduring power of attorneys.

Jenny
Yes, and I just want to correct you, Denise, on this. These things are really important but End of Life has actually got nothing to do with it. All people who own anything should have a will, and all grownups should have powers of attorney. So once someone comes of age, ideally they would have powers of attorney because you never know when you're going to need them. 

Denise
Yeah, you're quite right, Jenny. So with Wills, what are the things that we need to know?

Jenny
Well, first of all, I just want to say that Wills and Powers of Attorney are completely different things for completely different purposes – and one has no relation to the other at all. While they both deal with your wishes and your property, Powers of Attorney are what cover your circumstances while you're alive. So, doesn't matter whether you've got a Will or not. Powers of Attorney are redundant the minute you die. 

So when you die, if you don't have a Will, that can be a very expensive problem. So anyone who owns property should have a will, because you're going to need a Will, if you do – or if you have more than $15,000 in one bank or in one institution, or sometimes if you have life insurance. 

And if you don't have a Will, then you have to apply for Letters of Administration just to start –   invariably more costly than obtaining probate. And not only that, under your Will you can leave whatever you want to whomever you want. Under letters of administration, if you didn't have a Will, it's determined by the law who gets what out of your assets.  For example, if you have a partner, then they get a share. At the moment they get the first $155,000. If you have a partner and children, then the partner still gets the first $155,000 and the partner and the children share third shares in the balance of the assets.  And then there's other rules if you haven't got children and you don't have any relations at all, then your estate or hard earned assets may well go to the Crown. 

So you do want a Will, and my firm suggestion is that it be done by a lawyer, because there are a lot of Will kits and people think they can make their own wills. Sometimes they're okay but there's a very good chance that there will be something wrong. 

And let me tell you a horror story where someone died three years ago, and he lived on his own. He was separated and a daughter cleared his flat.  He didn't have a lot, less than $15,000 in the ANZ and less than $10,000 in Bonus Bonds.  Had he banked anywhere other than the ANZ, Probate would not have been required, but because Bonus Bonds were a division of the ANZ, Probate would be required.  The daughter found a homemade Will that had been prepared just before he died with a JP and with his sister and it was almost fit for the purpose. He had appointed his daughter as the executor, so he'd done that right. He said he wanted everything to be left between his children. He signed it, he dated it. And one of the two witnesses witnessed it. So the JP witnessed it. The thing is, a Will is invalid if it's not signed by the testator (the person making the Will) and witnessed by two people, at the same time and in the presence of each other (all three together at the same time).

Denise
So that small anomaly was enough to invalidate the handwritten, otherwise fit-for-the-purpose Will?

Jenny
Yes, even though the second person/witness was there, and could have witnessed it, but didn't. So because the daughter had found this will, she couldn't apply for Letters of Administration “swearing” in the required affidavit that her Dad had no Will. 

So what we/she had to do was have that will validated. This required getting the consent of all of the other siblings, and have the handwritten Will validated in the High Court at Christchurch. So that's a costly process and once the Will was validated, then we had to apply for Probate in the Wellington High Court. It actually took nearly three years. So this type of scenario is the risk of making your own and not getting it quite right. 

 I couldn't impress upon you enough that having a valid and validly executed Will, is really important. 

Another thing that many people don't know is that marriage invalidates a will.  If a person gets married, and hasn’t made their will in “contemplation of that marriage”, then that Will is invalid.

This can cause issues particularly in a blended family situation.  Let me give you an example where the deceased person had had a Will, but she had remarried some years before she died, and so her previous Wills, which did leave everything to her children were invalid. It was the same as if she had never had a Will.  So in her case,  Letters of Administration means that her husband gets the first $155,000, and her children only get a third share of what's left after that. And the problem with that is, she only owned a half share of the house. So he already owns a half share of the house, and now he's getting about a half of the other half of the house because that's the law – her children are not getting much. So I couldn't impress upon you enough about having a Will that takes into account everything that is required for it to be a valid Will. 

Denise
What about having children Jenny – does that have any impact on a legal Will?

