Before you begin to consider the specifics of possible legal options to protect the interests and wellbeing of your FASD individual, it is important you consider and be clear on your answer to these three questions:

1. Why are you considering legal options?
2. What do you want to achieve for your FASD individual through any available legal options?
3. What effect will formal legal authority over their affairs have on them - now and across the lifespan?

Write your answers down in your notebook because you will want to refer back to these for planning and review purposes if you decide that pursuing legal protection is the right thing to do for your FASD person – whether you do this as they move from adolescence to adulthood, or at some later stage of their life. 

When to start

There is no right answer to this question. But the general advice is to start thinking about these things as early as possible, even if you do not pursue them at the time. Read up about the options available to you, or seek legal advice on those options.

You can find more information about disability legal advice providers here.

Where to start – a shared vision

Before you even get into the legal specifics, we recommend you start by developing a shared vision for the FASD individual’s adult life – setting out simply and clearly the ideal kind of a life that they would like to see in their future. This should reflect their personal values, aspirations, and desired lifestyle.

Remember that you know your FASD person best when it comes to their strengths and challenges. So when developing that shared vision, be realistic, but focus on their strengths, interests and potential for growth. 

Whatever vision you develop for your FASD person, they must be in the placed in the centre of the planning and be involved in developing this vision about their future life. 

Before you even get into the legal specifics, we recommend you start by developing a shared vision for the FASD individual’s adult life, setting out simply and clearly the ideal kind of a life that they would like to see in their future. This should reflect their personal values, aspirations, and desired lifestyle.

Remember that you know your FASD person best in terms of their strengths and challenges. So when developing that shared vision, be realistic, but focus on their strengths, interests and potential for growth.

Whatever vision you develop for your FASD person, they must be in the placed in the centre of the planning and be involved in developing this vision about their future life.

Who to involve in planning their vision

Start by asking your FASD person who they want involved in developing this vision for their life. It is recommended you involve trusted people who are close to them, who have shown an interest in being in their life long-term, and have some empathy and understanding of FASD (if this is possible) – see 'Circles of Support' under this tab.

Thinking longer-term, try and involve people who can help them with any future planning because life situations and goals, even the vision, is likely to change over time. Life is never static! 

Why is a shared vision important?

A vision for a disabled or neurodiverse person is particularly important because it can help them achieve their hopes and dreams, and live their ideal life.  It also helps you know what you are trying to achieve with any legal arrangement(s) you might put in place, and it can potentially help you identify trusted people who may be prepared to fulfil legal roles (e.g. Welfare Guardian) that your loved-one may need at some stage in their life. 

It also helps with the following:

Clarifies thoughts
Putting a vision on paper can help whānau and families clarify their ideas and direction. 

Guides decision-making
A vision plan can help people evaluate choices and decide what will bring them closer to their desired outcomes. 

Communicates needs
A vision plan can help people communicate their needs to others, and help enlist support. 

Enhances self-determination
A vision plan can also help people feel in control of their lives, and reduce the possibility of a life designed by others. 

Recognises rights
A vision plan can help people understand that disabled people have the same rights to an ordinary life as everyone else. 

Expands opportunities
A vision plan can help people enjoy a broader range of opportunities. 

Developing a shared vision

So what do you need to think about when working together to develop a shared vision? Key aspects of vison development, particularly for people with disabilities, are:

Person-centred approach
Prioritising the individual's desires, needs, and goals, rather than imposing a generic plan. 

Flexibility
Allowing for adjustments based on changing health conditions or life circumstances. 

Involve the individual
Ensure the person with a disability is actively involved in the visioning and planning process and has a voice in decision-making. 

Regular review and adjustments
Regularly assessing the vision and life plan and making necessary modifications as needed. 

Respect individual capabilities
Acknowledging limitations while focusing on strengths and potential for growth.

Vision planning tools can help you create your shared vision. Here are a few ideas to assist you.

Vision Planning: A Guide for Parents and Carers

Parent2Parent and Care Matters have helpfully developed a 9-page booklet entitled: Vision Planning – A Guide for parents and carers.   The booklet covers:

• what a vision plan is
• why a vision plan is important
• what a vision plan can look like
• how to create a vision plan
• some top tips
• some additional resources.

You can access this booklet here:  Vision Planning - A guide for parents and carers

The PATH Planning Tool (Planning Alternative Tomorrows with Hope)

PATH is a creative tool that helps people visualise their future and plan to achieve their goals. It's used in a variety of contexts, including personal growth, career planning, and strategic planning. 

Here's how the PATH planning tool works: 

Set a vision

The group starts by identifying the person's dreams and ideal future without limits.

Set goals

The group then works together to identify specific, positive, and achievable goals.

Plan backwards

The group uses backwards planning to create a step-by-step plan to achieve their goals.

Record the plan

The group records their plan in words and pictures on a large sheet of paper.

You can find out more about the PATH Planning Tool by watching this FASD-CAN webinar:
PATH: Planning Alternative Tomorrows with Hope

Another useful resource about PATH can be found here: PATH, MAPS and Person-centered Planning

The SAMS Planning Tool (Standard and Monitoring Visioning Tool)

You can find out more about this Vision Developing tool from pages 27-29 in this publication.

Keeping records

Don't forget to keep your shared vision in your notebook or file – use them as living documents that you can refer back to, review and adjust over time so they remain relevant to your situation.

An important part of developing your vision and planning for the future is to create and record the FASD person’s circle of support. 

These are also referred to as 'intentional networks'. Building a strong network of family, friends, healthcare providers, and community organisations to provide assistance and encouragement is really important for a number of reasons. 

Lived experience tells us that most FASD individuals become socially isolated when they leave school and become adults. When this transition happens they mainly get to interact and engage with paid support workers, not people that have chosen to have a social relationship with them … and our people with FASD are well aware of this fact. Developing a trusted circle of support is a way of protecting them from social isolation, loneliness, potential manipulation and abuse.

When developing your circle, the intention is to include, wherever possible, people who have a genuine interest in their friendship or regularly maintaining a social link with them. You are also looking to include people who are prepared to make a long-term commitment to stay in their lives in some way, and people who will look out for their safety, particularly from manipulation, victimisation and abuse. 

Support roles should remain the responsibility of the professionals in their lives – well as much as possible.  You also need to consider the age of members of your circle of support because the purpose is that these social links remain in place well after you have died. 

We acknowledge that developing natural circles of support for people with FASD as adults is often difficult.

Reasons for this include:

• The parents and caregivers themselves tend to have become socially isolated during FASD childhood and adolescence due to the challenging symptoms associated with FASD, lack of societal understanding and stigma, and failures in every sector to accommodate the FASD symptoms.
  
  
• The FASD individual usually has few friends or social contacts anyway for the same reasons given above.
  
  
• Many people are not prepared to make a commitment to stay in a FASD person’s life because they know how hard and challenging it can be.

Don’t let this stop you from recording the circle of support you have at the time you are developing your shared vision. Relationships change in our lives all the time. Remember, the vision plan is a living document that you can review and change at any time.

Here are a couple of resources that might help you develop your circle of support:

• A Guide to Circles of Support
• Circles of Support - A manual for getting started

Here you can link to a template to help you record your circle of support: Circles of Support - template 

There are more templates available online. Choose one that works for you.

In Aotearoa New Zealand, the terms ‘capacity’ and ‘competence’ are often used interchangeably.  However, in a clinical context, ‘competence’ usually refers to the process of decision-making, while ‘capacity’ is the legal term. 

In Aotearoa New Zealand law, the issue of capacity is relevant in many circumstances, particularly when it comes to making legal decisions, entering into contracts, and managing personal affairs.  Key contexts in which capacity is critically assessed includes:

1. Creating a Will

Testamentary Capacity: When a person creates a will, they must have the capacity to understand the nature of making a will, the extent of their assets, and the implications of the provisions they are making. If there are doubts about a person's capacity at the time of making the will, it may be challenged in court.

Example: An elderly individual with dementia may lack the capacity to make a valid will if they cannot understand the implications of their decisions.

2. Enduring Powers of Attorney (EPA)

Capacity to Appoint an Attorney: To create an Enduring Power of Attorney, a person must have the mental capacity to understand what an EPA entails and the implications of granting decision-making powers to another individual.

Example: A person with significant cognitive impairments may be deemed unable to appoint an attorney if they do not fully comprehend the authority they are granting.

3. Contractual Agreements

Capacity to Enter Contracts: Individuals must have the legal capacity to enter into contracts. If a person lacks capacity (due to age, mental health issues, or other factors), the contract may be deemed void or voidable.

Example: A minor (under 18 years) typically lacks the capacity to enter into binding contracts, except for essential goods and services.

4. Medical Treatment Decisions

Capacity to Consent to Treatment: Patients must have the capacity to understand the nature of medical treatments, the associated risks, and the consequences of consenting to or refusing treatment. If a patient is deemed unable to make these decisions, a legally authorised representative may need to make decisions on their behalf.

Example: An individual with severe mental illness may not be able to provide informed consent for a medical procedure if they cannot understand the implications.

5. Legal Proceedings

Capacity to Participate in Legal Proceedings: Individuals involved in legal proceedings must have the capacity to understand the proceedings, instructions given to their legal counsel, and the implications of their decisions. If a party is found to lack capacity, a guardian or representative may be appointed to act on their behalf.

Example: A person with a serious cognitive impairment may require a representative to participate in a court case.

6. Trustee Responsibilities

Capacity to Act as a Trustee: Individuals must possess the capacity to act as trustees, which includes understanding their duties and responsibilities regarding the management of trust assets. If a trustee is found to lack capacity, they may need to be replaced.

7. Financial Management

Capacity to Manage Finances: Individuals must have the capacity to manage their financial affairs. If a person is unable to understand their financial situation or the consequences of their financial decisions, they may require assistance or a trustee to manage their finances.

Conclusion

In summary, the issue of capacity is relevant in various legal contexts in Aotearoa New Zealand, including creating a will, appointing an enduring power of attorney, entering contracts, making medical decisions, participating in legal proceedings, acting as a trustee, and managing finances. Assessing capacity is essential to ensure that individuals can make informed decisions and that their rights are protected. If there are concerns about a person's capacity in any of these areas, it is advisable to seek legal or professional guidance to navigate the complexities involved.

In Aotearoa NZ, the assessment of decision-making capacity is an important aspect of various legal frameworks, including those related to welfare guardianship, property management and enduring powers of attorney.

Generally, a ‘relevant health practitioner’ is authorised to assess whether someone has decision-making capacity, meaning a medical professional whose scope of practice includes assessing a person's decision-making capacity, such as a doctor.

There is some debate about whether a nurse practitioner (with the appropriate qualifications) can undertake this assessment. It would be prudent to check this specific requirement out before approaching a nurse practitioner to undertake a decision-making capacity assessment.

Various pieces of legislation identify specific individuals who are authorised to assess decision-making capacity. The standards and criteria for these assessments can differ depending on the context, such as welfare guardianship, property management, and enduring powers of attorney. Here’s an overview:

Authorised Persons to Assess Decision-Making Capacity

Protection of Personal and Property Rights Act 1988

This legislation includes assessments in relation to Welfare Guardianship, Property Managers, and Enduring Powers of Attorney.

Under this Act, a medical practitioner is specifically identified as an authorised person to assess decision-making capacity. This includes assessing individuals for welfare guardianship and property management purposes.

Definition of ‘Medical Practitioner’: Section 2 of the PPPR Act provides the definition of a medical practitioner as:

‘A person who is registered under the Health Practitioners Competence Assurance Act 2003 as a medical practitioner.’

• Health Practitioners Competence Assurance Act 2003: To register under the Health Practitioners Competence Assurance Act 2003 as a medical practitioner in Aotearoa New Zealand, an individual must have completed a recognised medical degree, fulfilled clinical training requirements, and demonstrated competence and fitness to practice. The registration process involves submitting an application to the Medical Council of New Zealand, which assesses qualifications and ensures that only qualified individuals are permitted to practice medicine. 
  
  
• Medical Council of New Zealand: The Medical Council of New Zealand registers medical practitioners (doctors) who have completed the necessary qualifications and training, whereas nurse practitioners are registered with the Nursing Council of New Zealand. They have different regulatory frameworks governing their practice.

• Psychologist: In some cases, a registered psychologist may also be involved in assessing capacity, particularly when psychological factors may influence a person's ability to make decisions.

Legislative Framework

The Health and Disability Commissioner Act 1994 and the Mental Health (Compulsory Assessment and Treatment) Act 1992 also touch on aspects of capacity, particularly related to healthcare decisions and treatment. These laws reinforce the need for assessments to ensure individuals can make informed decisions about their health care.

Conclusion

In summary, under New Zealand law, a ‘medical practitioner’ is identified as an authorised person to assess decision-making capacity across various contexts, including welfare guardianship, property management, and enduring powers of attorney. The standards for assessing capacity may vary slightly depending on the context, focusing on the individual's ability to understand and communicate decisions relevant to personal care, welfare, and financial matters. If there are concerns about decision-making capacity, it is advisable to consult with qualified medical professionals or legal experts to navigate the assessment process appropriately.

How does a health practitioner decide if a person lacks capacity?

What is assessed?

A relevant medical practitioner will determine if an adult lacks capacity to make decisions through a clinical interview that assesses the person's ability to: 

• Understand the nature and purpose of a decision
• Understand the consequences of the decision
• Retain the information needed to make the decision
• Use the information to make the decision

The assessment is based on a functional test that considers the person's brain or mind function. A health practitioner may also consider the person's ability to communicate their decision. A neuropsychologist may also be involved in the assessment if the person's incapacity is borderline. They can use specialised assessments to identify the person's cognitive strengths and weaknesses. A health practitioner who knows the person is best (but practice nurses, social workers, and occupational therapists) may also contribute to the assessment. 

Toolkit for Assessing Capacity

The Law Commission has published a practical, legal, and clinical guide for lawyers and health practitioners to assess an adult's capacity to make decisions.  It includes a three-step method for assessing capacity.

1. Establish the relevant decision-making domain
2. Assess the individual's ability to understand the information related to that decision
3. Assess the individual's ability to weigh up the relevant information and make a decision; essentially focusing on understanding the situation, considering options, and communicating a choice in a relevant context. 

Key points about this method

Decision-specific

The assessment is always conducted in relation to a specific decision the individual needs to make, ensuring the evaluation is relevant to the situation.

Functional approach

It looks at the individual's actual ability to understand and weigh information, not just their cognitive abilities in general.

Flexible application

This method can be applied to various situations, including medical decisions, financial management, and legal matters. 

If you want to know more you can find this toolkit here: Toolkit for Assessing Capacity

In Aotearoa NZ, a person's ability to make legal and important life-related decisions is assessed through the concept of ‘capacity,’ which determines if they can understand, appreciate, and rationally use information to make choices. If a person lacks capacity, they may need support to exercise their legal rights and duties, and another person can be appointed to support their decision-making. Aotearoa New Zealand supports the concept of supported decision-making, where individuals receive assistance to make their own decisions.

• Legal capacity

Legal capacity is something that every person has. It refers to a person's ability to have rights and obligations and to perform acts with legal effect. It's the recognition by law that an individual can make their own decisions, engage in transactions, enter into contracts, bring legal proceedings, make a will, and generally exercise their rights and duties as a person.

• Substituted decision-making

If a person is assessed as lacking the capacity to make decisions, another person can be given the authority to make decisions on their behalf.  This is known as substituted decision-making. However, the system in Aotearoa New Zealand is based on the requirement to undertake supported decision-making, so substituted decision-making should be a rarity.

• Supported decision-making

In most cases, a person with impaired capacity is still be able to make decisions with support.  The PPPR legislation requires supported decision-making to be practiced by everyone acting in a role under this Act.  This is common, and the preferred approach.

• Principles

The PPPR Act states that judges should intervene in a person's life as little as possible.  Judges and those appointed to make decisions should encourage the person to make decisions for themselves as much as possible. 

‘Capacity’ is decision and time specific, and it can affect people of all ages. Culture, language, and religion are also important factors in how a person makes decisions. 

How does ‘decision-making capacity’ affect decision-making in New Zealand law? 

Decision-making capacity affects decision-making in Aotearoa New Zealand law in the following ways:

• Decision-making capacity

The PPPR Act and other laws in New Zealand regulate decision-making capacity. These laws apply to a wide range of adults, including those with dementia, brain injuries, learning disabilities, mental health needs, and other disabilities or health conditions. 

• Presumption of capacity

The burden of proof to establish that a person does not have capacity lies with the person who wants to obtain a court order.  This means that they must provide medical evidence to the Court that persuades the Judge the subject person lacks capacity. Again, a reminder there is high threshold to be met before the court will intervene.

• Substitute decision-making

If a person is assessed as lacking decision-making capacity, another person can be given the authority to sign off on decisions on their behalf.  This is called substituted decision-making.  However, decision-making for a person lacking decision-making capacity is still required to undertake supported decision-making, even if they have the legal authority to sign off on the decision.

• Supported decision-making

As indicated with legal capacity above, Family Court Judges are required to promote a supported decision-making approach to help and encourage the person to make decisions for themselves as much as possible. 

• Decision-making capacity

When assessing a person's decision-making capacity, a health practitioner will consider medical evidence and statements from family, friends, and health professionals.

The Law Commission has published a capacity assessment tool that practitioners and doctors can use to assess capacity.
Click here to access the Toolkit for Assessing Capacity.

This is a tricky one for people with FASD for several reasons that include:

• They are often seen as generally capable individuals who can express their wishes well.
• The lived experience of memory challenges, confabulation, being able to ‘talk the talk’ but not ‘walk the talk’, their tendency to change their wishes on a whim, their inconsistency in performance, their inability to understand cause and effect or learn from consequences, their lack of good judgement, dysmaturity – all those many executive and adaptive functioning challenges we know so well, are usually not seen as issues that affect their decision-making capacity.
• Courts are loathe to talk away a person’s rights to self-determination except in exceptional circumstances.
• Our knowledge of the ‘trouble’ they can get into in their lives, their capacity to manage money and issues with accumulation of debt are generally not seen as relevant to their decision-making capacity.

On the other hand, while acknowledging people with FASD have many challenges and they are slower to mature than their peers, they are amazingly resilient individuals with a huge capacity to continue to learn, and developmentally grow over time. So what might be beneficial or necessary to protect their best interests now, might not be needed in the future, and vice versa.

The Court’s approach in these matters in therefore understandable, but it does not alleviate parent, caregiver and whānau / family lived experience concerns around the decisions made and their failure to learn from the past.

All this information taken together indicates it is unlikely the Family Court will agree to restrict your FASD person’s decision-making rights about their lives, except in exceptional circumstances.

The Family Court will only intervene if it believes that the person's safety is at risk and that the appointment of a Welfare Guardian is necessary. The Court will also consider the principle of least restrictive intervention, meaning that the person should be able to exercise their capacity to the greatest extent possible.

We therefore recommend engaging with your FASD person in supported decision-making as much as possible, and seek their consent to take on some of the roles discussed later in this resource.

RECOMMENDATION: The process of establishing lack of capacity is a complex area of law and is best handled by a specialist disability lawyer. FASD-CAN recommends seeking their advice if you wish to pursue this option.

With the expected future changes to the law relating to adult decision-making capacity, the legal system in Aotearoa NZ will be moving away from the current standard of ‘best interests’ to ‘rights, will and preferences'.

While this is entirely consistent with the self-expressed desire of many in the disabled community, and with the provisions of the UNCRPD, this change cannot be to the extent that someone’s preference will result in them being unsafe or harming themselves or others. This highlights the hugely variable degrees of capacity even within the disability community itself.

Another issue for people with FASD is that a Court-appointed lawyer will sometimes ignore or minimise medical evidence because the person seems to have a better understanding of legal proceedings than they actually do.

This is particularly related to the difference in their expressive communication skills (which is generally in keeping with their peers) and their receptive communication skills (which is usually much younger than their peers) meaning they do not really understand what is being communicated to them.

Another confounding factor for FASD clients is their lack of understanding of cause and effect, and the consequences of their actions.

In 2023 FASD-CAN wrote about the relevance of the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) for people with FASD, and their caregivers, whānau and families.

We particularly looked at the definition of disability in relation to FASD, and how the recent review of New Zealand’s implementation of the Convention indicated several issues, including ones specifically related to FASD, still needed to be addressed.

You can find out more information about the link between the UNCRPD and FASD here: Unpacking the UNCRPD for FASD.

The Canada FASD Research Network (CanFASD) also wrote in January 2025 about the link between the rights people with FASD have under the UNCRPD and their rights to a diagnosis and housing.

You can find out more about that here: Advocating for your right to FASD diagnosis and housing - A guide for caregivers and individuals with FASD.

The United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) is built on eight guiding principles that stress individual autonomy and independence.  It does not create new rights but clarifies what these are:

1. Individual autonomy: Respect for the freedom of people with disabilities to make their own choices.
   
   
2. Respect for inherent dignity: People with disabilities should have their inherent dignity respected. 
   
   
3. Non-discrimination: People with disabilities should be treated equally and fairly, and not discriminated against. 
   
   
4. Full and effective participation and inclusion in society: People with disabilities should be able to fully and effectively participate in society.
   
   
5. Respect for difference: People with disabilities should be accepted as part of human diversity and humanity.
   
   
6. Equality of opportunity: People with disabilities should have equal opportunities with other people in society, with a focus on removing institutional and environmental barriers. 
   
   
7. Accessibility: People with disabilities should have access to places, information, technologies, communication, and economic and social life. 
   
   
8. Equality between men and women: Men and women with disabilities should have equal rights and all people should be treated equally under the law, regardless of gender or disability. 

Children with disabilities should have their evolving capacities respected and children should be supported to develop their abilities and make choices about their lives. People with disabilities should also have effective access to justice on an equal basis with others.

Under the UNCRPD, ‘access to justice’ includes supporting legal capacity by ensuring that people with disabilities have the support they need to exercise their legal capacity. 

Article 12 of the UNCRPD (United Nations Convention on the Rights of Persons with Disabilities) essentially states that people with disabilities have full legal capacity, including the right to manage their own property, meaning they should be treated as having the same legal rights to own and manage their property as anyone else, without automatic assumptions about their ability to do so based on their disability; it promotes the use of supported decision-making mechanisms where necessary to assist individuals in exercising their property rights.

If a disabled person who relies on a WINZ benefit for income inherits property, it could impact the amount of benefit they are eligible to receive. This is one reason why placing property in a trust can be advantageous: WINZ does not consider a house or car as part of the asset test when determining benefit eligibility.

The right to make ‘unwise’ or ‘imprudent’ decisions

The UCRPD protects the right of people with disabilities to exercise their legal capacity, which includes the right to make decisions about their personal lives, health care, and finances, even if others might deem their decisions misguided.

Of course the concern for parents and family / whānau of vulnerable adults is that their loved one or family member may be taken advantage of by predators and abused in one way or another. 

This raises the ethical issue around their rights in terms of allowing abuse (in whatever form) to happen or continue. While there isn't a single ‘adult safeguarding act,’ Aotearoa New Zealand is actively working to improve safeguarding practices through legal reforms, multi-agency collaborations, and increased awareness and training, with the goal of protecting adults at risk from harm and abuse. 

The United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) is linked to legal decision-making capacity in Aotearoa New Zealand in several ways:

• Legal capacity

The UNCRPD guarantees that people with disabilities have the right to legal capacity, which means they are recognised as capable of acting under the law. This includes the right to make decisions and take action to implement them. 

• Supported decision-making

The UNCRPD's Article 12 emphasises the importance of providing support to people with disabilities to exercise their legal capacity. This support can include a range of mechanisms, such as providing information and advice, allowing video testimony, and offering professional sign language interpretation.  Although the specific words are not used, it is from Article 12 of the UNCRPD that the concept of ‘supported decision-making’ emerged. 

If you want to read the specific wording in Article 12 click here: UNCRPD Article 12 - Equal Recognition before the Law

• Legislative reform

New Zealand ratified the UNCRPD in 2008 and has made no reservations to its ratification of the treaty.  Despite this, many maintain that Aotearoa New Zealand has not yet made the widespread legislative changes needed to align with the UNCRPD. However, the Law Commission is currently in the process of reviewing the law relating to affected decision-making of adults and expects to release a final report at the end of 2025. To find out more about their project click here: Review of Adult Decision-making Capacity Law

FASD-CAN made a submission to the first consultation round on this project, and you can read out submission here:  Kathy has this submission ever been loaded to our website?

• Procedural and practice change

The UNCRPD requires procedural and practice changes to reflect its principles. For example, Aotearoa New Zealand could design its legal system to be more accessible and make reasonable accommodations to ensure that people with disabilities can participate effectively. 

Supported decision-making (SDM) is a process that allows people with disabilities to make their own decisions with the help of trusted advisors. It promotes self-determination, control, and autonomy, and fosters independence. It can also help people with disabilities make decisions about living arrangements, health care, relationships, and financial matters. Another benefit of SDM is that it helps people learn decision-making skills, which can lead to greater self-determination and self-esteem.

SDM can involve a variety of supports, such as friends and family, advocates, legally mandated supporters (such as attorneys, welfare guardians, property administrators and property managers), advance directives and communication tools.

Because Aotearoa NZ does not have a legal mechanism for supported decision-making as yet, people can make up their own supported decision-making agreement. These should be written down, and simply and clearly state what has been agreed in terms of the support to be given, by whom, etc.

It is useful to consider the findings of the Royal Commission on Abuse in Care in New Zealand (2024), because caregivers and whānau / family involved in supported decision-making with their FASD person can learn from what occurred.

The Royal Commission strongly advocated for the implementation of ‘supported decision-making’ practices, emphasising that people in care should have the right to access support to make decisions affecting their lives, while respecting their autonomy and agency, particularly for those with disabilities or who may require additional assistance due to their circumstances; this included recognising the importance of culturally appropriate support and involving whānau in the decision-making process. 

Key points from the Commission's findings on supported decision-making included:

Right to participate

People in care should have the same rights as others to make decisions affecting them, with access to appropriate support mechanisms when needed. 

Culturally sensitive support

Support should be provided in a culturally sensitive manner, taking into account the unique needs and perspectives of Māori and other diverse communities. 

Whānau involvement

Whānau should be actively involved in decision-making processes, respecting their role as primary caregivers and advocates. 

Assessment of needs

Proper assessment of individuals' needs and capabilities should be conducted to determine the appropriate level of support required for decision-making. 

Empowerment

Supported decision-making should aim to empower individuals in care to make choices aligned with their wishes and values. 

Criticisms in the Report

It is equally important to note their findings on what did not go well. A key criticism of the Royal Commission was that supported decision-making was often not adequately implemented.  This led to situations where vulnerable individuals in care were not given sufficient agency in decisions affecting their lives, sometimes resulting in neglect or abuse due to a lack of understanding of their needs and preferences. 

Key points of criticism:

Lack of care

The evidence suggested that many supported decision-makers did not adequately care about the needs and well-being of disabled people in their care, often failing to prioritise their best interests and allowing abuse to occur due to systemic issues and a lack of understanding of disability needs. 

Capacity assessment

The Commission found that assessments to determine individuals' decision-making capacity were often inadequate, leading to situations where people were deemed unable to make choices for themselves when they may have been able to with appropriate support. 

Paternalistic approaches

Care providers sometimes made decisions on behalf of individuals without adequately considering their input, perpetuating a power imbalance and undermining their autonomy. 

Discriminatory attitudes

Systemic ableist attitudes within care institutions often resulted in disabled individuals being seen as less credible or having their needs disregarded. 

Inadequate training

Staff working in care settings may not have received sufficient training on how to implement supported decision-making effectively, leading to misunderstandings and poor practice. 

Cultural considerations

The Commission highlighted concerns that supported decision-making practices may not have adequately taken into account the cultural needs and perspectives of individuals from diverse backgrounds. 

Impact of these criticisms:

Increased vulnerability to neglect or abuse

When individuals are not properly supported in decision-making, they are more susceptible to experiencing abuse or neglect within care settings. 

Lack of agency and control

Without adequate supported decision-making, individuals may feel powerless to influence their own lives and care plans. 

Key Takeaway

It is important that any person or agency acting as a supported decision-maker has a real interest in the disabled person and in them achieving their best life.  Currently this role is more likely to be best filled by the caregiver or a whānau│family  member until there is the option of professional people taking on these roles.

There are lots of national and international resources on the internet about SDM … far too many to list here.  But here are links to a few Aotearoa New Zealand resources that may be useful when you are considering or using supported decision-making:

• People First NZ is a Disabled People’s Organisation (DPO). On their website you can find information and resources to support disabled people. Two of these resources are Easy Read documents. You can access them here:

Guide to Supported Decision Making (Easy Read) 

'How I make my decisions' form (Easy Read) 

• Ministry of Social Development
Supported decision-making - preparation of easy to understand information to support informed decision-making 

• IHC
Supporting decision-making

• Aotearoa Disability Law
Supported decision-making resources  

• The Personal Advocacy and Safeguarding Adults Trust
Support for decision-making (Easy read available)

• People First NZ
Easy Read library and resources

Supported decision-making (SDM) involves: 

Choosing a support network

People with disabilities selecting people they know and trust to help them make decisions. These people are called supporters. As with choosing a welfare guardian, it is really important to identify people who have a real interest in the person with FASD and their lives. 

Preparing information

Information is prepared to help the individual make informed decisions.  It should be easy for them to understand, relevant to their needs, and presented in a way that the individual prefers, such as through reading, talking, video,  pictures, or augmentative and alternative communicators. 

Considering options and consequences

The individual and their supporters consider the options available and any risks. 

Putting the plan into action

The individual and their supporters make the plan happen. 

Reflecting on the decision

The individual and their supporters look back on the decision. 

When supporting someone to make decisions, you should consider: 

• Allowing plenty of time

• Choosing a time that suits them best

• Talking in familiar surroundings

• Removing distractions

• Explaining things in a different way where necessary, such as in pictures or sign language

• Requirements to meet their concentration, sensory or mobility needs in the decision-making environment

• You also need to remember to meet (as best you can) the decision-making capacity standards of:

• Understanding the nature and purpose of the decision
• Understanding the consequences of the decision
• Retention of the information needed to make the decision
• Are they able to use the information you have provided to make the decision.

It is important to note that even if the individual does not know how to access their information or is unable to understand it, if the individual is over 16 years of age a parent, caregiver or whānau│family member has no right to have that information to disclosed to them (unless they are their representative).  The Code does not talk about capacity issues at all.

If the person is under 16 years of age, then their parent or guardian is automatically their representative.  However, over 16 to the age of 18, if the person is unable to give their consent or authority, or exercise their rights (ie. unable to meet the text of capacity – click here for this information: Kathy link to capacity section)) the representative would be someone appearing to act on the person’s behalf and in their best interests.

Once the person turns 18 years of age, only someone acting under a Power of Attorney or as a Welfare Guardian could exercise the right to have health information disclosed to them.

You can find out more about the HIPC here: Office of the Privacy Commissioner: HIPC Fact Sheet

Guardians have many responsibilities, including making important decisions about:

• where the child lives and with whom 
• the child's medical treatment 
• the child's school 
• the child's culture, language, and religion
• if they can travel outside of Aotearoa New Zealand 

What does a guardian do?

A guardian is an adult who is responsible for a child's care, growth, and upbringing. A guardian's role is to provide care and protection for a child, known as the ‘ward’, when the child's parents are unable to do so. Guardianship can be temporary or permanent until the reach the age of 18. 

Are there different types of guardianship?

A guardian can be appointed for all guardianship purposes or for specific purposes.  A guardian appointed for specific purposes can only make certain decisions, such as medical treatment decisions depending on the Court’s order. 

How do you apply to become a guardian?

You can apply to become a child’s guardian at the Court nearest to where the child you’re applying for guardianship of lives. You can talk to a lawyer, or you may be able to get legal aid or free community legal help. 

To apply to become a guardian you must: 

1. Complete the required forms

1. File the forms with the Family Court

You can get the forms from the Ministry of Justice website or by calling them at 0800 224 733. You can file the forms in person, by post, or electronically. Ministry of Justice: Appoint a guardian

Things to consider

Some things to consider when thinking about becoming or appointing a guardian include:

• Age: The main requirement is that you be at least 18 years old. 
• Background check: The court may consider whether you can pass a background check with no felonies or misdemeanours. 
• Child's views: What does the child think and what are their views?
• Will: You can include your wishes for a guardian in your Will. 

A testamentary guardian is a person named in a parent's will or deed to care for their child after the parent's death: 

Role and responsibilities

A testamentary guardian's role is to make important decisions about a child's life such as their education, health, religion, where they live, culture and language, and name changes. 

Their responsibilities include:  

• making major decisions about how the child is brought up.
• helping make important decisions in the child’s life
• supporting the child's development

When do they become a guardian?

A testamentary guardian automatically becomes a guardian if the parent was a guardian at the time of their death. If the parent wasn't a guardian, the testamentary guardian must apply to the court to be appointed. 

How do they work with other guardians?

If the child has other guardians, the testamentary guardian becomes a joint guardian. All guardians must make unanimous decisions about the child. 

Who can be a testamentary guardian?

A testamentary guardian must meet the following requirements:

• Be at least 20 years old at the time of the parent's death
• Share guardianship with the other parent if they are still alive

When to appoint them

The appointment can be made by deed or will, executed before or after the child's birth. 

Choosing a testamentary guardian

When choosing a testamentary guardian, you should consider things like: 

• Your family values
• Their values and religious beliefs
• Your parenting style
• Their parenting style
• Their skills to parent
• The candidate's financial situation
• Their health
• Their accessibility
• Their family circumstances
• Whether they have other work or family commitments
• Where they live
• Your children's comfort level.

What is a testamentary guardian unable to do?

A testamentary guardian doesn't automatically have the right to provide day-to-day care for the child. They must apply to the court to be involved in the child's day-to-day care. A testamentary guardian in Aotearoa New Zealand cannot automatically provide day-to-day care for a child.

Custody

A will cannot determine who has custody of a child. Custody is usually handled by private arrangements with family or a parenting order from the Family Court. 

Day-to-day care

A testamentary guardian must apply to the court for a parenting order to gain the right to day-to-day care. 

The main difference between a testamentary guardian and a welfare guardian in Aotearoa New Zealand is that a testamentary guardian is appointed for a child, while a welfare guardian is appointed for an adult. 

Testamentary guardian

A parent names a testamentary guardian in their will to care for their child if they die. The guardian's role is to support the child's welfare and make important decisions, such as about their education and health. The guardian must be at least 20 years old and only one can be appointed. The guardianship ends when the child turns 18. 

Welfare guardian

A welfare guardian is appointed to make decisions about a person's care and welfare, such as where they live, their medical treatment, and their care arrangements. The guardian must be at least 20 years old, act in the person's best interests, and have no conflicts of interest. They must also provide written consent to their appointment. A medical assessment is required to determine if the applicant has the capacity to make decisions and communicate them. 

The main difference between a guardian and a testamentary guardian is when their responsibilities begin. 

Guardian

A guardian has the same legal rights and responsibilities as a child's parents for their care, upbringing, and growth. Guardianship usually ends when the child turns 18.

Testamentary guardian

A testamentary guardian's responsibilities begin after the death of the parent who appointed them. They have the same rights and responsibilities as the living parent or guardian, but only after the death of the appointor.

A parent can appoint a testamentary guardian in their will or deed. The testamentary guardian automatically becomes the guardian if the parent dies and was also a guardian at the time of death. If the parent was not a guardian at the time of death, the testamentary guardian can apply to the court to be appointed. 

Guardianship usually ends when the child turns 18. Parents have no legal responsibility for their tamaiti / child after this. However, guardianship can end earlier if: 

• The child gets married or enters a civil union
• The child lives with another person as a de facto partner
• The Family Court removes the guardian. They will only do so if the find it is in the best interests of the child.

However, guardianship of a child does not end at 18 years of age if: 

• The Family Court appointed the guardian for a limited time, and that time has not ended
• The Family Court appointed the guardian for a specific purpose, and that purpose has not been carried out.

If the person is under 18 years of age, the guardian can consent to surgery on their behalf. If the person is over 18 years of age, they cannot. However, if the adult over 18 years of age lacks capacity and there is no Welfare Guardian or Personal Care Power of Attorney arrangement in place, then no one can sign a consent form authorising surgery on behalf of the individual.

Despite the information above, please note there are more and more circumstances where the Courts are giving people younger than 18 years of age the right to make important decisions for themselves. This is particularly occurring in the health context relating to medical consent. 

You can find other useful resources on the topic of guardians and guardianship by clicking on these links:

Community Law

• Guardianship of Children
• Other people as Guardians

Ministry of Justice   

• Being a Guardian
• Who can be a Guardian

A personal representative is a person who is responsible for managing a deceased person’s estate, or making or defending claims on behalf of a deceased person's estate.  A personal representative can be a family member, friend, advocate, or lawyer. They can act on behalf of someone who is unable to give their consent or authority.  They are also known as an executor, administrator, or trustee of an estate.  The terms are often used interchangeably.

What are a personal representative’s responsibilities?

A personal representative is a person who manages the estate of a deceased person.  They have responsibilities and duties: 

Responsibilities

A personal representative is responsible for carrying out the wishes of the deceased as outlined in their will. They are also responsible for making or defending claims on behalf of the estate, and for distributing the assets according to the will or intestacy rules. 

Duties

A personal representative's duties include:

• Arranging the funeral 
• Listing assets and liabilities
• Being aware of claims against the estate
• Acting with due diligence and as quickly as possible
• Distributing the remainder of the estate to the entitled persons
• Preserving the assets 
• Paying debts, taxes, and other expenses 
• Keeping records of all dealings with the estate's assets 

A court may remove a personal representative if there are concerns of fraud, breach of trust, or dishonesty

You can find out more about dealing with a deceased person’s property by reading this Community Law resource:  Dealing with the deceased's property

Types of personal representatives

A personal representative can be an executor, administrator, or trustee. The executor is appointed in the will, and is responsible for carrying out the will's provisions. The trustee takes over from the executor and distributes the assets to the beneficiaries. 

Who can be a personal representative?

Anyone who is at least 18 years old and of sound mind can be appointed as an executor. It's common to appoint a close relative or child, but you can also appoint a trusted friend, colleague, or professional. 

What is a personal representative unable to do?

In Aotearoa New Zealand, a personal representative cannot do the following:

• Acquire a personal interest in estate assets

Without the express consent of all beneficiaries, a personal representative cannot acquire a personal interest in estate assets, except as provided for in the will. 

• Distribute estate before six months

A personal representative is personally liable for any distributions made within six months of the Grant of Probate. 

• Deal with an estate worth more than $15,000 without court approval

A personal representative needs court approval to deal with an estate worth more than $15,000. 

The legal process for appointing a personal representative in Aotearoa New Zealand depends on whether or not the deceased person left a will.

Will exists

The person who wrote the will, called the testator, appoints an executor to carry out the instructions in the will. The High Court confirms the executor's authority with a grant of probate. 

Will does not exist

The deceased person's next of kin or another beneficiary applies to the High Court for letters of administration to be appointed as the administrator. The administrator's role is to settle the estate and distribute the deceased person's property. 

The High Court will usually appoint the deceased person's closest relative as the administrator, unless they decline the role. The applicant must provide evidence that all other close relatives have been informed of the application or have agreed to it. 

The application process involves preparing formal documents, which a lawyer can help with. The High Court usually takes 6–8 weeks to process the application, but it can take longer depending on the complexity of the case. 

A personal representative in Aotearoa New Zealand law must be formally appointed by the court in certain circumstances: 

Executor or administrator

If the estate is worth more than $15,000, the executor or administrator must apply to the court for approval to deal with the property. This is done by getting ‘probate’ if there's a will, or ‘letters of administration’ if there isn't. 

Administrator

The court will usually appoint the deceased person's next of kin as the administrator. The applicant must provide evidence that everyone who is equally close to the deceased has agreed to or been told about the application. 

Testamentary guardian

If a parent names a guardian in their will, the testamentary guardian will automatically become a guardian if the parent dies. If the parent wasn't a guardian at the time of their death, the testamentary guardian can apply to the court to be appointed. 

Probate

The High Court typically takes 6–8 weeks to process an application for probate or letters of administration. There is a fee for probate and letters of administration, but it may be possible to waive, postpone, or refund the fee. 

A personal representative, also known as an executor or administrator, has many responsibilities and can be a big responsibility. Some pros and cons of having a personal representative in New Zealand law include: 

Pros

A personal representative can help settle the deceased's affairs and distribute their estate. They can also take advantage of certain exceptions and modifications that were available to the deceased. 

Cons

A personal representative can be personally liable for any claims of fraud or mismanagement by the beneficiaries. They may also need to work quickly and deal with beneficiaries who are squabbling or contesting the will. 