 Jenny
You don't have to leave everything to be divided between your children, I mean you can leave one child out if you want to, at your peril. If you have a bad child, like doing time for murder, and you don't want to leave that child anything you can leave them out. And you would write a letter to go with your will to say why you're leaving them out, or you can leave them a nominal sum to discourage them from bringing a Family Protection Act claim.  

Another thing that you can do if there is a very undeserving child is transfer your residential property to a trust. And you can transfer property to a trust and gift the whole value to a trust in one go since 2010. So this person has transferred her property to a trust. Her son lives on the property with her and there can be no Family Protection Act claim against property that's owned by a trust so is not a personal asset. 

Denise
So that protects it for her.

Jenny
Completely. Another thing about this is that joint ownership trumps everything. So if all your bank accounts are joint, if all your money's in the bank, upon the death of one of you, the bank account, whatever the value, goes to the survivor, so it may not matter if you have a Will or not. If your house is jointly owned and your bank accounts are joint everything goes to the survivor. 

Denise
So a home that’s owned together, for example, that can be owned jointly, which in that case would go to the survivor is, or it can be owned separately or… 

Jenny
Yes, the family home can be owned a half share each. People often do have their house owned a half share each, because then if one of them goes into care, more importantly, in a blended family situation, they then only own a half a house. If one person goes into care and the other person is still alive, then all of their assets are taken into account when you're doing a rest home subsidy application. 

But if one person has died, then upon their death, their half share of the house is owned by their estate. So can't be asset tested against. But most importantly, the deceased person’s half share of their home or assets or estate will be inherited by their children, other members of the family or in fact whoever they choose, which may be their partner, their friends, or their chosen charities.

Denise
So when something's owned in a trust, Jenny, that trust goes on, doesn't it? So what happens with generation – you know, you might be two or three generations beyond that.

Jenny
It's usually a house that's owned by the trust and once everyone's finished with it, we wind the trust up and pay it out to the beneficiaries in equal shares. Sometimes though, we do carry on or retain the trust for one member of the family.  For example, there’s one we’re dealing with at the moment, where we have retained the Trust for the share of one of the three (adult) children, because she is a long term invalid and on a benefit. Her inheritance is safely in her late mother’s trust.  And a Trust can be great protection from losing an inheritance to relationship property, and other claims such as from creditors etc.

 Denise
That makes sense. So some of the other things that can be put in a Will, Jenny, are some of the kind of finer details. Isn't it like perhaps, particular possessions to go somewhere or to arrange care for pets?

Jenny
You can put anything at all in your Will that you want. So what people commonly put in are directions about what they want to happen after they die. They might say that they want a private funeral – they only want a notice in the ODT after the funeral. And you can also put if you want to leave certain things to certain people, but if what you're leaving are furniture and paintings and things, that can be on a list that doesn't need to be in a Will, because you only need the Will for money in the bank or house ownership properties, – anything else can be on a list. And it is a good idea if you've got things in your house or family heirlooms that you know that everybody would like. It just prevents a lot of angst if you actually appoint who you want to have certain things.

Denise
So if I keep a list at home, and if I say in my will, that there was a list at home or with my copy of the will at home, of who I want to hear it, is that legally binding for the executors?

Jenny
No. We usually don't put it in the will, that there's a list. We just advise people to do it and sometimes people change it. It's good if it's with the Will. But if it's not and someone in the family finds it then that's fine – or names on the back of paintings are helpful too. 

Denise
Yeah, my grandmother used to have little stickers on the back of objects in her house for various grandchildren.

Jenny
It's a good idea too. 

Denise
You mentioned Jenny, about having funeral instructions or what's to happen after someone's died. So it's actually really helpful to have people know about those other than with your Will, isn't it, because your Will may not be read for several days after somebody's died, by which time actions may have already been taken.