Other considerations

Other things to think about include:

Who to choose

Who you choose usually depends on your individual family circumstances. For example, it is common to have couples act for each other because professionals tend to charge significant sums of money to take on the roles identified above.

However, you can appoint anyone to be your executor, but it's important to choose someone who can act objectively, understands the law, and has the time to take on the role. You can consider naming a close friend or relative, but you may also want to consider using a professional, such as a lawyer or accountant, particularly if you know there is likely to be a dispute in the family.

Cost

A professional executor will charge for their time and costs, but they are experienced and insured for legal liability. So as long as the person carries out their role responsibly, there should not be a big risk of legal liability.

You can use online tools or hire estate lawyers to help with the process. 

Enduring power of attorney

You can appoint someone to handle your financial matters until you die, if you lose decision-making capacity. 

To assist in understanding the information to come, here is the meaning of some of the most common terms used in the PPPR Act:

Subject person: Someone who is no longer able to manage their own property and welfare decisions due to a loss (permanent or temporary) of decision-making capacity. 

Welfare guardian: A person appointed by the Family Court to support the decision-making of the person, but with the authority to make the decision on behalf of the person if they are unable (e.g. in relation to their medical care, dentistry, etc.) 

Property manager and Property administrator: A person appointed by the Family Court to support the decision-making about the subject person's property and money.

Enduring Power of Attorney (EPA): A legal document where an individual appoints an attorney to make decisions on their behalf if they lose the capacity to make those decisions themselves. This appointment is made with the understanding that the attorney will utilise supported decision-making options to enable the individual to participate in decisions as much as possible. 

Donor: The person who sets up the EPA and appoints the attorney. They must be 18 years or over, and have decision-making capacity. 

Attorney: The person appointed to make decisions for the donor. They must be over 20 years of age, of sound mind, and have agreed to be the Attorney.

Consult: To ask for advice and consider it before making a decision 

Please don’t confuse the term ‘Attorney’ used in this legislation with the term ‘Attorney’ used particularly in the United States of America to mean a lawyer.

What’s the difference between a lawyer / barrister / solicitor / attorney?

In Aotearoa New Zealand, the terms ‘lawyer,’ ‘barrister,’ ‘solicitor,’ and ‘attorney’ often overlap, but understanding their specific distinctions is important to navigating the legal profession. This is largely governed by the Lawyers and Conveyancers Act 2006, which outlines the structure and regulation of legal practitioners.

Lawyer: A general term for someone who has a law degree and is licensed to practice law. In Aotearoa New Zealand, most lawyers are both barristers and solicitors. 

Barrister: A lawyer who specialises in court or tribunal work, and may also provide legal opinions. Barristers are not allowed to hold money for clients or do transactional work. 

Barrister and Solicitor: A lawyer who can practice as both a barrister and a solicitor, and has few restrictions on the type of legal work they can do. Solicitor work involves providing legal advice and documents, such as contracts, wills, and property purchases. Solicitors are usually the first point of contact for legal needs. 

For further information about these differences click on the links below:

New Zealand Law Society: Who is and isn't a lawyer

LegalVision New Zealand: Solicitor - Barrister - Lawyer in New Zealand

The Protection of Personal and Property Rights Act (PPPR) allows the Family Court to make two types of orders: personal orders and property orders: 

Personal orders

These orders are generally related to the welfare of a person who is incapacitated. The Court can make a personal order to:

• Appoint a Welfare Guardian to make decisions about the person's care and welfare

• Provide instructions about the person's personal care and welfare, such as where they'll live, who will take care of them, and their medical treatment

• Order someone to pay a person for work they've done or are going to do

• Order a parent to make arrangements for their child's personal care after the parent's death

• Appoint a Property Administrator to manage property or income/benefits of the subject person if the total of these assets is below a certain threshold.

Property orders

These orders deal with situations where a Property Manager has been appointed by the Family Court. The court can make a property order to appoint a Property Manager to administer property or income where either the assets or income are above the threshold amounts set out in the PPPR Act. 

A personal order usually ends on a specific date, when all tasks set in the order have been done, or 12 months after the order was made, whichever comes first. The Court can set a date to review the order, and the people involved in the order can ask for a review at any time. 

The Family Court can also establish the following roles to support people who are unable to make decisions for themselves: 

Welfare guardian: Makes decisions about health and welfare

Property manager or administrator: Makes decisions about property and money.

The PPPR Act helps people exercise and develop their capacity to the greatest extent possible. Whichever option is used, the duty to encourage and maximise the capacity of the person to make their own decisions remains. The Court can make an interim order in relation to Welfare Guardians and Property Administrators if a decision needs to be made urgently. These order can last up to 6 months. 

The Court can also make a temporary order in relation to a Property Manager. Temporary orders for Property Managers, made ‘without notice’ to the other party, last for a maximum of 3 months from the date of the order. If the other party objects and defends the order, a hearing will be set by the Court. If the person for whom the manager is acting dies, or if the Court ends the property order, the Property Manager's duties cease unless the Court orders otherwise. 

You can find a guide to making Applications under the PPPR Act here: Guide to the PPPR Act.

A welfare guardian is a person who is appointed by the Family Court to make decisions about the welfare and day-to-day care of another person. They are appointed to protect the person from abuse, neglect, or exploitation. It is an unpaid and voluntary role. The appointment lasts for a maximum of three years, and the welfare guardian must apply for a review by the Family Court for another order when it expires. 

A welfare guardian can be appointed for anyone who is 18 or older. For people who are 16 or 17, a welfare guardian can be appointed if they are married, in a civil union, or in a de facto relationship. A welfare guardian can also be appointed if the person has no living parents or guardians, or if their parents or guardians are not in regular contact with them. 

A Welfare Guardian's responsibilities include:

• Making decisions on behalf of a person with impaired capacity about their health, care, and living arrangements
• Protecting the person from abuse, exploitation, or neglect
• Promoting the person's best interests 

A welfare guardian can make decisions about:

• Where the person lives
• The medical treatment the person receives
• Whether the person gets married or divorced

A welfare guardian cannot make decisions about special health matters such as sterilisation, refusal to consent to life saving treatment, or to request assisted dying for the person (even if the subject person has an Advance Directive on these issues). Nor can they make decisions about special personal matters like the dissolution of a marriage or de facto relationship, consenting to the person adopting a child, or making the person's will. 

Potential Costs associated in Welfare Guardianship 

A Family Court judge appoints a welfare guardian. There is no filing fee cost with the Family Court to apply for the appointment of a welfare guardian. And having a lawyer is not strictly a requirement to make an application to become a welfare guardian in Aotearoa New Zealand. Someone can choose to prepare and file the application themselves. But while you can do it yourself, the process can be complex. The Family Court deals with sensitive and significant matters. So we recommend that if want to apply for the appointment of a welfare guardian your interests would be best served by engaging a lawyer to act on your behalf. 

Doing it yourself 

If you decide to ‘go it alone’, the Ministry of Justice can provide the necessary forms for an application to appoint a Welfare Guardian.

You can download the appropriate forms, fill them out, and then file them with the Family Court. The process and forms are different if you are applying for yourself to become a welfare guardian, or if you are applying on behalf of someone else to be appointed the subject person’s welfare guardian.

Potential Costs

While the filing fee for the application itself is zero, it's crucial for applicants to be aware of potential legal or administrative costs if they choose to seek assistance with the process.

• Lawyer's Fees: If an applicant chooses to engage a lawyer to prepare and file the application, or to provide legal advice throughout the process, those legal fees will be payable by the applicant. These costs can vary significantly depending on the complexity of the case and the lawyer's rates.
  
  
• Medical Report Costs: A medical report from a GP or other registered medical practitioner is required as part of the application, outlining the subject person's physical and mental capacities. There may be a cost associated with obtaining this report.
  
  
• Court-Appointed Lawyer for the Subject Person:  The Family Court usually will appoint a lawyer to represent the subject person (the person for whom the welfare guardianship is sought). While this lawyer is appointed by the court, the judge will consider whether the subject person has sufficient funds to pay for their court-appointed lawyer. If they do not, the cost may be covered by Legal Aid or the Ministry of Justice. This cost is not borne by the applicant unless they are also the subject person and have the means.
  
  
• Services for Application Preparation: Some organisations offer services to help with preparing the paperwork for a welfare guardianship application. These services will have their own fees.

A welfare guardian has the power to make decisions on behalf of a person who is unable to do so themselves due to a disability, illness, or injury. However, they also have an obligation to support decision-making. Therefore, they should only make a decision themselves if the person is completely unable to engage in the decision-making process. There may also be situations where another party will not accept that the subject person has the capacity to make the decision. But even then, the welfare guardian should still engage in support decision-making but may have to be the person to sign any documents.

The welfare guardian's powers include: 

• Making decisions about the person's healthcare, accommodation, and other personal care matters 
• Deciding where the person lives and what their care arrangements will be 
• Deciding what medical treatment or therapy the person might have 

A welfare guardian's powers are limited by the following:

• They cannot make decisions about marriage, civil union, or adoption 
• They cannot refuse standard medical treatment or procedure 
• They cannot consent to electro-convulsive treatment (ECT) or specific types of surgery or treatment 
• They cannot consent to medical experiments other than those to save life or prevent serious damage to health 
• They cannot request the option of receiving assisted dying on behalf of the person 

A welfare guardian is appointed by the Family Court and must always act in the best interests of the person they represent. They must also use support decision-making and encourage the subject person to use their decision-making capacity. 

The process for appointing a welfare guardian in Aotearoa New Zealand involves the following steps:

Making an application

Theoretically, an application can be made by the person themselves, but almost always is made by someone else because they do not have the capacity to make the application. The application requires medical evidence to support the request. 

Appointing a lawyer

A lawyer is appointed by the court to meet with the applicant and the subject person. The lawyer prepares a report for the court on a number of topics and makes recommendations on procedure, whether further information is needed, and whether they think the orders should be made. The judge then decides about the process and what happens next.

Judge's decision

The judge will decide whether to hold a hearing, request more information, or make the order. 

Reviewing

The court will set a date for the welfare guardian to request a review of the order. This date must be no more than three years after the order was made. The order and the powers granted by it will end if the welfare guardian does not request a review by the set date. 

Applying

To apply to become a welfare guardian you'll need to:

Gather the required information and forms, including:

• Information Sheet – PPPR14 
• Affidavit in support of appointment of welfare guardian 
• Medical expert report 
• Statement of consent to be appointed as a welfare guardian – PPPR16 

Then file the application at the Family Court nearest to the subject person's home. The application process is similar to applying to become a property manager, but the capacity test has different measurements. 

To be appointed as a welfare guardian, you must:

• Be over 20 years old 
• Be an individual, not a company, trustee, or organisation 
• Satisfy the court that you will act in the person's best interests 
• Satisfy the court that the person lacks the capacity to make and communicate welfare decisions for themselves.

> You can find out more about the application process at the Ministry of Justice website here: Applications for a Welfare Guardian

> There is also information provided by the Community Law Centre for the person with FASD to explain what this will mean for them here: Appointing Someone to make Decisions for You.

The main difference between a guardian and a welfare guardian is that a guardian's role is limited to a child's upbringing, while a welfare guardian's role is to make decisions for someone who can't make them for themselves.

• Guardians

Guardians are responsible for a child's care, growth, and upbringing, and have the same legal powers and responsibilities as the child's parents. Guardianship typically ends when a child turns 18. 

• Welfare guardians

Welfare guardians are appointed by the Family Court to make decisions for someone who can't make them for themselves. They act in the best interests of the person they represent, and can make decisions about their personal care, healthcare, and accommodation. However, they can't make decisions about property or money. 

Welfare guardians are usually appointed for a maximum of three years, but can be re-appointed for up to five years. The court will normally appoint a relative, but may appoint a volunteer if no suitable relative is available. Welfare guardians aren't paid, but they can claim reimbursement for reasonable expenses from the person they're acting for. 

A Property Manager's role under the PPPR Act is to manage the property and finances of the subject person, including income and government benefits.  They are not responsible for managing property or finances of any property in owned by a Trust or individualised funding. 

A property manager is appointed by a Family Court Judge and is usually a family member, friend, or trustee company. The property manager's initial appointment is usually for three years, and to continue past this date it will need to be reviewed by the Judge.  If the property manager does not request a review, the property manager order will expire and they will no longer be able to act on behalf of the subject person. 

A property manager is responsible for acting in the subject person's best interests, engaging in supported decision-making, and consulting with them and other organisations. Property managers are accountable to the Family Court and must prepare statements of assets and liabilities.  There is also a limitation on what they can do.  They do not have the ability to engage in sales, gifts and purchases in excess of $120,000 without the permission of the Court.

A property manager can also apply to the Court to make a will for the subject person. They have to provide a draft will for the Court and the judge will decide if it is appropriate.

One or two people can be appointed as a Property Manager, and they are able to charge ‘reasonable costs’ for managing the assets.  Under general civil law and contract law the test of what is considered ‘reasonable’ means taking actions that a reasonable person would take in the same circumstances. 

The property manager is required to file:

• An initial application: This document outlines the need for the appointment, the circumstances of the person, and the proposed administrator's qualifications.
  
  
• Annual Statements: These statements detail the financial transactions conducted on behalf of the individual under administration, including income, expenditures, and the current status of assets. This ensures transparency and accountability, allowing the court to monitor the actions of the administrator and protect the interests of the individual.
  
  
• Changes in Circumstances: If there are significant changes in the individual's circumstances or the administrator's management of the property, the administrator may be required to file additional statements or reports with the court. This could include changes in the individual's health, significant financial changes, or any concerns raised about the administrator's conduct.
  
  
• Final Accounts: Upon the termination of the property administration (e.g., if the individual regains capacity or passes away), the administrator may need to file a final account with the court. This account summarises all transactions made during the administration period and provides a comprehensive overview of how the individual’s property has been managed.

A property manager's responsibilities include: 

• Acting in the subject person's best interests
  The person appointed to this role is responsible for acting in the subject person’s best interests and can be removed from the role if they fail to do so.
  
  
• Consulting with the subject person and other organisations
  This includes consulting with the subject person on property matters and ensuring they participate in the decision-making process, and initiating or following up on matters that affect the subject person.
• Financial management
  Developing and implementing a financial management plan, ensuring the subject person receives all income and benefits, and creating a budget.
  
  
• Record keeping
  Maintaining clear and accurate records of all actions taken on the subject person's behalf. 
  
  
• Reporting
  Providing a report within 3 months of the appointment being made, and providing an annual statement of management to the Family Court.
• Protection
  Safeguarding the subject person's property and financial affairs by ensuring no actions are taken without the court's permission, thus preventing undue influence or exploitation. This includes preventing unauthorised debt enforcement, property transactions, or tenancy determinations. 
  
  

To find out more about the role of Property Manager click here: What is a Property Manager under the PPPR?

A Property Administrator is a person appointed by a Family Court Judge to manage the property of the subject person when the subject person's property is less than $25,000 and their income or benefit is less than $40,000 per year. The income threshold increases each year on 1 April and will increase again on 1 April 2026.

The appointment is usually for up to three years. Only one person can be appointed a Property Administrator.

Responsibilities

A Property Administrator makes decisions for the subject person regarding their property, such as bank accounts. They are required to develop and implement a financial management plan, which includes creating a budget, ensuring the subject person receives all entitlements, and maintaining accurate records.

Appointment

A property administrator is appointed when the subject person's property is worth less than $25,000 or their annual income or benefit is less than $40,000. If the property or income is higher, an applicant would apply to be appointed as a property manager.

Reporting

Property administrators have no reporting responsibilities under the PPPR Act but they must still keep good records in case they are checked when if they were to apply for review. 

Specific Responsibilities

A property administrator appointed under the Act has a number of responsibilities, including:

Managing the subject person's property

The property administrator is responsible for managing the property of someone who is unable to make decisions for themselves. This includes making decisions about the subject person's income and government benefits. 

Developing a financial management plan

The property administrator must develop a plan to ensure the subject person's finances are administered responsibly and effectively. This includes creating a budget and ensuring the subject person receives all their entitlements. 

Consulting with the subject person

The property administrator must engage in supported decision-making with the subject person whenever possible. They should also encourage the subject person to manage their own property affairs. 

Supporting the subject person's interests

The Property Administrator must also act in the subject person's best interests and support them to use any skills they have to manage their own property. 

The main difference between a Property Manager and a Property Administrator under the Protection of Personal and Property Rights Act (PPPR Act) is the value of the subject person's property and income: 

Property administrator

Appointed when the subject person's property is less than $25,000 and their income or benefit is less than $40,000 per year. They do not have to report to the Court so many people prefer to take on this role.

Property manager

Appointed when the subject person's property or income is worth more than the amounts above, unless the subject person is in residential care and money is going directly to the residential provider. 

Property managers also have additional responsibilities, including:

• Filing financial statements with the court. 
  
  
• Having the power to buy or sell the subject person's property, with the Court’s permission.

Property managers also have some powers that property administrators do not.

• They can apply to the Court to make a will for the subject person. This can be done at the same time as applying to become a property manager.  The person applying would need a sworn affidavit attesting to the need for the will, and provide a draft of the will. 
  
  
• They can act to unwind transactions that the subject person has entered into by mistake, misrepresentation or fraud.

Property Managers and Property Administrators are not usually paid for their role, but they can claim expenses incurred while carrying out their duties. However, if the Public Trust acts as the property manager they do charge fees for this role. To find out more about the Public Trust and what it does click here.

The value of the subject person’s property/assets is the key determining factor in whether you appoint a property manager or a property administrator under the Protection of Personal and Property Rights Act (PPPR Act). Key issues to be aware of are:  

• Property value and income

A property administrator can be appointed if the subject person's property is worth less than $25,000 and their income or benefit is less than $40,000 per year. A property manager is appointed if the property or income is higher than these thresholds.

• Reporting responsibilities

Property managers have reporting responsibilities to the court.

• Number of appointments

Only one person can be appointed as a property administrator at a time.

• Concurrent appointments

The general rule stated by the Ministry of Justice and in the Act's structure is that you typically have either a Property Administrator or a Property Manager for a person's property affairs. The Ministry of Justice website explicitly states: ‘The court can't make an Order to Administer Property if a property manager has already been appointed. Only one person can administer property.’

So while the intention of the PPPR Act is generally to have one type of property management order (either Administrator or Manager) to cover all of a person's property affairs based on the thresholds, the Family Court retains the power to appoint a Property Manager over a specific part of a person's property (Section 31(1) of the PPPR Act), even if a Property Administrator is already appointed for other, usually lower-value, aspects of their property. This allows the court flexibility to address unique or challenging financial circumstances of the incapacitated person.

The process of applying for both roles is largely similar, involving an application to the Family Court.

Application Process

To apply for an Order to Administer Property (for a Property Administrator) or a Property Order (for a Property Manager), the process generally involves:

Establishing Incapacity

A comprehensive medical report from a registered medical practitioner is essential. This report must clearly assess the person's current capacity to make decisions regarding their property and financial affairs, and detail the nature and extent of any incapacity.

Completing Forms

• Application Form: You will complete a specific application form (e.g., PPPR Form 9 for a Property Order, or Form 10 for an Order to Administer Property).
  
  
• Affidavit in Support: A sworn statement (affidavit) explaining the reasons for the application, the nature of the person's property, why the proposed administrator/manager is suitable, and details of other interested parties.
  
  
• Statement of Consent: The person seeking to be appointed (you, if you are the proposed administrator/manager) must complete a statement of consent (Form PPPR 16), confirming their willingness and understanding of the role.

Filing the Forms
The completed forms, along with the original medical report, are filed at the Family Court closest to the person's residence.

Court-Appointed Lawyer
The Family Court will almost certainly appoint a lawyer to represent the interests of the subject person whose property is being managed. This lawyer provides an independent report to the court.

Court Decision
The judge reviews all documents and may hold a hearing if necessary. The court's primary objective is always the best interests of the subject person.

Key Distinctions Between Roles

While the application process is similar, the roles are distinct, primarily based on the thresholds for assets and income and the powers/responsibilities involved.

Thresholds for Appointment

• Property Administrator (Order to Administer Property - Section 11 PPPR Act):
  • Appointed when any single item of property to be managed is worth $25,000 or less; or when the person's annual income or benefit is $40,000 or less (as of April 1, 2025 – this amount is subject to change by Order in Council).
  • This order is for relatively small or straightforward financial matters.
    