Jenny
Correct. Often, the funeral directors will ask if there's a Will. But often the people don't know where the Will is. People often ask us, how are you going to know when I've died? And how we know is that the staff every day check the death notices in the paper. But of course, you don't have to put a death notice in the paper, but most people do. And sometimes it's only a thank you notice but they check all of those as well and check them against our Wills Register. If there's no notice in the paper, often the family might ring. And then if no one knows whether there's a Will because person might have very often moved to a different part of the country, for example, the lawyer that's dealing with the family, the family's lawyer puts a notice in the Law Society magazines. And there’s always about six of those in every Law Society magazine that comes out, asking if anybody's got a will for a certain person.

Denise
That makes sense because I was thinking, people are so mobile these days. They may have a Will in Dunedin and then move to Auckland, or Australia. 

 Jenny
Another thing actually, that I think I should say, is that if you leave things to your children, that only includes your legal children. So it might be that a person has a child that's lived with them all their life, but actually is not a legally adopted child. So when they say ‘I want to leave everything to be divided between my children’, it never occurs to them that that child wouldn't be included – but because it's not a legal child, then according to the letter of the law, it's not included. So in that case, we would just name that child in the will. So we’d say ‘to my children’, and we might name them, ‘and also John’.

Denise
So that would apply to a step child, for example?

Jenny
Yes. In that case, you would say, ‘my children and my stepchildren’ – you have to identify them. It's a really important thing, Denise actually.  

Denise
So it really does come down to those finer details, and these are the kinds of things that might get missed. 

Jenny
If you do your own Will.

Denise
And as you say that Will you mentioned earlier, simply the fact that it wasn't signed by that second witness was enough to invalidate it and cost the family large sums of money. 

So Jenny, the few instances where somebody may not need a Will is where they have got no particular belongings, they don't own a house, and if they have less than $15,000 in any one bank, that would be the one instance that they wouldn't need to have a Will?

Jenny
Correct. Or if all their bank accounts are jointly owned. If everything is jointly owned, it doesn’t matter if they’ve got a Will. It's also lovely for the family and also for grandchildren when Granny or Granddad has left them something. It's lovely for the grandchildren to know that Granny wanted one of them to have her wedding band or her engagement ring. You know, it's lovely for the family to know that.  

Denise

Absolutely Yeah. It would have quite a lot of meaning really to have a gift left like that, wouldn't it?

Jenny
So a lot of older people do that, if for example they're going into a rest home.  Sometimes they're really past sorting things out, but we've got a house to deal with full of things. I always look at their Will to see if they have any wishes as to who gets what, to see if they leave the tools to, say, a grandson, and if they leave certain items, paintings etc. to anyone in particular. We don't ever disclose the contents of a Will to the family until after the person has died. But in terms of the things that they own, if it's all being cleared out of the house, we do.

Denise
So Jenny, the other topic that is really important is Enduring Powers of Attorney. I know there are two different ones – there's one for health and welfare, and there's one for finances. So do you want to tell us first, why are there two different ones? 

 Jenny
So first of all, I'm going to say it doesn't matter how good your Will is, it's not of any consequence until the minute you have died. So until then, all grownups should have Powers of Attorney. There's one for property where you can appoint as many people as you want. So some people, generally would appoint a partner and they might appoint one or more of their children, if they've got children. Or if they don't have any close family or don't want to appoint the family, they might appoint a friend or a lawyer. So that's the Power of Attorney for Property, under which you or the Attorney can do anything with the assets at all. Using the Power of Attorney is the same as the person doing it themselves. You can put conditions on the appointment. For example, that if there is more than one Attorney, they must consult with each other on certain matters, say for example, if dealing with funds of over $10,000 that you want the Attorneys to consult with each other. So sometimes we have that provision. 

So that's the power of attorney for property, that is valid to use from the minute that it's been signed by all parties. And normally you wouldn't be using it unless someone was unable to go to the bank or wanted you to. Except there are occasions where we do use them where we're selling houses where the person who owns the house is an elderly lady, and is perfectly capable of signing the documents herself to sell the house. But now you have to have government issued photo ID to go with selling the house, and there are people who have never driven and whose passports have expired. So that's sometimes where we would use it, where the person could be doing it, and if you don't have a power of attorney, then you have to use statutory declarations and things to say that she is the owner of the property, but has no photo ID. 