    
• Property Manager (Property Order - Section 31 PPPR Act):
  • Appointed when the value of the assets or the annual income/benefit exceeds the thresholds for a Property Administrator.
  • This order is for more substantial or complex financial affairs. A Property Manager typically has broader powers and more stringent reporting obligations to the court (e.g., annual financial statements).

Minimum Age for Appointment

For both Property Administrator and Property Manager roles, the person appointed must be at least 20 years old.

Scope of Appointment

A Property Administrator is appointed to administer specific property or income/benefits as outlined in the order, generally fitting within the lower thresholds.

A Property Manager can be appointed for all of a person's property, or a specified part of their property (as discussed in our previous exchange, allowing for flexibility in complex situations, even potentially alongside a Property Administrator for other, distinct, lower-value assets if the court deems it necessary for specific complex issues).

Personal requirements for Appointment

• Capable of Carrying Out the Duties
  This means having the practical skills, knowledge, and understanding to manage financial matters relevant to the scope of the order.
  
  
  • For a Property Administrator, this might involve managing basic income, paying routine bills, and overseeing small assets.
    
    
  • For a Property Manager, given the higher thresholds and potential for more complex financial situations (e.g., investments, property sales, significant debts), the court might expect a higher degree of financial literacy, experience, and organisational capability. If the affairs are very complex, the court might consider appointing a trustee corporation or a professional.
    
    
• Trustworthy and Honest (Fit and Proper Person)
  The proposed administrator/manager must be reliable and act with integrity. The court will scrutinise any history of:
  
  
  • Criminal convictions, especially for dishonesty or financial offences.
    
    
  • Personal bankruptcy, significant unresolved debt issues, or a demonstrated history of poor financial management.
    
    
  • Any exploitation, abuse, or negligence towards vulnerable individuals.
    
    
• No Undue Conflict of Interest
  The appointed person must be able to act solely in the best interests of the subject person, free from personal gain or conflicting loyalties. Examples of potential conflicts include:
  
  
  • Owing significant personal debt to the subject person.
    
    
  • Having a direct personal financial stake in decisions made on behalf of the subject person that could be detrimental to the subject person's estate.
    
    
  • Being involved in a dispute over the subject person's will or inheritance.
    
    
• Willingness to Act and Understand the Responsibilities
  The proposed administrator/manager must formally consent to the appointment (via Form PPPR 16) and demonstrate an understanding of the significant legal duties, obligations, and accountability to the Family Court. This includes the differing reporting requirements for each role (Property Managers have more stringent, regular financial reporting duties, often requiring examination by the Public Trust, which Property Administrators typically do not).
  
  
• Ability to Communicate and Consult (as far as practicable):
  The appointed person should be able to communicate effectively with the subject person (to involve them in decisions to the greatest extent possible) and be willing to consult with relevant family members and other interested parties, aligning with the ‘least restrictive intervention’ principle of the PPPR Act.
  
  
• Good Judgment:
  The capacity to make sound, rational decisions regarding the subject person's financial affairs, ensuring their assets are protected, managed prudently, and used for their direct benefit.

While the fundamental personal qualities remain the same, the demonstrated level of certain capabilities (like financial literacy or organisational skills) might need to be higher for a Property Manager role due to the increased complexity and value of the assets typically involved. The court will always assess the individual's suitability in relation to the specific needs and scale of property of the person for whom the order is sought.

In summary

The core process to get a court order for property management is largely the same, but the specific form used, the type of order, and the duties/reporting requirements depend on whether a Property Administrator or Property Manager is appointed, which is determined by the financial thresholds and complexity of the person's property affairs.

To apply for a property manager or property administrator to be appointed click below to take you to the Ministry of Justice website and application form.

Apply  for a Property Manager to be appointed

Apply to Administer Property

Here are some common terms used in New Zealand wills:

• Beneficiary

A person, organisation, trust, or charity that receives a benefit from the will 

• Estate

Everything the deceased owned at the time of death that can be distributed by the will 

• Probate

The process of obtaining the High Court's confirmation that the will is authentic and can be used to divide the estate 

• Administrator

The person appointed to administer the estate if the deceased died without a will, or if the executor clause in the will is invalid 

• Intestate

This is the term for used when some has died without leaving a legally valid will 

• Codicil

An addition or supplement that can explain, modify, or revoke a will or part of it.  These are seldom used nowadays.

• Executor

Responsible for locating the will, following the will's instructions, collecting assets, and distributing the remaining assets 

• Bequest

A gift made to a person or organisation in the will, usually a specific item or amount of money 

A will is important in New Zealand law because it allows you to specify how you want your assets distributed after you die.

Avoids confusion and conflict
Without a will, the law determines who receives your assets, which can lead to confusion and conflict among your family. 

Protects your loved ones
A will ensures that your loved ones and dependents are looked after when you pass away.

Testamentary guardian for children
You can name in your will the person who will care for your child if you die.

Helps with administration
A will can make the administration of assets less costly, more straightforward and quicker. 

Leaves a legacy
A will can help you leave a legacy for your loved ones to remember you by. 

A will must be in writing, signed by you, and witnessed by two people who are at least 20 years old. The witnesses cannot be beneficiaries under the will, nor can their partners or spouses. 

You can include many things in your will, such as: 

• Gifts to individuals, charities, schools, or groups
• Guardians for dependent children
• Instructions for payments of debts
• Funeral and burial/cremation instructions
• Appointment of executors to carry out the instructions

Here are a few things you may need to consider.

• WINZ Benefit

When you make a will you should consider the effect of the inheritance you wish to leave of a child reliant on a WINZ benefit. This could significantly affect the amount they would then receive.

If you inherit money, you should let Work and Income (WINZ) know. The inheritance may affect your supplementary benefits, but it usually won't affect your main benefit. 

• You should tell WINZ if you receive a lump sum payment from an estate or will 
• You should tell WINZ if you receive regular payments from an inheritance, such as an annuity 
• You should tell WINZ if you invest the money and earn interest. Income from inherited assets, like interest or rent, may reduce your main benefit payment 
• You should tell WINZ if you receive Accommodation Supplement, Temporary Additional Support, or Special Benefit.

If your total savings exceed certain thresholds, you may lose eligibility for means-tested benefits.  To find out more you can contact WINZ by phone at 0800 559 009, but to help you avoid receiving incorrect information, we recommend you actually go into a WINZ Centre and talk directly to someone. Another alternative is to consult a financial advisor about your particular circumstances. 

• Kiwisaver

You can set out in your will how you want your Kiwisaver funds to be distributed.  If your KiwiSaver funds are not specifically distributed in your will, the funds will be managed by a court-appointed administrator who will distribute them according to the rules of the Administration Act 1969, meaning your closest relatives will likely receive them based on a set order of priority, such as spouse, children, parents, and siblings; this process can be lengthy and complex compared to having a clear will outlining your wishes. 

Under the Administration Act, if your KiwiSaver balance is $15,000 or less, a KiwiSaver provider can release the funds to a close family member without requiring a full court process. This is an exception to the general rule that KiwiSaver funds require probate or letters of administration to be accessed if the balance is over $15,000.

• Asset Threshold

The Administration Act also says that an executor can distribute an asset valued at or below $15,000 without needing probate. For example, an executor can distribute money in bank accounts up to $15,000, shares up to $15,000, and certain other assets without requiring court approval. 

For more information click here: Community Law: Small Estates - No need for court approval

• Trustee appointment

If you have set up a trust you should be clear in your will about who the trustees of the trust are  on your death, and/or who has the power to appoint trustees after your death.  If you do not give away this power in your lifetime, then you need to give the power to someone when you die so the trust can continue to operate. 

If a power or function within a trust is not specifically delegated, the Trusts Act 2019 provides that it can be exercised by the trustee's executor, and if no executor, then the personal representative. This is often the case when a trustee dies or is otherwise unable to act. 

• Delegation of Powers

Trustees can appoint others to exercise or perform specific powers or functions on their behalf. However, there are limitations to what can be delegated, such as the determination of how trust property is distributed. 

• Devolution of Powers

If a trustee dies or is unable to act, the surviving trustees (if any) may exercise the power until a replacement is appointed. 

• Executor's Role

The executor of a deceased trustee's estate can also exercise the power, particularly if the trustee was the sole trustee or the last surviving trustee. 

• Personal Representative

If there is no executor, the personal representative (administrator of the estate) can act on behalf of the deceased trustee for a reasonable period. 

• Trusts Act 2019

The Trusts Act 2019 clarifies these situations and provides a framework for ensuring that trust powers are exercised even in the event of a trustee's death or inability to act. It is recommended that the power to appoint trustees not be left just to one person because it provides an opportunity for one person to control the entire trust.

A will can help protect family and whānau interests by ensuring assets are distributed according to the testator's wishes, including specifying who should be guardians for children, and potentially providing for the needs of family members who may have specific or special financial needs. It also outlines the process for succession, which can be particularly important for Māori land. A will can prevent disputes and ensure that loved ones are cared for as intended. 

Here's how a will protects family and whānau:

• Specifying Guardians for Children

A will allows parents to name guardians for their children if they are no longer able to care for them.

This ensures the children's well-being and upbringing are aligned with the parents' wishes. 

• Protecting Māori Land Interests

A will can specify who should succeed to Māori land and how many shares each person should receive. 

This helps ensure that land is passed down to the intended whānau members according to tikanga (custom). 

The Māori Land Court plays a role in ensuring succession follows tikanga. 

• Providing for Family Members' Needs

A will can include specific provisions for the financial needs of family members, including spouses, children, and grandchildren.

This helps ensure that family members are adequately supported after the testator's death, especially if they have specific needs or are unable to support themselves. 

• Minimising Disputes and Ensuring Intended Outcomes

A will clarifies how assets should be distributed, reducing the potential for disputes among family members.

It ensures that assets are distributed according to the testator's wishes, preventing unintended outcomes. 

For more information visit these websites:

Law Society: Making a will and estate administration

NZ Seniors: Estate Planning Guide for seniors  

Community Law: Making a will 

If you die without a will, your assets will be distributed to your family members according to the provisions set out in the Administration Act 1969.

What happens to your estate? 

• The law determines who gets your property and in what proportions
• The administrator, usually a close relative, distributes the property
• The administrator may also close the deceased's accounts
• If no relatives come forward to make a claim on the estate, the state will go to significant efforts to find family members to inherit the estate
•  However, if there are no relatives found, the estate then goes to the state.

Who gets your property?

The priority order is usually spouse, civil union partner, de facto partner, children, parents, siblings, grandparents, and uncles and aunts. The distribution depends on whether you have a spouse or partner, children, and parents. 

The priority order is: 

• Spouse or partner: Receives the personal belongings, $155,000, and one-third of the estate 
• Children: Receive the remaining two-thirds of the estate, divided equally 
• Parents: Receive one-third of the remainder, split equally 
• Siblings: Receive the entire estate, divided equally 
• Grandparents: Receive half of the estate, with the other half going to the aunts and uncles.

Please be aware that amounts mentioned in this resource can be changed through legislative amendments and new rules and regulations. Always check the current situation.

To find out more click below.

Community Law: Intestacy and distributing the property .

High Court Rules 2016 (as at 1 May 2023) - Subpart 8 - Priorities on intestacy

What happens to your KiwiSaver? 

Your KiwiSaver will be distributed according to the intestacy rules set by the Public Trust NZ .

Distributing assets

The process of distributing assets without a will can be lengthy and expensive. An administrator is usually a close relative who is entitled to benefit from the estate. The administrator is responsible for: 

• Distributing the estate to the beneficiaries
• Closing the deceased's accounts with the bank, power company, telephone company, or subscription services

If the estate is worth less than $15,000, you may not need to apply to the High Court. However, if the estate is worth more than $15,000, the administrator will need to apply to the High Court for a grant of letters of administration. 

In Aotearoa New Zealand, letters of administration are an order from the High Court that appoints an administrator to manage the estate of someone who has died without a will or whose named executor is unable or unwilling to do so. 

Here are some other things to know about letters of administration and the process of administering an estate.

When to apply

You need to apply for letters of administration if the deceased died without a will or if the named executor is unable or unwilling to administer the estate. 

Who applies

A family member usually applies to be the administrator. The applicant must provide evidence that everyone who is equally close to the deceased has been told about or agrees to the application. 

Estate administration costs

The average cost to administer an estate is around $10,000 plus GST, but this can vary depending on the complexity of the estate and family situation. 

Probate

Every estate goes through probate unless it's considered a ‘small estate’ under New Zealand law. Probate is the court process that officially recognises a will and the executors named in it. 

We recommend that people with FASD seriously consider if they need to make their own will (if they have capacity to make a will). We feel it is important they get to say who they would like to leave any personal assets to rather than leaving it to the executor or the law’s default as set out in the Administration Act 1969.  If you are not sure if you need a will, you can always consult a lawyer.

You might also find it useful to access the People First NZ Easy Read resource on making a will.
You can access that here:  People First: How to make a will 

Things to consider 

Capacity to make decisions

New Zealand law assumes that everyone has the capacity to make their own decisions, unless there is a good reason to think this is not the case.

Supported decision-making

This process allows people to make their own decisions with support, which can help ensure they have control of their life. 

But here's the catch: your ability to make decisions isn't like an ‘on/off’ switch. It's more like a dimmer switch, and it can change.

• It's about specific decisions: You might be great at deciding what to have for dinner, but find it really hard to understand how to buy a house. That's normal!
  
  
• It can change over time: You might be perfectly capable today, but if you get very sick or older, your ability to make decisions might lessen. Sometimes it's temporary (like when you're really unwell), and sometimes it's more lasting.

A special kind of decision: making a will (testamentary capacity)

When it comes to making a will (the document that says what happens to your belongings and assets after you die), there's a specific kind of ‘decision-making power’ needed. Lawyers call this ‘testamentary capacity.’

To have this power, you basically need to understand three main things when you're making or changing your Will:

1. What a will is: You know it's a legal document about your property after you're gone.
   
   
2. What you own: You have a general idea of your money, house and other belongings.
   
   
3. Who you're giving it to: You remember the people who might expect to get something from you (like family or close friends), and you understand who you're choosing to include or leave out.

Important note: Just because someone has trouble making some decisions (and might even have a court-appointed support person for their daily care or money) doesn't automatically mean they can't make a will. They might have moments of clarity, or enough understanding to make this specific decision. But if there's any doubt, a doctor's check-up and a lawyer's careful hand are important to make sure the will is valid and won't cause problems later.

So, while the general rule is ‘you can decide for yourself,’ the law also recognises that some decisions are harder than others, and your ability to make them can vary.

The importance of a will

A will can be important for a disabled person in Aotearoa New Zealand for a number of reasons:

Estate planning
A will can help ensure that your assets are distributed according to your wishes after you pass away. This can help reduce stress on your loved ones and make the process of administering your estate smoother.

Supporting causes
You can include a gift in your will to support a cause you care about, such as an organisation that helps disabled people.

Peace of mind
Writing a will can give you peace of mind that your wishes are recorded.

Advance care plans and advance directives are tools that can help individuals express their preferences for future healthcare treatment in case they become unable to communicate their wishes.

People most likely to particularly benefit from having advanced care plans and directives include:

• Individuals with Chronic or Progressive Illnesses

People living with chronic or progressive illnesses (e.g., cancer, heart disease, neurodegenerative conditions) should consider advance care planning to ensure their treatment preferences are documented and respected as their condition progresses.

Example: A person with advanced cancer may wish to specify their preferences regarding pain management or whether they want aggressive treatments if their condition deteriorates.

• Older Adults

Older adults, especially those with declining health or cognitive impairments, might want to  use advance care plans and directives to outline their healthcare wishes. This helps ensure that their preferences are known and honoured.

Example: An elderly individual may wish to express their desire for limited medical interventions, such as resuscitation or life support, in the event of a medical crisis.

• Individuals Undergoing Major Surgery

Individuals preparing for major surgeries might want to consider discussing and documenting their preferences regarding post-operative care and treatment options, including scenarios where they may not recover fully.

• Individuals with Cognitive Impairments

People diagnosed with conditions that may lead to cognitive decline, such as dementia, should create advance care plans while they are still capable of expressing their wishes.

Example: A person diagnosed with early-stage dementia may want to document their healthcare preferences regarding end-of-life care before their condition progresses.

• Individuals Who Value Autonomy in Healthcare Decisions

Anyone who wants to ensure their healthcare decisions reflect their values and preferences should consider using advance care plans and directives. This is particularly important for those who have specific beliefs about medical interventions.

• Family Members of Individuals with Health Concerns

Family members of individuals with health issues may encourage their loved ones to engage in advance care planning.This can alleviate uncertainty and stress for family members during healthcare decisions. While these documents are not legally binding in Aotearoa New Zealand, they can help your loved ones and medical professionals make decisions that are in line with their wishes. 

If you wish to explore this more, here are some resources you can access:

• Advance Care Planning - A taonga for whānau
• My Advance Care Plan & Guide
• Easy Read - My plan for a good life, right to the end

Tempting as it is to try and save money by writing a will yourself by downloading one of the many online templates or using a will kit, we do not recommend doing unless you have a good legal knowledge in this area and some lived experience. 

We do not recommend this for the following reasons:

• There are certain legal requirements when writing a will that must be strictly followed. If your will does not comply with these requirements it may be deemed invalid.

• It doesn’t matter how clever you are, lawyers have studied for years to do what they do and they should be able to do something like a will quickly and efficiently. Unless you are a lawyer yourself, you will not have this knowledge and experience.

• Getting it wrong can be costly longer-term to your family and whānau members. You can inadvertently cause tax problems in terms of specific assets and personal items you would like to gift to beneficiaries.

• There are issues such as taxation around Kiwisaver and Superannuation to be considered.

• It can get very complicated, particularly in blended families, of clearly recording who gets what and when in different family scenarios (e.g. one of three siblings dying leaving behind children, before you die).

• It takes a lot of your time and emotional energy to this by yourself.

There are several taxation issues related to KiwiSaver and Superannuation in Aotearoa New Zealand that should be considered when drafting a will. Understanding these implications is essential for ensuring that your beneficiaries receive the intended benefits without unnecessary tax burdens. Below is a detailed overview of the key aspects to consider:

KiwiSaver and Superannuation Overview

• KiwiSaver: A voluntary savings scheme in Aotearoa New Zealand to help individuals save for retirement. Contributions are made by employees, employers, and the government.
  
  
• Superannuation: Refers to the broader retirement savings schemes, which may be from various providers, including private superannuation funds or government schemes in other countries.

Taxation of KiwiSaver

Tax-Free Withdrawals

• Retirement Withdrawals: Funds in a KiwiSaver account can be withdrawn tax-free upon reaching the qualifying age (usually 65) or under specific circumstances (e.g., buying a first home).

Death Benefits

• Paid to Beneficiaries: If a KiwiSaver member passes away, the accumulated balance is paid out to the nominated beneficiaries. This payout is generally tax-free. However, if the funds are retained in the KiwiSaver account after the member's death, there may be tax implications.

• Nominated Beneficiaries: It’s essential to keep beneficiary nominations up to date, as these designations take precedence over any instructions in a will.

Taxation of Superannuation

Death Benefits

• Tax Treatment: Superannuation death benefits can vary in tax treatment based on the provider and the relationship of the beneficiary to the deceased.
  
  
• Dependents vs. Non-Dependents: Typically, benefits paid to dependents (like spouses or children) may be tax-free, while benefits paid to non-dependents may incur tax liabilities.

Implications for Wills

Clarity in Beneficiary Designations

• Direct Payments: Since KiwiSaver and superannuation benefits can be paid directly to beneficiaries, it's important to ensure that these nominations are clear and current.
  
  
• Impact on Estate Distribution: If these benefits pass directly to beneficiaries, they may not be considered part of the estate, potentially impacting how other assets are distributed according to your will.

Tax Liabilities

• Estate Tax Considerations: While there is no estate tax in Aotearoa New Zealand, any income generated from assets post-death (such as rental income) could be taxable. Ensure that your will accounts for any potential liabilities that might arise from the estate's assets.
  
  
• Planning for Debts: If your estate has debts, the executor needs to ensure there are sufficient resources to cover these obligations, particularly if assets are tied up in KiwiSaver or superannuation accounts.

• • Example 1: A KiwiSaver member passes away, and their balance is paid directly to their partner, who is the nominated beneficiary. This amount is tax-free. However, if the will states that the estate must cover any funeral expenses or debts, the executor must ensure that the estate has enough assets to cover these costs, even though the KiwiSaver funds are not part of the estate.
    
    
  • Example 2: An individual has a superannuation fund with a balance of $100,000. If the individual passes away and their spouse is the nominated beneficiary, the spouse may receive this amount tax-free. Conversely, if the beneficiary is an adult child who is not considered a dependent, there may be tax implications, and the child may have to pay tax on the received amount.

Conclusion

When considering taxation issues around KiwiSaver and superannuation in relation to a will in Aotearoa New Zealand, it is essential to:

• Keep Beneficiary Nominations Updated
  Ensure that all beneficiary designations for KiwiSaver and superannuation accounts are current and clearly stated.
  
  
• Understand Tax Implications
  Be aware of how these benefits are treated for tax purposes and how they may affect your estate.
  
  
• Consult Professionals
  Engage with financial advisors or estate planning professionals to navigate the complexities and ensure compliance with relevant laws.

By taking these steps, you can help ensure that your beneficiaries receive the full benefit of your assets while minimising potential tax burdens.

More resources

To find out more you can visit these websites.

• KiwiSaver Information: The New Zealand government’s official KiwiSaver website provides detailed information about KiwiSaver accounts, including withdrawal rules, tax implications, and beneficiary nominations.
  
  
• Superannuation Information: The Retirement Commission of New Zealand ffers resources related to superannuation, including information about tax treatment for superannuation benefits and how they relate to estate planning.
  
  
• Inland Revenue Department (IRD): The IRD's website contains information on taxation, including how different types of income (including KiwiSaver and superannuation payments) are taxed in Aotearoa New Zealand.
  
  
• Tax Information Bulletins: Various Tax Information Bulletins published by the IRD can provide insights into specific taxation rules applicable to superannuation and KiwiSaver accounts. 

• New Zealand Law Society: The New Zealand Law Society () provides guidelines and resources on estate planning, including considerations for wills and the treatment of financial assets like KiwiSaver and superannuation. 

• Financial Advisors and Planners: Many financial advisory firms provide resources and articles on their websites that discuss the interaction between KiwiSaver, superannuation, and estate planning. Examples include firms like:

• • Fisher Funds 
  • Craigs Investment Partners 

• Estate Planning Professionals: Consulting with estate planning attorneys or financial advisors who specialise in New Zealand law can provide tailored advice based on the latest laws and regulations regarding KiwiSaver and superannuation.

These sources collectively provide a comprehensive understanding of the taxation issues surrounding KiwiSaver and superannuation as they relate to wills in Aotearoa New Zealand. They ensure that the information is accurate, reliable, and up-to-date, reflecting current laws and practices. For specific legal advice or detailed inquiries, consulting a professional in the field is recommended.

The Act covers a range of issues including:

• Administration: The probate of a deceased person's will, and the letters of administration for their estate 
  
  
• Administrators: The people who are granted administration, including trustee corporations 
  
  
• Temporary administrators: The people who can be appointed by the court to manage an estate while legal proceedings are ongoing 
  
  
• Beneficiaries: Who is entitled to benefit if there is no valid will, or if the will only covers part of the estate 
  
  
• Protection: The protection of administrators against certain claims.

The Act also covers the distribution of intestate estates, the succession to real and personal estate, and restrictions on succession by certain de facto partners.

The topics addressed in the Act include:

• Who can apply to be administrator

The High Court Rules specify the order of priority for who can apply to be an administrator of an estate. The priority is as follows: surviving spouse, children, parents, siblings, grandparents, and uncles and aunts. 

• What happens if there is no will

If the deceased person did not leave a will, the Administration Act 1969 determines who is entitled to a share of the estate and the size of that share. Section 77 of the act sets out who is entitled to benefit in this situation. 

For more information about what happens to your estate if you die without a will see the links below.

Public Trust - when there is no will

Community Law - Dealing with the deceased's property - wills, intestacy and small estates

Citisen's Advice Bureau - What happens to a person's estate if they die without a will?

The Administration Act 1969 of New Zealand establishes the roles of administrator and temporary administrator for the administration of estates.

Administrator

An individual appointed by the High Court to manage the estate of a deceased person. The administrator's responsibilities include distributing the estate according to the will or the laws of intestacy (i.e. what happens if you die without a will). 

Temporary administrator

An individual appointed by the High Court to manage the estate of a deceased person when legal proceedings are pending. The temporary administrator has the same rights and powers as a general administrator,  but cannot distribute the estate until certain expenses are paid. 

The Administration Act 1969 of New Zealand governs who can apply to be an administrator of an estate for a deceased person without a will.

• Order of priority

The surviving spouse or civil union partner, then children, parents, siblings, grandparents, and uncles and aunts.

• Consent

The applicant must obtain consent from anyone with an equal or greater right to apply. 

• Evidence

The applicant must provide evidence that everyone equally close to the deceased has been told about or agreed to the application. 

The High Court Rules specify the order of priority. The Department of Internal Affairs must also perform a Status of Children search and attach the certificate of results to the application. 

Once the High Court grants Letters of Administration, the estate is administered similarly to probate. The administrator's responsibilities include: 

• Obtaining the deceased's will
• Determining the estate's assets and who receives them
• Applying for letters of administration or probate,
• Recording estate outgoings
• Paying the deceased's debts from the estate

The Administration Act 1969 also establishes the order of priority for who can apply to be an administrator. The order of priority is: 

• Surviving spouse or de facto partner
• Children
• Parents
• Brothers and sisters
• Grandparents
• Uncles and aunts.

To apply to be an administrator of an estate under the Administration Act 1969, you or your estate lawyer must: 

• Gather information about the estate's assets and liabilities
• File an application with the High Court
• Provide an affidavit
• Wait for the High Court to approve the Grant of Administration
• Receive a sealed order from the High Court

The Administration Act 1969 regulates the administration of trusts and wills in Aotearoa NZ. It sets out who can apply to be an administrator, and how the estate should be distributed. The act also establishes a priority order for who can apply to be the administrator. 

Typically, a family member applies to be the administrator. The applicant must provide evidence to the court that everyone who is equally close to the deceased has been told about the application or has agreed to it. 

The basic order of priority for distributing the estate is: 

1. Spouse, civil union partner, or de facto partner
2. Children
3. Parents.

An ordinary power of attorney (OPA) is a legal document that allows someone to act on your behalf in specific situations for a temporary period. 

Purpose

You can use an OPA to give someone the authority to make decisions or act on your behalf for example when you're overseas or perhaps you have had an accident and become immobile for a time.  For example, you can give someone the power to pay bills or send you money from your accounts. 

Duration

An OPA is created for a defined period of time and ends if you lose legal capacity. 

Who's involved

You are the ‘donor’ of the power, and the person you give the power to is your ‘attorney’. You can choose your attorney, the powers you grant them, and how they should be used.  But it is important to note that the donor must have capacity to give the power of attorney.

Witnessing

Both the donor and attorney must have their signatures witnessed by someone over 18 who is not related to either party and who does not benefit from the power of attorney.  The same witness can not act as a witness for both the donor and the attorney.

An OPA is different from an enduring power of attorney (EPA), which remains in effect even if you lose your capacity. 

An enduring power of attorney (EPA) is a legal document that gives someone you trust the power to make decisions about your personal or financial matters if you are unable to look after your personal care and welfare or property. 

Types of Enduring Power of Attorney

There are two types of Enduring Powers of Attorney:

• Enduring Power of Attorney for personal care and welfare: Gives someone the power to make decisions about your health and welfare.  An EPA for personal care and welfare can be made before it is needed.  It only comes into effect when a donor loses their decision-making capacity.  Only 1 person can be appointed in this role. However, you can also name a successor attorney who can step in if the initial attorney is unable to act. Additionally, you can specify individuals your attorney should consult with before making decisions about your care and welfare.
  
  
• Enduring Power of Attorney for property: Gives someone the power to look after your money and property.  An EPA for property can also be made before it is needed.  It can come into effect before or after the donor loses their decision-making capacity.  More than one person can be appointed to this role, depending on the wording in the EPA, and you can also appoint successor attorneys to step in if your original attorney's appointment ends.  This could be because they are no longer able to do so or willing to act in this capacity, 

You can set up an EPA through a lawyer or trustee corporation. You can appoint the same person to act in relation to both property and care and welfare, or you can appoint different people.  If you become ‘mentally incapable’, for example because of an illness or accident, you can specify the type of health practitioner you want to assess your decision-making capacity. You can also appoint different attorneys for different aspects of your personal care and welfare, and put any conditions and restrictions on this that you want.  You can also decide whether your property attorney should have the power to apply to the Court to make or amend a will for you.

EPAs are separate from a will and have no authority after the donor's death. 

Resources:

For more information click on the links below:

Enduring power of attorney for property - NZ government 2025

NZ Legislation - Schedule Forms - Enduring POA property

MSD - EPOA property

If you don’t have an EPA in place before someone loses capacity, you will not be able to immediately get on with managing their personal care and welfare or property (depending on the EPA in place).  If an EPA is not already signed before capacity is lost, then applications to the court would need to be made to become a welfare guardian or property manager or property administrator.  You can find out more about these roles here:

• Welfare guardian 
  
  
• Property managers and property administrators 

RECOMMENDATION: We recommend that all adults over 18 years of age who have capacity have an Enduring Power of Attorney in place for the personal care and welfare, and for property in case of loss of capacity, because this can happen to anyone at any point in time.  It gives the donor the power over what they want to happen in these circumstances, rather than leaving it to the Court to decide. 

The People First NZ Easy Read resource below can help disabled people who have capacity considerations to understand what an Enduring Power of Attorney is about, and possibly develop the capacity to make an EPA.

People First: Protect your future with an Enduring Power of Attorney

The roles involved in establishing an EPA are: 

Donor

The person who creates the EPA, chooses their attorney and successors, and grants them power to act on their behalf. The donor can decide what the EPA covers and who will make decisions for them.  The donor must have decision-making capacity and understand what the document is about and what powers they are giving away.  The donor must be 18 years of age or older to sign an EPA.

Attorney

The person who will act on the donor’s behalf.  The attorney can be a family member, friend, or someone from a trustee company. They do not need to be a lawyer. 

• The attorney must be at least 20 years old.
• The attorney must be a New Zealand resident.
• The attorney must not be bankrupt.
• The attorney must not be subject to any personal or property orders.
• The attorney must understand their role and agree to it.

Lawyer

The EPA must be created with the help of a lawyer, qualified legal executive, or authorised officer of a trustee company.

When can an EPA come into effect?

An EPA can be created while the donor is still mentally capable, or it can be made to take effect only if the donor becomes mentally incapacitated. An ordinary POA is best used for temporary purposes. 

Who can make decisions

An EPA's attorney can make decisions about the donor's property or personal care and welfare, as specified in the EPA. A POA automatically ends if the donor is declared mentally incapable. 

When an EPA is invalid

An EPA is invalid if it's not arranged before the donor becomes mentally incapacitated. 

How to get an EPA

To sign a valid EPA, the donor must understand the document in general terms. If there's any doubt about the donor's capacity, a medical certificate can be obtained from a qualified doctor. 

Witnessing an EPA

An Enduring Power of Attorney (EPA) must be witnessed, just like an ordinary power of attorney, but there are different requirements for witnesses for the donor and attorney signatures. The donor's signature must be witnessed by an authorised witness, typically a lawyer or legal executive. This witness also has to provide specific explanations and advice to the donor about the EPA. The attorney's signature, on the other hand, can be witnessed by any independent adult, but they cannot be the donor or the witness to the donor's signature. 

The Donor's Signature:

• Must be witnessed by an authorised witness: This is typically a lawyer or a legal executive who meets certain requirements, or an authorised officer of a trustee corporation. 
• The witness must provide specific explanations and advice: The witness must explain the effects and implications of the EPA to the donor and provide advice on certain matters. 
• There are restrictions on who can witness: The witness cannot be the donor, the attorney, or a relative of the attorney, and must be independent of the attorney and any successor attorney named in the EPA. 
• The witness must explain the implications of the EPA to the donor before they sign to ensure they understand the EPA and what it means (i.e. it’s effects and implications for the donor). The witness must also have no reason to believe the donor is mentally incapable.

Importance of the witness

The witness verifies that the donor understands the document and is signing freely. 

The Attorney's Signature:

• Can be witnessed by any independent adult: The witness needs to be at least 18 years old and cannot be the donor or the witness to the donor's signature.

• No specific explanations or advice are required: Unlike the donor's witness, the attorney's witness does not need to provide advice or explanations about the EPA.

• Attorneys can witness each other's signatures: Attorneys or replacement/successor attorneys can witness each other's signatures, but not the donor's. 

Who can't be a witness?

The witness can't be a minor (a person under 18 years of age) or a relative of the attorney, their spouse or partner, or live at the same address as the attorney. 

Government mandatory EPA forms

The government now has mandatory standard EPA forms that must be used to create an EPA. You can download the forms from the Ministry of Justice website here:

Personal care and welfare: Used to appoint an attorney to make decisions about your personal care and welfare 

Standard explanation of effects and implications - EPA personal care and welfare

Form - EPA personal care and welfare

Property: Used to appoint an attorney to make decisions about your property 

Standard explanation of effects and implications - EPA - property

Form - EPA property

Who should prepare your EPA?

While you can prepare an EPA yourself, it is not recommended, particularly if you are a person with FASD. These are important legal documents and it is really important to get them right.  While cost is a factor for many people, getting it wrong can be more risky and costly in the long-run. 

A lawyer that specialises in Disability Law will ensure that the form(s) are filled in correctly, and meet the person’s specific needs and situation. They will use supported decision-making, give tailored advice, and a disability expert will make sure specific considerations relating to your disability are covered in the EPA.  A lawyer also has a duty of care to make sure the person has capacity to make an EPA, and that they are not being coerced, manipulated or taken advantage of in the process.

However, if you are a caregiver and want to do it yourself the process is set out below.

What to do next 

• Read the standard explanation document
• Fill out the form
• Get the form witnessed by an authorised witness
• Activate the EPA if necessary
• Inform your care provider and anyone else who may need to be involved

You can change, replace, or revoke your EPA at any time while you have decision-making capacity. You should get legal advice on how to do this. 

How to activate an EPA

An Enduring Power of Attorney (EPA) is activated when a medical practitioner assesses that the donor lacks the decision-making capacity to manage their personal care or welfare or property. The medical practitioner will then issue a certificate of mental incapacity. 

Steps to activate an EPA 

While there is no prescribed process in law to activate an EPA, this is a common-sense approach to the process.

• A medical practitioner assesses the donor's decision-making capacity
• If the donor is deemed mentally incapable, the medical practitioner provides a certificate
• The certificate is provided to the lawyer
• The law firm notes that the EPA has been activated
• Certified copies of the EPA are released to the attorney

What happens after the EPA is activated?

• The donor or their attorney must inform their care provider of the activated EPA, and the care provider will want a certified copy of the EPA.
• The donor or their attorney must provide the care provider with the attorney's contact details. 
• The attorney is responsible for making important decisions about the donor's care, health, and welfare.

How to revoke an EPA 

The donor or their attorney can revoke the EPA by providing written notice to their attorney and successor attorney.

An Enduring Power of Attorney (EPA) gives someone the legal authority to make decisions on your behalf if you are unable to do so.  There are two types: 

Personal care and welfare EPA

This EPA allows your attorney to make decisions about your day-to-day care, such as where you live, who cares for you, and what medical treatment you receive.  Specific types of personal care orders can include arrangements relating to:

• personal care after your parent’s death
• living arrangements
• medical advice and treatment
• rehabilitative and therapeutic services
• educational services
• ability to leave Aotearoa New Zealand

Property EPA

This EPA allows your attorney to make decisions about your property, including your money, investments, assets, and KiwiSaver. They can also manage your bank accounts, pay your bills, and sell your house and other property. 

You can choose to give your attorney general power to make decisions about all of these areas, or you can limit their power in certain ways. For example, you can restrict your attorney from signing a will on your behalf, or you can limit the amount of money they can borrow. 

An EPA is different from an ordinary power of attorney, which is best used for temporary situations and ends if you lose legal capacity. An EPA is used for longer term protection and doesn't end when you lose legal capacity. 

To find out more about the role of EPAs click here: Planning Your Future - And the role of Enduring Powers of Attorney or here Enduring Power of Attorney - prepare for the unexpected: A vital tool in planning for the future

You can also find useful information at the Office for Seniors here: Enduring Power of Attorney - Office for Seniors  and here: Enduring Power of Attorney - Property  

Brochures explaining EPAs in different languages can also be accessed here:  Enduring Power of Attorney - Different language brochures

An Enduring Power of Attorney (EPA) can be useful when you are no longer able to make decisions for yourself, such as due to an illness, accident, or mental incapacity.  An EPA can help ensure that your care, finances, and wellbeing are taken care of by people you trust. 

An EPA can be used for personal care and welfare, or for property: 

Personal care and welfare

An EPA can be used to give someone you trust the power to make decisions about your personal care and welfare if you are no longer able to.  This could include decisions about your treatment, care, or medications and so on.  If you do not appoint someone before you lose decision-making capacity then the Court will make the decision on your behalf and it might not be someone you trust or would want to be in that position. 

Property

An EPA can be used to give someone you trust the power to manage your money and property if you are no longer able to rather than leave the decision to the Court. This could include decisions about selling your home, accessing your bank accounts, paying your bills, and managing any businesses you own. 

Other benefits

Other benefits of an EPA include:

• An EPA is that can help protect a donor from potential victimisation and abuse.
• As with welfare guardians, property managers and property administrators, an attorney should also be using and maximising support decision-making with the donor.
• The attorney does not always have to use the EPA in all its decision making. There is flexibility in the arrangement.  The EPA can specify whether the attorney can make decisions about property transactions even while the donor is still mentally capable. 
• A donor with an EPA can still enter into a binding contract as long as they have the decision-making capacity to do so. Decision-making capacity is the key here.  A donor must have sufficient decision-making capacity to understand the contract they are signing to make it binding, even if they have an EPA.  However, if the EPA is activated due to a loss of decision-making capacity, the appointed attorney would be responsible for making contracts on their behalf. 
• If a doctor refuses to accept the consent of a donor due to decision-making capacity concerns to a medical procedure and there is a personal care and welfare EPA in place, the doctor can give the attorney a medical certificate so that the attorney can make the decision.
• It is also more likely to ensure your wishes are more likely to be respected, and it can help avoid the stress and expense of your family having to apply to the Family Court to act on your behalf. You can also name people to oversee your attorney's actions and state what information to give to them.

RECOMMENDATION: FASD-CAN recommends caregivers and people with FASD give serious consideration to setting up Enduring Powers of Attorney for both personal care and welfare to come into effect as soon as possible after the age of 18 years of age. 

Property EPA coming into effect

The donor can decide if they want the property EPA to come into effect before they lose decision-making capacity – perhaps they may not want the stress of managing their assets, or perhaps they live overseas and it is easier for someone in Aotearoa New Zealand to manage their financial affairs.  Otherwise the property EPA will not come into effect until they lose capacity. 

Personal care and welfare EPA coming into effect

A personal care and welfare EPA only comes into effect when the donor loses decision-making capacity.

Entering into these arrangements before they are needed means the donor will get to choose who they want in these roles, and the extent of their powers under the EPA.

RECOMMENDATION: If you are thinking of entering into an Enduring Power of Attorney with a person with FASD we recommend you get them to read (or support them to understand) an Easy Read resource from People First NZ first to help them understand what this means. 

People First NZ is a Disabled People’s Organisation (DPO). On their website you can find information and resources to support disabled people. One of these Easy Read resources is a document entitled: Protect your future with an Enduring Power of Attorney. 

You can find it here: Easy Read - Protect your future with an Enduring Power of Attorney

Here are some things to consider when creating an EPA.

Who to choose

The attorney should be someone you trust to act in your best interests. You can add requirements to the EPA, such as requiring the attorney to consult with certain people or provide information to others. 

Benefits

You can choose whether the attorney can benefit from the EPA, and you can limit how much they can benefit. 

Decision-making capacity

You can specify the type of health practitioner who should assess your decision-making capacity. The Family Court can also decide if someone is mentally incapable.

Extent of the EPA

You can restrict the powers of your Enduring Power of Attorney (EPA) by specifying conditions and limitations on what your attorney can do within the EPA document. This allows you to control which decisions they can make and which areas they need to consult with others on before acting. 

Restricting an Attorney’s Powers

Key points about restricting EPA powers in NZ:

Specific limitations

You can choose to give your attorney power over certain aspects of your finances, like managing specific bank accounts, while restricting their ability to sell property without further approval. 