Denise
So it gets complicated. 

Jenny
The other important one, though, is the Power of Attorney for Personal Care and Welfare, which is where you appoint someone to make decisions about where you're to live, and what care you're to have, if you're unable to make those decisions for yourself. So that's where you appoint someone who may have to make the decision and sign the paperwork for your discharge from the hospital into a rest home, because you've had a stroke, and you can't possibly go home or make a sound decision about your future. 

So that's where you've appointed a person who's going to make decisions for you, if you have been certified as being incapable of making a decision for yourself. The person who does that certification can be the long-time GP, or more often than not, it's the psychiatrist at the hospital. So that's when this Power of Attorney kicks in. And the hospital can't discharge the person unless there are Powers of Attorney in place to have the person discharged – someone's got to sign the paperwork before they can discharge the person from hospital. So at times they have to keep the person in hospital while there’s an application to the Court to have someone appointed, quite a process, and the person who has lost capacity has to pay the legal fees if they have the means to do so.  A lawyer is appointed to go and interview them (the subject person) to do a comprehensive report to say that they're mentally incapable.  It’s so much easier and considerably less cost to appoint a person of your choice, while you still can. 

Denise
And it may not be the person that you would like to be speaking for you.

 Jenny
The person who applies can, for example, be the pushy daughter that you would never have chosen to be the one in charge of your future. 

Denise
As far as that personal welfare one, Jenny, can somebody choose to say ‘I no longer want to make decisions for myself and I want this person to speak for me’ or do they have to be deemed incompetent?

Jenny
Not about making the decisions – so they would still be one making the decision if they are competent to do so.  But often in that situation where the person is still competent but they want the family help decide, there would be a family meeting. But it's the person who's still got capacity who actually makes the decision, even though they want all the input from the family – they're the ones that actually sign it off if they're still capable of doing that. 

Denise
Yeah, and it really does pay doesn't it to have that thought about who we would want to speak for us. You know, when it comes to deciding whether you're going to continue having treatment, or whether the treatment should be stopped. You know, you want someone who's going to have your best interests, and think the way you would think for yourself – not their decision, but yours.

Jenny
Be the master of your own destiny, that's what it is.

Denise
Yeah. I'd like to know who's going to make the decisions for me if I can't, and, and I've struck people in the past who've assumed that, ‘Oh, well, I'm married, my husband can speak for me’, but actually, that's not legally binding. 

Jenny
That’s right. So when I say that all grownups should have a power of attorney it’s because you never know if or when you’re going to need it.  Hopefully never, but you just don’t know.

When the people are appointed by the court, that's the other thing. People appointed by the court as a Property Manager (essentially an Attorney for Property) have to report regularly to the Court about what they've done. It can be huge. 

Denise
And really, that's all most of us want, isn't it, to be able to speak for ourselves, or to know that if we can't, the person who is, is going to speak for us the way we would want.

Jenny
That's right, yeah. 

Denise
And so really these – although they're quite separate, that EPOA or enduring Power of Attorney and the Will – they're very similar. They're a voice for us when we can’t speak.

Jenny
Well, they serve the same purpose, but one when you're alive and one when you're dead. It's like the Berlin wall between them.

 Denise
But you say there's nothing to stop you having the same people being your Enduring Power of Attorney and the Executors of your Will. 

Jenny
Correct. 

Denise
So you can appoint that at the same time? Thank you, Jenny. that's been really informative. It's good to have that clarity around those things and why they're so important to us. So thank you for joining us today.

Jenny
Okay, it's been lovely. Thank you, everybody.

Denise
And thanks listeners for joining us. 

 This podcast was brought to you by Otago Community Hospice, with support from Hospice New Zealand. If you found this discussion helpful, check out our other episodes of Ending Life Well, a podcast series for carers. You can also find more resources for caring for a person who's dying at otagohospice.co.nz/education