Consultation requirements

You can designate individuals your attorney must consult with before making significant decisions, even if the final decision rests with them. 

Reporting obligations

You can specify that your attorney needs to provide regular reports on their actions and financial transactions. 

Decision-making capacity considerations

If you want your EPA to only come into effect when you lose decision-making capacity, you can specify this in the document. 

Other important considerations

Seek legal advice

When creating an EPA, it's crucial to consult with a lawyer to ensure your restrictions are clearly defined and legally sound. 

Balance restrictions with practicality

While you can add limitations, be mindful of not making it too difficult for your attorney to manage your affairs effectively. 

Review and update regularly

As your circumstances change, you can always review and update your EPA to adjust the level of authority granted to your attorney. 

More things to think about

Enduring Powers of Attorney (EPAs) can have disadvantages, including:

• Selecting the wrong attorney

The person you choose as your attorney may not act in your best interests, or they may abuse their role. 

• Joint appointments

If you appoint more than one attorney, they may not be able to work well together

• Incapacity

If you become mentally incapacitated, your attorney can't make significant decisions for you without a health practitioner's certification. 

• The process can be daunting

The process of setting up an EPA can be time consuming if you do not know what you are doing, and expensive if you are on a benefit or low income, although some Community Law Centres may do this if you are in these circumstances.  

ª Your attorney may not be monitored

Unless you specify, your attorney won't be monitored or guided on how to act. Expecting someone in your life to look after another person might be your wish, but it might not be implemented or not implemented in the way you wanted or expected.

• Unwinding transactions

Only a property manager can unwind transactions, not an attorney operating under an ordinary power of attorney or an enduring power of attorney.

To reduce the risk of problems, you can: 

• Choose a trusted relative, friend, solicitor, or accountant
• Restrict your attorney's powers
• Require your attorney to consult with certain people.  However, if they do not do this it will require someone else to take the matter to Court.
• Require your attorney to provide records of financial transactions.  However, again, if they do not do this it will require someone to take the matter to Court.

Choosing someone to be your Attorney

When choosing someone to be your Enduring Power of Attorney (EPA), you should consider:

Trust
You should be able to trust them completely to act in your best interests.

Commitment to supported decision-making
They need to clearly understand their role and the requirement to engage in supported decision-making if you lose capacity.

Skills
They should have the skills to manage your affairs, such as keeping records and accounts. 

Location
While not a legal requirement, they should preferably live in Aotearoa New Zealand and be able to get to you if needed. 

Communication
They should consult with you as much as possible. 

Professionalism
If you choose a professional, such as a lawyer or accountant, they may charge a fee. 

You can appoint a family member, friend, or professional, and you can also appoint more than one attorney in relation to an EPA for property. If you have more than one attorney, you can choose whether they act jointly or severally. 

You should never feel pressured or manipulated into appointing an attorney. 

For more information about choosing a person to be your EPA click here:  Choosing Someone to be your Attorney under an EPA

The main differences between a property power of attorney (EPA) and a property manager or administrator under the Protection of Personal and Property Rights Act (PPPR Act) are: 

• Who appoints the decision maker

With an EPA, you appoint someone to make decisions for you while you are unable to. With a property manager or administrator, the court appoints someone to make decisions for you.

• When the decision maker is appointed

You can appoint an attorney under an EPA while you are still able to make decisions. If you lose capacity to make decisions before an EPA is in place, your family or loved ones may need to apply to the Family Court for the appointment of a Welfare Guardian and/or Property Manager or Property Administrator. 

• Reporting requirements

A property manager appointed by the court must report to the court annually. 

• Appointment requirements

Property managers and welfare guardians usually need to be reappointed every three years.

A property manager is responsible for decisions about the subject person's property, including income and government benefits. They cannot make decisions about the subject person's personal care and welfare. 

A person can be the subject of a PPPR Act if they are not fully able to manage their own affairs. This could be due to mental illness, dementia, an intellectual disability, or a serious accident or health episode.

Some common terms used in New Zealand trust law include:

Settlor: The person or organisation that creates the trust and transfers ownership of assets to the trustee 

Trustee: The person or group of people who hold and manage the trust assets for the benefit of the beneficiaries 

Independent trustee: A person or entity that manages a trust without benefiting from the trust's assets. They are not a beneficiary of the trust and are not entitled to any of its assets. 

Beneficiary: The person or group of people who benefit from the trust assets 

Trust deed: The legal document that establishes a trust. It outlines the trust's rules, including who the settlor/s, trustees and beneficiaries are, and how the trust will operate. 

Terms of trust: The legal requirements that govern how a trust is managed and the parties involved. The terms are usually set out in a trust deed, which is a signed agreement between the parties involved. 

Trust capital: The assets of the trust, such as real estate, investments, and gifts 

Trust income: The money the trust makes from investing its capital, such as interest, rent, and dividends 

Family trusts: A form of discretionary trust usually formed by families to benefit family members (i.e. children).

Parallel trusts: Two separate trusts for each partner in a relationship. This is common within blended families, or when there is disproportionate asset value between partners.

Sham trust: A structure that appears to be a trust but was not intended to be one and does not behave like one. 

Corporate trustee: A company that is set up to act as a trustee.

Individual trustee: A person who is appointed to manage and administer a trust, holding the trust assets in their name but obligated to use them for the benefit of the beneficiaries. 

Fiduciary Duty: The legal obligation of a trustee to act reasonably and in good faith for all beneficiaries. 

In New Zealand law, a ‘trust deed’ is the legal document that outlines the specific details of a trust, including who the beneficiaries are, the trustee's powers, and how the trust property should be managed.

‘Terms of trust’ refers to the overall rules and conditions governing how the trust operates, which are primarily defined within the trust deed itself. Essentially, the trust deed is the written form of the ‘terms of trust’ for a particular trust. 

Key points 

Trust Deed

The formal document that creates a trust, setting out the key details like who the settlor (creator), trustees, and beneficiaries are, and the specific rules for managing the trust property. 

Terms of Trust

The fundamental rules and conditions that dictate how a trust is set up, how it operates, and how its assets are managed and distributed. These terms are primarily, and most definitively, set out within the trust deed itself. 

The trust deed is the governing document, and while it must clearly identify the beneficiaries, it also specifies many other crucial operational guidelines.

Examples of what the Terms of Trust (as found in the trust deed) might specify include:

• Powers of the Trustees: What the trustees are allowed to do with the trust property (e.g., whether they can invest in shares, buy or sell land, take out loans, or give a mortgage over trust property).
  
  
• Distribution Powers: Whether the trustees have the discretion to choose which beneficiaries receive distributions, when, and how much (often referred to as 'discretionary beneficiaries'), or if distributions are mandatory.
  
  
• Trustee Appointments and Removals: The process for appointing new trustees or removing existing ones, and whether there must always be a certain type of trustee, such as an independent trustee.
  
  
• Winding Up the Trust: The conditions or dates under which the trust must eventually be ended and its assets distributed (e.g., the vesting date or perpetuity period).
  
  
• Beneficiary Categories: While beneficiaries are named, the deed might also define categories of beneficiaries (e.g., 'primary beneficiaries,' 'final beneficiaries,' 'discretionary beneficiaries') and the different rights or entitlements attached to each category.

In New Zealand law, a trust is a legal relationship where a settlor transfers assets to trustees, who are legally obligated to manage and administer the assets for the benefit of beneficiaries. It's a way to separate ownership and control of assets from those who ultimately benefit from them. 

In Aotearoa New Zealand the law recognises the following kinds of trusts:

Express trusts
An express trust is a type of trust created intentionally by the settlor (the person establishing the trust) through clear and explicit terms, typically laid out in a formal written document known as a trust deed. This trust is established to manage and distribute assets according to the specific wishes of the settlor.

Discretionary trusts
A discretionary trust allows trustees to have broad control over how trust assets are distributed to beneficiaries. This means the trustees decide who benefits, how much they receive, and when they receive it. Beneficiaries in a discretionary trust don't have a fixed claim to the trust assets; their entitlement is at the trustees' discretion.

Fixed Trusts
These trusts specify exactly who the beneficiaries are and the exact portion of the trust assets they are entitled to. The trustee has no discretion in distributing the assets; they must follow the terms outlined in the trust deed. 

Unit Trusts
Similar to shares in a company, beneficiaries in a unit trust have units that represent their share in the trust's assets. These units can be transferred or traded, making them a common way to hold investments. 

Bare Trusts
In a bare trust, the trustee holds the assets on behalf of the beneficiary, but they have no active role in managing the trust assets. The beneficiary has the right to demand the assets at any time. 

Interest in Possession Trusts
These trusts grant beneficiaries a right to receive the trust income during their lifetime. The beneficiaries have a life interest in the trust, but they do not have ownership of the underlying assets. 

Discretionary Trusts

In New Zealand law, a discretionary trust allows trustees to decide who the beneficiaries are, and how much income or capital they receive from the trust. This means beneficiaries don't have a guaranteed entitlement to any specific assets until the trustees decide to distribute them. Family trusts and charitable trusts are often, but not always, set up as discretionary trusts. 

Types of trusts that are commonly discretionary include:

Family Trusts

These are a common type of discretionary trust where the beneficiaries are typically family members. They are used to protect assets, distribute income, and provide for future generations. 

Charitable Trusts

These trusts are established for charitable purposes, and the trustees have the discretion to decide which charitable organisations benefit from the trust. 

Other Trusts

Any trust that is not a ‘bare trust’ (where the trustee holds the assets for a specific beneficiary) is considered a discretionary trust. 

Key Aspects of Discretionary Trusts

Trustee Discretion

Trustees have the power to choose which beneficiaries benefit, how much they receive, and when they receive it. 

No Fixed Beneficiaries

Unlike fixed (or non-discretionary) trusts, beneficiaries of a discretionary trust do not have a legal right to the trust assets until the trustee decides to distribute them. 

Flexibility

This discretion allows for adapting to changing family circumstances or needs. 

Potential for Tax Advantages

Discretionary trusts can offer tax advantages, but it's crucial to seek professional advice to ensure compliance with tax laws

A ‘family’ trust is a usually set up as a discretionary trust where, like other trusts, the assets are owned by trustees for the benefit of the beneficiaries.  When setting up a trust for the benefit of family members, there is no requirement to use the words ‘family trust’ or indeed include the family’s ‘name’ in the trust’s title.  However, for the purposes of the information below we are going to use the phrase ‘family trust’ to describe the purpose of a trust set up for the benefit of family members.

Purpose

A family trust can be used to protect assets from creditors, ensure children receive their inheritances, and manage the risk of estate claims. 

Structure

A family trust involves a settlor (the person, people or company that creates the trust), trustees (the people who manage the trust), and beneficiaries (the people who benefit from the trust). 

Trust deed

A trust deed is a legal document that outlines the rules for a trust, including who the beneficiaries and trustees are, how the trust operates, the assets of the trust, and the powers and duties of the trustees.  It is essentially a contract that governs the trust. 

Duration

The Trusts Act of 2019 extended the maximum duration of trusts from 80 to 125 years. However, the terms of the trust deed may determine whether older trusts can be extended. 

Number of trustees

The law doesn't specify a minimum number of trustees, but it's usually at least two. 

‘Family’ trusts are often used to hold assets like farms and businesses that benefit multiple generations and remain in the family for a long time. They are also used by people who want to keep separate property separate from relationship property.

As noted above, ‘family’ trusts are most commonly set up as ‘discretionary’ trusts although they can also be set up as ‘fixed’ trusts. Where people with FASD and other disabled people are a beneficiary of the trust, setting up a discretionary trust is recommended because fixed payments could create issues with benefit payments.

Discretionary trusts empower trustees with broad control over asset allocation and distribution to beneficiaries. Trustees decide who benefits, when, and to what extent, without beneficiaries having an automatic entitlement to distributions. This flexibility allows for varied needs and circumstances of beneficiaries, and can be used for asset protection and tax planning.  Trustees are legally responsible for the trust’s assets and have a duty to act in the best interests of beneficiaries. 

How do they work?

• The settlor gives property to the trustee to hold and maintain. The trustee has the discretion to decide how much and when to distribute the trust's assets and income to the beneficiaries. 
• The trustee must administer the trust in accordance with the trust deed. 
• The trust deed determines the beneficiary entitlements. A Memorandum or Letter of Wishes can tell the trustee how to distribute assets and income, and for what purpose. 

Benefits

• Discretionary trusts provide flexibility and can protect assets if circumstances change because nobody knows what is going to happen after they die.  Giving trustees some discretion in meeting the purposes of the trust is therefore very beneficial.

This is where your vision, planning, and Letter of Wishes becomes very important in providing guidance to the trustees on meeting the needs of your beneficiaries.

• Beneficiaries of a discretionary trust don't have a legal interest in the trust's income or capital until the trustee decides to distribute it to them. 
• Beneficiaries are only entitled to the share of income or capital that has been distributed to them or allocated to them (sometimes income is allocated but not distributed). In  the latter case it is an asset of the person but they do not receive any money.  It is important to note that if the person is on a WINZ benefit, that asset would still need be disclosed to WINZ.

Family trusts 

• Most family trusts in Aotearoa New Zealand are discretionary trusts.
• Family trusts are designed specifically for family members.

Changing a discretionary trust 

• Changing a discretionary trust may create a new trust, which can have tax and administrative considerations.

Disadvantage of discretionary trusts

A discretionary trust can have the potential disadvantage of creating uncertainty for beneficiaries because trustees have discretion over who receives benefits and how much, so not all beneficiaries are guaranteed to benefit. 

A fixed trust in New Zealand law is a trust where the beneficiaries and how the trust property is distributed are set when the trust is created. The trustee is required to follow the distribution arrangement set out in the trust deed. 

Key features

• Fixed entitlements: the beneficiaries have specific entitlements to the trust's income and capital. 

• No discretion for the trustee: the trustee cannot change the arrangement set out in the trust deed. 

• Beneficiaries receive a fixed share: when the trust ends, the beneficiaries receive a fixed share of the trust's assets. 

Disadvantage of fixed trusts

A fixed trust can have the potential disadvantage of being inflexible to the changing needs of the beneficiaries over time. In a fixed trust, the beneficiaries and their shares are predetermined, and the trustees do not have the power to change them. Beneficiaries of a fixed trust have specific entitlements to the trust funds. For this reason, fixed trusts are generally less suited to meeting the needs of disabled people.

An express trust is a type of trust that is intentionally created by the settlor (the person establishing the trust) through explicit and clear terms. These terms are typically documented in a formal trust deed, which outlines how the trust will operate, the assets it will hold, and the rights and responsibilities of the trustees and beneficiaries. Here’s a detailed overview of express trusts under New Zealand law, including their characteristics, types, and legal framework.

Key Characteristics of an Express Trust

Intentional Creation

 An express trust is deliberately established by the settlor, who must clearly indicate their intention to create a trust. This intention is usually documented in writing.

Defined Beneficiaries

The beneficiaries of the trust must be clearly identified. These can include individuals, groups, or charitable organisations that will benefit from the trust’s assets.

Specific Purpose

The trust is created for a specific purpose, such as providing for the education of beneficiaries, managing assets for minors, or supporting charitable causes.

Trust Property

 An express trust must hold identifiable property or assets, which can include real estate, financial investments, cash, or personal belongings.

Appointment of Trustees

 The settlor designates one or more trustees who will manage the trust assets according to the terms of the trust deed and act in the best interests of the beneficiaries.

Types of Express Trusts in Aotearoa New Zealand

Discretionary Trust

In a discretionary trust, the trustee has the discretion to decide how to distribute income and capital among beneficiaries. Beneficiaries do not have fixed entitlements, allowing for flexibility in distribution based on their needs.

Example: A parent establishes a discretionary trust for their children, allowing the trustee to determine how much each child receives based on their individual circumstances.

Fixed Trust

A fixed trust specifies the exact shares or entitlements of each beneficiary. Beneficiaries are entitled to a predetermined portion of the trust assets.

Example: A grandparent creates a fixed trust stating that their three grandchildren will each receive equal shares of the trust's assets upon reaching a certain age.

Testamentary Trust

A testamentary trust is created through a will and comes into effect upon the death of the testator (the person who made the will). It is often used to manage the distribution of assets to beneficiaries over time.

Example: A person includes a clause in their will establishing a testamentary trust to fund their children’s education until they reach adulthood.

Inter Vivos Trust (Living Trust)

An inter vivos trust is created during the lifetime of the settlor and is often used for estate planning purposes. It allows for the management and distribution of assets while the settlor is still alive.

Example: A couple sets up an inter vivos trust to hold their family home, managing the property and providing support to their children.

Legal Framework

Trusts Act 2019: Governs the administration of trusts in New Zealand, outlining the powers and duties of trustees, the rights of beneficiaries, and the obligations of trustees to act in the best interests of the beneficiaries.

Property Law Act 2007: Provides relevant provisions regarding the management of property in relation to trusts and the rights of trust beneficiaries.

Benefits of an Express Trust

Safeguarding vulnerable beneficiaries

Express trusts allow the settlor to specify how and when assets will be distributed to beneficiaries. This means that vulnerable beneficiaries can receive support in a structured manner, rather than receiving a lump sum that they may not manage well.

Example: A parent sets up a trust for a child with special needs, allowing distributions to be made for education, healthcare, and living expenses rather than a direct cash inheritance.

Discretionary Powers

In a discretionary trust, the trustee has the authority to decide how to allocate funds to beneficiaries. This discretion allows the trustee to tailor distributions based on the specific needs of vulnerable beneficiaries, ensuring they receive appropriate support.

Example: If a beneficiary is struggling with financial management, the trustee can provide funds directly for necessary expenses such as housing or medical care, rather than giving the beneficiary cash.

Preventing Exploitation

By holding assets in trust, vulnerable beneficiaries are better protected from potential exploitation by third parties. The trust structure can shield assets from creditors or individuals who might seek to manipulate or take advantage of the beneficiary.

Example: If a beneficiary is at risk of being taken advantage of due to their vulnerability, the assets held in the trust remain protected, as they are legally owned by the trust and managed by the trustee.

Ongoing Benefits

Trusts can be designed to provide financial support over the long term, ensuring that vulnerable beneficiaries have a steady source of funds for their needs throughout their lives.

Example: A trust can be established to provide ongoing monthly payments to a beneficiary with a disability, ensuring they have a reliable income for basic living expenses.

Conditions for Distribution

The trust deed can include specific conditions for distributions that prioritise the needs of vulnerable beneficiaries. For instance, provisions can be made to ensure funds are used for healthcare, education, or living expenses.

Example: The trust may stipulate that funds can only be used for the beneficiary's medical treatment, ensuring that the money is spent on necessary care.

Control Over Asset Distribution: The settlor can dictate how and when assets are distributed, ensuring that specific needs of beneficiaries are met.

Asset Protection: Trust assets are generally protected from creditors and legal claims, which can be crucial for individuals in high-risk occupations.

Tax Efficiency: Trusts can provide tax advantages, such as income splitting among beneficiaries who may be in lower tax brackets.

Privacy: Unlike wills, which become public documents upon death, express trusts usually do not go through probate, maintaining the confidentiality of the trust’s terms and assets.

Conclusion

In summary, an express trust in New Zealand law is a trust that is intentionally created with clear terms and defined beneficiaries. By establishing an express trust, individuals can manage and protect their assets according to their specific wishes. It is advisable to seek legal advice when setting up an express trust to ensure it is compliant with New Zealand laws and effectively meets the settlor's objectives.

The Trusts Act 2019 and wills are linked because the Act's default duties apply to executors and administrators of wills, unless the will explicitly excludes them. Essentially, executors of wills are acting as trustees when dealing with an estate, and therefore are subject to the same obligations under the Act as trustees. 

Executors as Trustees

When an executor is administering an estate, they are essentially acting as a trustee for the benefit of the beneficiaries of the will. This means they have a fiduciary duty to manage the estate assets for the beneficiaries' interests. 

Trusts Act 2019 Obligations

The Trusts Act 2019 outlines mandatory and default duties for trustees. Executors, acting as trustees, are subject to these duties, including the general duty of care, duties to invest prudently, avoid conflicts of interest, and act for the benefit of the beneficiaries. 

Default Duties

The default duties outlined in the Act apply unless the will explicitly excludes them. This means that executors generally need to act impartially, avoid conflicts of interest, and exercise their powers for a proper purpose. 

Modification of Default Duties

While the default duties generally apply, a will can modify or exclude certain of them. For example, the will might specify how assets should be invested or allocate specific responsibilities to the executor. 

Mandatory Duties

The mandatory duties under the Trusts Act 2019 are always applicable to executors, regardless of what the will says. These duties include knowing the terms of the will, acting in accordance with those terms, acting honestly and in good faith, and acting for the benefit of the beneficiaries. 

A family trust is usually established as a discretionary trust. For the purposes of the information below we are going to use the phrase ‘family trust’ to describe the purpose of a trust set up for the benefit of family members.

Family trusts can be useful for many reasons, but they should not be entered into lightly. If a trust is not well-maintained, it can leave the trustees open to legal action. Family trusts can be used for estate planning, safeguarding assets, and income tax planning.

Setting up a family trust in Aotearoa New Zealand can have many benefits, including protecting assets and distributing them to younger family members. However, there are also some disadvantages to consider, such as the cost and ongoing management responsibilities. 

The Pros

Here are some of the benefits of setting up a discretionary family trust.

Protection of vulnerable beneficiaries

For FASD families and whānau, the number one reason to set up a trust is to help protect them from con-artists, scammers and predators seeking to manipulate them for some personal gain.  It can also help financially protect those who have addictions or other mental health issues.

Support for dependents

Trusts can be set up to provide ongoing financial support for vulnerable beneficiaries, such as minors or individuals with disabilities, ensuring their needs are met throughout their lives. The trust deed can stipulate conditions under which beneficiaries can access funds, helping to protect them from poor financial decisions and manipulation.

Asset protection

A trust can protect assets from creditors, lawsuits, and family disputes. For example, you can use a trust to protect your family home from business failure. 

Shielding Assets from Creditors

Family trusts can protect assets from creditors in the event of bankruptcy or legal claims against the beneficiaries. This is particularly beneficial for individuals in high-risk professions or businesses.

Protection from Relationship Property Claims

In the event of a relationship breakdown, assets held in a family trust may be protected from being divided as relationship property, depending on how the trust is structured and managed.

Avoiding Probate

Assets held in a trust do not go through the probate process upon the death of the settlor. This can save time and legal costs, allowing for faster distribution to beneficiaries.

Control Over Distribution

Trusts allow the settlor to specify how and when assets are distributed to beneficiaries. This can be particularly useful for managing distributions to minors or individuals who may not be financially responsible.

Tax benefits

Trusts can facilitate income splitting among beneficiaries, potentially allowing for tax advantages. If beneficiaries are in lower tax brackets, income can be distributed to them to minimise overall tax liability.

Tax-Free Gifts

Assets transferred to a trust may not be considered gifts for tax purposes, potentially avoiding gift duty and reducing tax liabilities on transferred assets.

Distribution of assets

A trust can help you distribute assets to younger family members. For example, you can use a NextGen Trust to protect assets for your child throughout their life. 

Flexibility

The trust deed can be tailored to your circumstances, giving you flexibility in how the trust operates. 

Changing Circumstances

Family trusts can be structured to allow for flexibility in management and distribution, adapting to changing family circumstances or financial situations.

Trustee Discretion

Trustees can have the discretion to make decisions regarding the distribution of assets, which can be beneficial in responding to beneficiaries' needs or changes in family dynamics.

Continuity of Asset Management

A family trust provides a mechanism for the ongoing management of family assets beyond the life of the settlor. This ensures that assets are managed according to the settlor's wishes, even after their death.

Prevention of Family Disputes

By clearly outlining the terms of asset distribution, trusts can help minimise disputes among family members regarding inheritance.

Privacy of Asset Distribution

Unlike wills, which become public documents upon death, trusts do not go through probate, thus preserving the privacy of the settlor’s estate and the distribution of assets.

Philanthropic Goals

If the family wishes to support charitable causes, a family trust can be structured to include charitable giving, allowing the family to manage their philanthropic efforts while enjoying potential tax benefits.

Summary: Establishing a family trust in Aotearoa New Zealand can provide numerous advantages, including asset protection, effective estate planning, tax efficiency, and flexibility in managing family assets. However, it is essential to consult with legal and financial professionals to ensure that the trust is set up in accordance with your specific goals and complies with relevant laws. By doing so, you can maximise the benefits of a family trust for your family’s future.

The Cons

Here are some of the disadvantages of setting up a family trust:

Cost
There are initial costs to set up a trust, plus ongoing legal and accounting fees. 

Complexity
They can be complex to set up and manage. Understanding the legal requirements and responsibilities can be overwhelming for individuals without legal or financial expertise.

Administration requirements
Trusts require regular administration, including record-keeping and compliance with legal obligations, which can be time-consuming.

Loss of control
Once you put assets into a trust, you no longer own them. The trustees are responsible for managing the assets in the best interests of the beneficiaries. If the trustees do not act in the best interests of the beneficiaries, it can lead to conflicts or disputes.

Tax implications
Trusts in New Zealand can be subject to higher tax rates on income generated by trust assets. The trustee tax rate can be as high as 33%, depending on the income level.

Disbursement delays
If trustees need to determine whether to distribute funds, beneficiaries may face delays in accessing their inheritance or support.

Family disputes
If the trust isn't managed well, family members may sue the trustees. 

Regulatory scrutiny
Trusts must comply with various legal and tax regulations, which may subject them to scrutiny from authorities. Failure to comply can result in penalties. 

Reporting obligations
Trustees have specific reporting obligations that can lead to increased administrative burdens.

Summary: While family trusts can provide valuable benefits, such as asset protection and estate planning advantages, they also come with significant disadvantages. It’s essential for individuals considering setting up a family trust in Aotearoa New Zealand to weigh these drawbacks against the potential benefits and consult with legal and financial professionals to ensure that it aligns with their specific needs and circumstances. 

RECOMMENDATION:  Before setting up a trust, it's important to get professional advice to ensure it's right for you.

Key Impacts of the Trusts Act 2019 (Effective 30 January 2021)

• Increased Trustee Duties and Obligations: The Act clearly codifies both mandatory and default duties for trustees, making their role more accountable.
  • Mandatory Duties (cannot be excluded) include: knowing the terms of the trust, acting honestly and in good faith, and acting for the benefit of beneficiaries.
  • Default Duties (can be modified or excluded in the trust deed) include acting with reasonable skill and care, and acting impartially towards all beneficiaries.
• Greater Disclosure to Beneficiaries: Trustees now have a proactive obligation to provide certain basic trust information to all beneficiaries (aged 18+) and a presumption to provide other trust information if requested. This is one of the most significant practical changes, as many older trusts were administered with minimal beneficiary awareness.
  
  
• Mandatory Record-Keeping: Trustees must keep a copy of the trust deed, trust property records, and records of all trustee decisions.
  
  
• Maximum Trust Duration Extended: The maximum lifespan of a trust was extended from 80 years to 125 years.
  
  
• Easier Trustee Administration: The Act provides clearer rules for appointing, removing, and delegating powers to trustees, often making court applications unnecessary.

Increase in the Trustee Tax Rate (Effective 1 April 2024)

Another significant change that has led some to ask if amendments to trust law have made 'family trusts' redundant is the increase in tax rates.  This is a key tax change that affects how trusts that retain income are taxed.

Key Impacts of the Tax Change

• Trustee Tax Rate Increase: The tax rate applied to trustee income (income retained within the trust and not distributed to beneficiaries) increased from 33% to 39%. This change aligns the trustee rate with the top personal income tax rate.
  
  
• $10,000 De Minimis Exception: A trust's retained income that is or less per year continues to be taxed at the lower 33% rate.
  
  
• Specific Exceptions: Certain trusts, such as disabled beneficiary trusts and deceased estates (for a limited time), may still be taxed at the lower 33% rate, regardless of the income amount.
  
  
• Implication for Planning: This change increases the incentive for trusts to distribute income to beneficiaries who have a lower personal income tax rate than 39% to reduce the overall tax burden.

However, these changes have not made family trusts entirely redundant, but it has significantly increased their compliance burden and costs, leading many families to conclude the trust is no longer worth keeping.  The idea that they are 'redundant' is primarily driven by the two recent law changes mentioned above:

1. The Trusts Act 2019: Increased Obligations and Scrutiny

The new Act, which took effect in 2021, fundamentally shifted the cost-benefit analysis for a simple family trust.

For a trust whose primary asset is just the family home, these new costs and administrative hassles may outweigh the benefit it now provides.

1. The Tax Rate Increase (Effective 1 April 2024)

This change further changed one of the secondary benefits of some trusts.

With the tax rate on retained trust income increasing from 33% to 39% (for income over $10,000), one of the historical tax advantages of accumulating income within a trust is largely gone.

This change aligns the top trust tax rate with the top personal income tax rate, which applies to individual income over $180,000. There are specific exceptions to the 39% rate for certain types of trusts and estates, such as disabled beneficiary trusts and deceased estates for a limited period. 

When a Trust is Still Not Redundant

Despite these changes, a “family” trust remains a critical and non-redundant tool for specific purposes:

1. Asset Protection from Creditors: For people in high-risk professions (e.g., business owners, builders, directors) or those with significant debt, a properly administered trust still offers a high degree of protection for assets like the family home from personal business failure or creditor claims.
   
   
2. Protection for Vulnerable Beneficiaries: This is especially relevant to FASD families. A trust remains the best legal mechanism to protect an inheritance for a vulnerable or disabled family member, ensuring they receive the benefit of the assets without losing their eligibility for government assistance or being exploited.
   
   
3. Estate Planning/Succession: A trust provides more flexibility and control than a Will, allowing assets of sentimental value (like a family holiday home) to be held for multiple generations, or ensuring a lump sum inheritance is not immediately given to a young or fiscally irresponsible beneficiary.⁴

In summary, the decision to have a trust is likely to be a pragmatic choice for people with family members who are vulnerable or otherwise disabled.

The establishment of a trust can significantly affect eligibility for residential care subsidies, which are financial supports provided by the government to assist individuals with the costs of residential aged care. Here’s a detailed overview of how trusts impact these subsidies:

Understanding Residential Care Subsidies

• Purpose: Residential care subsidies are designed to help individuals who require long-term care in a residential facility but cannot afford the full cost of care.
  
  
• Eligibility: Eligibility for these subsidies is generally determined by an asset test and an income test. The asset test looks at the total value of an individual's assets, including property, savings, and investments.

Impact of Trusts on Asset Testing

Asset Ownership

• Trusts and Asset Assessment: When assets are placed into a trust, they are no longer owned by the individual. This can potentially exclude those assets from being counted in the asset test for residential care subsidies.
  
  
• Non-Discretionary Trusts: If a trust is set up as a non-discretionary trust (where the assets are held for specific beneficiaries), these assets may not be considered part of the individual's personal assets for the purpose of the subsidy assessment.

Discretionary Trusts

Potential Issues: If a trust is a discretionary trust (where the trustee has the power to decide how and when to distribute assets), the Ministry of Social Development (MSD), which administers the subsidies, may assess the value of the trust's assets and distributions to the individual. This can complicate eligibility.

Trustee Distributions: If the trust has the ability to make distributions to the individual, those distributions may be treated as income, potentially affecting subsidy eligibility.

Look-Through Provisions

Deeming Rules: The MSD may apply ‘look-through’ provisions, where they consider the assets within a trust if the establishment of the trust was deemed to be a deliberate attempt to avoid asset testing for subsidies.

Five-Year Rule: If assets are transferred to a trust within five years of applying for a residential care subsidy, MSD may still consider those assets in their assessment. This is to prevent individuals from transferring assets to avoid paying for care.

Exemptions

Family Home

• Family Home Exemption: The family home is typically exempt from the asset test, provided it is occupied by the individual or their partner. If the home is placed into a trust, it may still retain its exempt status if it meets the necessary criteria.
  
  
• Trustee Occupation: If a family member continues to live in the home held by the trust, it may help maintain the property's exempt status.

Strategic Considerations

Planning Ahead: Individuals considering a trust for asset protection or estate planning should plan well ahead of applying for residential care subsidies. Timing and the structure of the trust can significantly influence eligibility.

RECOMMENDATION: It is crucial to seek legal and financial advice when setting up a trust, particularly with regards to residential care subsidies. This will ensure that the trust is structured in a way that aligns with the individual's long-term care needs and financial situation.

Conclusion

The effect of a trust on residential care subsidies in Aotearoa New Zealand can be substantial, influencing asset assessments and eligibility for financial support. While trusts can provide benefits such as asset protection, they must be set up carefully to avoid unintended consequences regarding subsidy eligibility. Consulting with legal and financial advisors is essential to navigate these complexities effectively.

Setting up a trust for the benefit of family members can be a valuable estate planning tool, offering various benefits such as asset protection and structured distribution of wealth. However, there are several key considerations to keep in mind to ensure the trust is effective and meets your goals. A trust can be created during a person's lifetime or in their will. 

Also a reminder than while we may use the term ‘family trust’ in this resource, the term in fact has no legal standing.  A family trust is just one form of express or discretionary trust, and nothing official in the law.

Things to think about

The main things you need to consider when setting up a trust for the benefit of family members include:

Beneficiaries

The trust deed should clearly state who the beneficiaries are. The trustees usually have discretion over which beneficiaries receive capital and income. 

Trust purpose

Understand the purpose of the trust and who you want involved. 

Trust documents

Clearly outline the trust's purpose and all parties involved in the trust deed and memorandum of guidance. Clear documents are essential for the trust to run smoothly. 

Trust name

Choose a distinctive name for the trust to help differentiate it from your own assets.

Trustees

Think carefully about who, and how many, should be the trustees of your trust. Specifically consider the benefits of having an independent trustee. Legal firms often set up independent trustee companies to be able to provide this service. Lawyers and accountants also often fulfil this role. However, also carefully consider whether lawyers and accountants (or their independent trustee companies) are the best people to take on a trustee role, especially if one of the purposes of the trust is to support the needs of a disabled family member.  In these circumstances family members or family friends are more likely to understand the needs and best interests of the disabled family member.

Tax

Consider the tax advantages and disadvantages of having a trust. The main thing to be aware of is that accountants are likely to attribute income to the disabled person if they are on the lowest tax rate in the family. But this is not advisable if the person is dependent on a WINZ benefit as it creates a debt to the disabled person which WINZ sees as an asset, and this will get asset tested.  Seek advice from an expert in this area when establishing your trust.

Trustees' duties

Trustees have several compliance responsibilities and should have the skills to fulfil these as efficiently and effectively as possible. 

Trust dissolution

Consider the when, what, and how rules that you want to apply when the trust is to be wound up. 

Tax and accounting advice

When winding up the trust, trustees should get tax and accounting advice to ensure they don't trigger a tax liability. 

Important considerations 

Setting up a trust for the benefit of family members in Aotearoa New Zealand involves careful planning and consideration of various factors. By addressing these key considerations—type of trust, purpose, trustee selection, beneficiary designation, asset management, tax implications, legal compliance, review processes, and costs—you can create a trust that effectively meets your family's needs and protects your assets for future generations.

Type of Trust

• Discretionary Trust: This allows the trustee to decide how to distribute income and capital among beneficiaries. It's flexible but may lead to complexities in management.
• Fixed Trust: Beneficiaries have defined shares in the trust. This provides certainty but lacks flexibility.
• Express Trust: A common type of discretionary trust specifically designed to benefit family members.

Consideration: Choose the type of trust that aligns with your goals for asset distribution and management.

Purpose of the Trust

• Asset Protection: Determine if the primary purpose is to protect assets from creditors, relationship property claims, or to preserve wealth for future generations.
• Support Vulnerable Family Members: If you have dependents with special needs or minors, consider how the trust can provide ongoing support for their care.

Consideration: Clearly define the trust's purpose to guide its structure and administration.

Trustee Selection

• Choosing Trustees: Select trustworthy and capable individuals or institutions to serve as trustees. Consider their ability to manage investments and make decisions in the best interests of beneficiaries.
• Number of Trustees: It can be beneficial to have multiple trustees for checks and balances, but too many may complicate decision-making.

Consideration: Evaluate the skills, experience, and reliability of potential trustees.

Beneficiary Designation

• Identifying Beneficiaries: Clearly define who the beneficiaries are. This can include immediate family members, extended family, or even charities
• Distributions: Outline how and when beneficiaries will receive distributions. Consider whether they will receive income, capital, or both, and under what conditions.

Consideration: Specify the rights and entitlements of beneficiaries to avoid disputes.

Asset Transfer and Management

• Transferring Assets: Decide which assets will be placed into the trust. Consider real estate, investments, and personal property.
• Ongoing Management: Consider how the assets will be managed within the trust. This includes investment strategies and how income will be generated.

Consideration: Ensure a clear plan for asset management to preserve and grow trust assets.

Tax Implications

• Tax Treatment: Understand how income generated by trust assets will be taxed. Trusts in Aotearoa New Zealand can be taxed at a higher rate, and distributions to beneficiaries may have tax implications.
• GST and Other Taxes: If the trust holds business assets, consider the GST and other tax obligations that may arise.

Consideration: Consult with a tax advisor to understand the tax implications of your trust structure.

Legal Compliance and Documentation

• Trust Deed: Draft a comprehensive trust deed that outlines the terms and conditions of the trust, including powers of the trustee and rights of beneficiaries.
• Compliance with Laws: Ensure that the trust complies with New Zealand trust law and any relevant regulations, including the Trustee Act 1956.

Consideration: Engage legal professionals to ensure that the trust is established correctly and legally sound.

Review and Amendments

• Regular Reviews: Trusts should be reviewed regularly, especially when there are changes in family circumstances, financial situations, or legal regulations.
• Amendments: Consider how and when the trust can be amended. Discretionary trusts may offer more flexibility in this regard.

Consideration: Establish a process for reviewing the trust to ensure it remains aligned with your goals.

Costs and Fees

• Initial Setup Costs: Understand the costs associated with establishing the trust, including legal fees, accounting fees, and any registration fees.
• Ongoing Management Costs: Consider the ongoing costs of managing the trust, including trustee fees and accounting services.

Consideration: Budget for both initial and ongoing costs to ensure that the trust remains financially viable.

Conclusion

Setting up a trust for the benefit of family members involves careful planning and consideration of various factors. By addressing these key considerations—type of trust, purpose, trustee selection, beneficiary designation, asset management, tax implications, legal compliance, review processes, and costs—you can create a trust that effectively meets your family's needs and protects your assets for future generations. Consulting with legal and financial professionals is essential to navigate the complexities of trust law and ensure that the trust is structured appropriately.

You can set up a family trust before you die and just leave them inactive until your death. In your will you then leave assets to this trust and it can begin to operate. You can register an inactive trust with the IRD, and you would return a nil income in your IRD tax return. However, you need to notify the IRD again when the trust becomes active.

You can click on the links below to find out more:

IRD: Declare a trust or estate non-active

Non-active trusts and compliance

Winding up a trust in Aotearoa New Zealand involves the formal process of terminating the trust, distributing its assets to beneficiaries, and ensuring that all legal and administrative obligations are fulfilled. The process can vary depending on the type of trust and the terms outlined in the trust deed. Below is a detailed overview of the steps involved in winding up a trust under New Zealand law.

1. Review the Trust Deed

Understanding Terms: The first step is to review the trust deed to understand the specific provisions related to winding up the trust. The deed may outline the conditions under which the trust can be terminated and the process for doing so.

Conditions for Termination: Some trusts may automatically terminate after a specified period, upon the occurrence of a particular event, or at the discretion of the trustee.

2. Trustee Decision to Wind Up

Trustee Authority: If the trust deed allows, the trustees must formally decide to wind up the trust. This decision should be documented in writing and may require a resolution by the trustees.

Consultation: In some cases, trustees may need to consult beneficiaries before making the decision to wind up the trust, especially if the trust deed stipulates such a requirement.

3. Settling Trust Debts and Obligations

Paying Debts: Before distributing any remaining assets to beneficiaries, the trustees must ensure that all trust debts and obligations are settled. This includes paying any outstanding bills, taxes, or liabilities associated with the trust.

Example: If the trust holds property, any mortgage or property-related expenses must be paid off before the property can be distributed to beneficiaries.

4. Asset Distribution

Identifying Beneficiaries: The trustees must identify the beneficiaries entitled to receive distributions from the trust as per the trust deed.

Distributing Assets: Trustees will distribute the remaining assets to beneficiaries according to the terms of the trust deed. This may involve transferring property titles, distributing cash, or reallocating investments.

Example: If the trust holds various assets, the trustee may choose to liquidate those assets to provide cash distributions to beneficiaries or transfer specific assets directly to them.

5. Final Accounting and Reporting

Financial Records: Trustees must prepare a final accounting of the trust, detailing all transactions that occurred during the trust's existence, including income, expenses, and distributions made during the winding-up process.

Reporting to Beneficiaries: Beneficiaries should receive a clear report on the trust’s financial status and the distributions made. This transparency helps prevent disputes and ensures that beneficiaries are informed about their entitlements.

6. Dissolution of the Trust

Formal Dissolution: Once all assets have been distributed and obligations settled, the trustees will formally dissolve the trust. This may involve filing necessary notices or documentation with relevant authorities, though a formal dissolution process may not always be required.

Retention of Records: Trustees should retain records of the trust and the winding-up process for a specific period, as required by law or for future reference.

Legal and Tax Considerations

Tax Implications: Trustees should consider any tax implications associated with winding up the trust. This includes potential capital gains tax on the sale of assets or income tax on distributions to beneficiaries.

Professional Advice: It is advisable for trustees to seek legal and accounting advice during the winding-up process to ensure compliance with relevant laws and to address any tax or legal issues that may arise.

Dispute Resolution

Addressing Disputes: If disputes arise during the winding-up process, trustees may need to facilitate resolution among beneficiaries. In some cases, mediation or legal intervention may be necessary to resolve conflicts.

Conclusion

Winding up a trust in Aotearoa New Zealand requires careful planning and execution to ensure compliance with the trust deed and legal obligations. By following the steps outlined above—reviewing the trust deed, settling debts, distributing assets, and preparing final accounts—trustees can effectively navigate the dissolution process. Given the complexities involved, it is often beneficial for trustees to consult with legal and financial professionals to ensure a smooth and compliant winding-up procedure.

You can click on the link here to find out more: IRD: Cease a trust or estate

In Aotearoa New Zealand, trustees have specific duties and responsibilities under the law, primarily governed by the Trusts Act 2019 and common law principles. These duties are designed to ensure that trustees act in the best interests of the beneficiaries and manage the trust assets responsibly.

The Trusts Act 2019 in New Zealand clearly sets out two types of trustee duties: mandatory duties and default duties.

The key difference is that mandatory duties cannot be modified, restricted, or excluded by the terms of the trust deed. They are the fundamental, irreducible core obligations of any trustee. Default duties, on the other hand, apply unless the trust deed specifically states otherwise.

Here are the five mandatory duties of a trustee under the Trusts Act 2019:

1. Duty to know the terms of the trust (Section 23): A trustee must be familiar with and understand all the provisions and conditions laid out in the trust deed and any other documents that constitute the terms of the trust.
   
   
2. Duty to act in accordance with the terms of the trust (Section 24): A trustee must follow the instructions and rules set out in the trust deed when managing the trust property and making decisions.
   
   
3. Duty to act honestly and in good faith (Section 25): A trustee must always act with integrity, sincerity, and genuine intent for the trust's purposes, rather than for personal gain or malicious reasons.
   
   
4. Duty to act for the benefit of the beneficiaries or to further the permitted purpose of the trust (Section 26): All actions and decisions by a trustee must be made to benefit the beneficiaries (or, in the case of a purpose trust, to further that specific purpose). They must not use trust property for their own benefit.
   
   
5. Duty to exercise powers for a proper purpose (Section 27): Any power given to a trustee must be used for the specific reason it was granted, which is ultimately to further the purposes of the trust and benefit the beneficiaries, not for an ulterior motive.

These mandatory duties are the bedrock of trust law in Aotearoa New Zealand, ensuring that trustees uphold the core principles of trusteeship and protect the interests of the beneficiaries.

Conclusion

Trustees in Aotearoa New Zealand have significant responsibilities that require diligence, integrity, and skill. 

• Significant Responsibilities: The mandatory and default duties under the Trusts Act are extensive and demand careful attention. Trustees are managing assets for others, often over long periods.

• Diligence, Integrity, and Skill: These qualities are inherent in the ‘fiduciary’ nature of the trustee role. ‘Diligence’ relates to the duty to act with reasonable care (a key default duty), ‘integrity’ relates to honesty and good faith (a mandatory duty), and ‘skill’ relates to applying appropriate knowledge when managing assets.
  
  
• Fiduciary Duties: This is the core legal concept of trusteeship – acting in utmost good faith and loyalty to the beneficiaries. The mandatory and default duties are manifestations of these overarching fiduciary duties
  
  
• Default Duties:  In contrast to mandatory duties which cannot be changed, default duties are those general obligations imposed on trustees by the Trusts Act 2019 that apply unless the trust deed specifically states otherwise. These duties cover various aspects of trust administration, such as the duty to exercise reasonable care and skill, invest prudently, and act impartially among beneficiaries.

By adhering to their fiduciary duties and operating within the framework of the trust deed and relevant laws, trustees can effectively manage trust assets and ensure the best interests of the beneficiaries are upheld.

However, given the complexity of these duties, it is highly recommended for trustees to seek legal and financial advice to navigate their responsibilities effectively.

Specific trust management duties include: 

Managing the trust's assets

Trustees are responsible for holding and managing the trust's assets and property. 

• Investing the trust's assets 
• Insuring the trust's property

Distributing assets to beneficiaries

Trustees may distribute income and possibly capital according to the wishes of the settlor(s), and after considering the needs of the beneficiaries. Where a house is owned by a trust, the trustees may allow a beneficiary to live there, normally in exchange for a rent payment but this could also be by agreement that they pay rates, insurance and maintenance, or whatever is agreed and is allowed by the trust deed.

Trustees distribute assets to the beneficiaries named in the trust. For example, in a life interest trust, trustees must distribute income to the life tenant beneficiaries while preserving the capital for remaindermen.

Remaindermen are the individuals or entities who are entitled to receive the remaining assets of a trust after the termination of a life interest or other temporary interests. In simpler terms, they are the beneficiaries who will inherit the trust property once the current beneficiary's rights (such as those of a life tenant) end, usually upon their death.  They are the future beneficiaries of a trust, waiting to receive their share of the trust property after the current beneficiary's interest ends.

Example:  In a trust where a parent leaves assets to their spouse for their lifetime (the life tenant), the children of the parent would be the remaindermen. They will inherit the trust assets after the spouse passes away.

• Acting in the beneficiaries' best interest

Trustees must act honestly and in good faith, and act for the benefit of the beneficiaries. 

• Following the trust deed

Trustees must know the terms of the trust, as recorded in the trust deed, and act according to those terms. 

• Avoiding conflicts of interest

Trustees must avoid conflicts of interest and not profit from their acts as trustee. 

• Acting impartially

Trustees must act impartially and consider how they use their power. 

• Acting unanimously

Trustees must act unanimously unless the trust deed says otherwise. 

• Providing information to beneficiaries

Under the Trusts Act 2019, trustees have mandatory information obligations to beneficiaries. These obligations are structured around presumptions, meaning the law starts with the assumption that information will be provided, unless the trustees can show a good reason (based on specific factors) not to.

These obligations include:

Presumption to Provide ‘Basic Trust Information’ (Section 51):

• Trustees must actively and at reasonable intervals (e.g., at least annually) consider providing this information to every beneficiary.
• The ‘presumption’ here means the starting point is that this information should be given, and trustees need a valid reason to withhold it.
• This ‘basic trust information’ includes:
  • The fact that a person is a beneficiary of the trust.
  • The name and contact details of the current trustee(s).
  • Details of any changes in trustees (appointment, removal, retirement) as they occur.
  • The beneficiary's right to request a copy of the terms of the trust (the trust deed) or other trust information.
    
    

Presumption to Provide ‘Trust Information’ Upon Request (Section 52):

• If a beneficiary requests ‘trust information,’ trustees must provide it within a reasonable period.
• The ‘presumption’ in this case means if a beneficiary asks for specific information, the trustees are generally expected to provide it, and they would need a valid reason to refuse.
• ‘Trust information’ is broader and includes any information regarding:
  • The terms of the trust.
  • The administration of the trust.
  • The trust assets.
• This information must be reasonably necessary for the beneficiary to have to enable the trust to be enforced.
• Crucially, this does not include the trustees' reasons for their decisions.

Important Note on Presumptions: While there are strong presumptions to disclose, trustees can decide to withhold some or all of this information from particular beneficiaries after considering a specific set of factors (outlined in Section 53 of the Act). However, withholding basic information from all beneficiaries is only permitted in exceptional circumstances and for a limited time (generally no more than 12 months without High Court direction). The burden is on the trustee to justify withholding the information.

The Trusts Act 2019 specifies that an individual must have the legal capacity to perform the functions of a trustee. This means they must be able to understand the nature and implications of their role and make decisions accordingly.  Under the Act certain individuals and entities are prohibited from acting as trustees. These restrictions aim to ensure that trustees are competent, trustworthy, and capable of fulfilling their fiduciary duties effectively.

1. Minors

Individuals under the age of 18 years are not allowed to act as trustees. This is due to their lack of legal capacity to enter into contracts or manage financial responsibilities.

2. Insolvent Individuals

An undischarged bankrupt cannot be a trustee.  An undischarged bankrupt is an individual who has been declared bankrupt but has not yet completed the bankruptcy process. This status comes with significant financial restrictions, legal obligations, and implications for asset management.  This restriction is in place because of concerns a bankrupt individual may not be able to manage trust assets responsibly and could pose a risk to the trust's financial integrity.

3. Individuals who lack the capacity to perform the functions of a trustee

Individuals who are unable to manage their affairs due to mental incapacity, such as those with severe cognitive impairments, dementia, or other mental health conditions, may be deemed incapable of fulfilling the responsibilities of a trustee.  This restriction is to ensure that trustees are capable of understanding their duties and making sound decisions.

4. Insolvent Companies

If a corporate entity or trustee company is in liquidation or has been declared insolvent, it cannot act as a trustee. The financial stability of the trustee is crucial for the effective management of trust assets.

Interaction with the Trustee Companies Act 1967

The Trustee Companies Act 1967 continues to govern the specific operations of corporate trustees (trustee companies), including licensing and regulatory requirements. However, where the two Acts intersect, the provisions of the Trusts Act 2019 will apply to the administration of trusts, even if a corporate trustee is involved.

Conclusion

In summary, individuals and entities who cannot act as trustees in Aotearoa New Zealand law include minors, insolvent individuals and those lacking capacity. These restrictions are in place to ensure that trustees are capable of managing trust assets responsibly and in the best interests of the beneficiaries. If you are considering appointing a trustee, it is advisable to assess their eligibility carefully and consult legal professionals if necessary.

An independent trustee can be a person or entity that is not a beneficiary of the trust and is not entitled to its assets. This can include:

• Family friend

A close friend of the settlor may be able to act as an independent trustee. 

• Accountant

An accountant with knowledge of trust legislation can ensure the trust complies with the Trusts Act 2019. 

• Lawyer

A lawyer with knowledge of trust legislation can ensure the trust complies with the Trusts Act 2019. 

Transferring assets into a trust involves a legal process known as ’settling’ the trust. This process requires the settlor (the person creating the trust) to formally transfer ownership of their assets to the trust, which will then be managed by the trustees for the benefit of the beneficiaries. The process involves:

Establishing the Trust

Before transferring assets, the trust must be established. This typically involves:

1. Creating a Trust Deed

The trust deed is a legal document that outlines the terms and conditions of the trust, including the roles of the settlor(s), trustees, and beneficiaries, as well as the purpose of the trust.

2. Appointing Trustees

The settlor(s) designates one or more trustees who will manage the trust assets according to the trust deed.

3. Identifying the Assets

The settlor(s) needs to identify which assets they wish to transfer into the trust. These assets can include:

• Real Estate: This includes residential or commercial properties.
  
  
• Financial Assets: Bank accounts, stocks, bonds, and other investments.
  
  
• Personal Property: Items such as vehicles, artwork, and valuable collectibles.
  
  
• Business Interests: Shares in a business or ownership interests in partnerships.

Transferring Ownership of Assets

The actual transfer of ownership to the trust is often referred to as ’settling the trust.’ The process for transferring different types of assets varies:

• Real Estate: To transfer real estate into the trust, a title transfer must be executed. This involves:

• • Completing a Transfer of Land document, which must be signed by the settlor (as the current owner) and the trustee (as the new owner).

• • Lodging the completed transfer document with Land Information New Zealand (LINZ) to update the title records.

Example: If a homeowner wishes to place their property into a family trust, they would sign the necessary transfer documents, and the property title would be changed to reflect the trust as the new owner.

• Financial Assets

Account Transfers: For bank accounts or financial investments, the settlor(s) must contact their financial institution to initiate the transfer. This may involve completing specific forms required by the institution.

Example: If the settlor(s) wants to transfer shares in a company to the trust, they would need to complete a share transfer form and submit it to the relevant company registrar.

• Personal Property

Physical Transfer: For personal property, the settlor(s) can simply gift or transfer ownership to the trust. This may involve a written declaration of the transfer or a bill of sale for valuable items.

Example: If a settlor wants to give valuable artwork to the trust, they could draft a simple deed of gift stating that the artwork is now owned by the trust.

• Business Interests

Share Transfers: If the settlor(s) owns shares in a company, they will need to execute a share transfer agreement and notify the company of the transfer.

Documentation

Record Keeping: It’s essential to document all transfers clearly. This documentation should include:

• Copies of signed deeds, transfer documents, and any correspondence with financial institutions.

• Updated records showing that the assets are now owned by the trust.

Tax Considerations

Gift Duty: while New Zealand has no gift duty, transferring assets into a trust may have implications for tax purposes, particularly if there are capital gains or income generated from the transferred assets. Consulting with a tax advisor or legal professional is advisable to understand any potential tax impacts.

Conclusion

In summary, transferring assets into a trust in Aotearoa New Zealand involves establishing the trust through a trust deed, identifying the assets to be transferred, and executing the appropriate legal documents for each asset type. This process ensures that the assets are legally owned by the trust and managed by the trustees for the benefit of the beneficiaries. Proper documentation and consideration of any tax implications are essential to effectively manage the trust and protect the interests of all parties involved.

Remember all trust are operate in terms of the rules set out in the Trust Deed and no two trusts are the same. If you are considering setting up a trust and transferring assets, it is advisable to seek legal and financial advice to ensure compliance with all legal requirements. 

A Letter of Wishes is also known as a ‘Memorandum of Wishes’ or ‘Note for Guidance for Trustees’. 

It is a formal non-binding document that accompanies a trust deed or will, and expresses the intentions, preferences, and/or desires of the settlor(s) (the person/people who create the trust) or testator (the person who makes a will) regarding the management and distribution of their assets.

While a Letter of Wishes is not legally binding on the trustees or executors (meaning they are not legally compelled to follow its instructions), it provides invaluable guidance.  Trustees and executors are expected to give due consideration to these wishes when making discretionary decisions, as they illuminate the settlor's or testator's intent. They are generally unlikely to be ignored unless unusual circumstances arise that necessitate a deviation from the expressed wishes, such as unforeseen changes in beneficiaries' circumstances or market conditions.

Key Characteristics of a Letter of Wishes

Informal Nature

A letter of wishes is not a legally binding document and does not have the same formal requirements as a trust deed or a will. However, it should be clear and well-articulated to convey the settlor’s intentions effectively.

Guidance for Trustees or Executors

The primary purpose of a letter of wishes is to provide guidance to the trustees of a trust or executors of a will on how the settlor or testator would like their affairs to be managed and how assets should be distributed. This can be particularly helpful in complex family situations or where the trust or will may be open to interpretation.

Flexibility

Since it is not a legally binding document, a letter of wishes can be updated or changed at any time by the settlor or testator without the need for a formal legal process. This flexibility allows individuals to adapt their wishes to changing circumstances.

Common Contents of a Letter of Wishes

A letter of wishes may include various elements, such as:

Distribution Preferences

The letter can outline how the settlor or testator wishes their assets to be distributed among beneficiaries, especially in cases where specific items or amounts are intended for certain individuals.

Trustee Guidance

The letter can provide guidance on how the trustees should administer the trust, including investment strategies or specific considerations regarding particular beneficiaries.

Family Dynamics

It may address family dynamics or relationships, providing context that can help trustees or executors understand the settlor’s or testator’s intentions.

Personal Messages

A letter of wishes can include personal messages or sentiments for beneficiaries, which can help convey emotional significance and provide comfort.

Legal Considerations

While a letter of wishes is a useful tool, it is essential to understand that:

• Non-Binding: The letter is not legally enforceable, meaning trustees or executors are not obligated to follow the wishes expressed in it. However, it can influence their decision-making.
  
  
• Complementary Document: It should be used in conjunction with a formal trust deed or will, as it does not replace these legal documents. Proper legal documentation is necessary to ensure the wishes are executed according to the law.

Conclusion

In summary, a letter of wishes serves as an informal but valuable document that expresses the intentions and preferences of a settlor(s) or testator regarding the management and distribution of their assets. While it is not legally binding, it provides essential guidance to trustees and executors, helping them make decisions that reflect the settlor's or testator's desires. For individuals creating trusts or wills, drafting a letter of wishes can enhance clarity and communication regarding their intentions. It is advisable to consult with legal professionals when preparing a letter of wishes to ensure it aligns with the overall estate planning strategy.

For guidance on how to write a letter of wishes click here: How to Write a Letter of Wishes

In Aotearoa New Zealand, an independent trustee is a trustee who is not a beneficiary of a trust and is not entitled to share in the trust's assets. Trustees must act in the best interests of the beneficiaries. 

Trustees can be lawyers or accountants, but can also be a close family friend or other person. The trust deed sets out who and who cannot be a trustee. Some trust deeds may require an independent trustee. It is important to read the terms of the trust deed to determine whether an independent trustee is required.

While there is no legal requirement for a trust to have an independent trustee, they can be extremely beneficial: 

Interests of the vulnerable family member

An independent trustee can represent the best interests of the vulnerable family member after the settlor(s) have gone.

Transparency

An independent trustee can help ensure that the trust assets are managed properly, rather than being treated as personal assets. This can help prevent claims that the trust is a ‘sham’.

It can also help ensure the trust is transparent, and prevent other trustees with conflicts of interest from being able to act on them to the detriment of the beneficiaries.  Most of the trusts that are unwound by the Court are ones without independent trustees.

Impartiality

An independent trustee is more likely to be fair and equitable in their decisions because they don't benefit personally from the trust. 

Trust management and record keeping

An independent trustee can help ensure that proper procedures are followed and record keeping is completed. They can help ensure that the trust is operating as a trust, rather than as personal assets. 

Protection from claims

An independent trustee can also help protect the trust from claims a trust is a ‘sham’ by third parties or beneficiaries. 

A letter of wishes is important and valuable for several reasons, particularly in the context of estate planning and trust management. The following are some of the key benefits of having a letter of wishes:

Clarification of Intentions

A letter of wishes helps clarify the intentions of the settlor (in the context of a trust) or testator (in the context of a will), providing guidance on how they would like their assets managed and distributed. This can prevent misunderstandings and disputes among beneficiaries.

Example: If a settlor wishes for a trust fund to be used primarily for their grandchildren’s education, this intention can be explicitly stated in the letter, guiding the trustees in their decision-making.

Expression of Personal Values

The letter allows the settlor or testator to express their values, priorities, and hopes for their beneficiaries. This can provide comfort and context to the beneficiaries, helping them understand the motivations behind the decisions made in the formal legal documents.

Flexibility and Adaptability

Unlike wills or trust deeds, which require legal processes to amend, a letter of wishes can be easily updated or changed by the settlor(s) or testator at any time before their death. This flexibility allows individuals to adapt their wishes to changing circumstances, such as the birth of new grandchildren or changes in family dynamics.

Conflict Prevention

By clearly outlining wishes and preferences, a letter of wishes can help mitigate potential conflicts among beneficiaries. When beneficiaries understand the settlor's intentions, they are less likely to contest the provisions of the will or trust.

Example: A letter may clarify why certain beneficiaries received specific assets, helping to prevent feelings of preferential treatment or resentment.

Context for Decision-Making

A letter of wishes can provide context for trustees and executors when making decisions about the trust or estate. It can help them interpret the settlor's or testator's intentions and priorities, especially in ambiguous situations.

Addressing Special Circumstances

The letter can address specific needs or circumstances of beneficiaries that may not be covered in the formal legal documents. This can be especially important for beneficiaries with disabilities, special needs, or unique financial situations.

Example: A settlor may wish to specify that a portion of the trust funds should be reserved for a beneficiary's long-term care.

Emotional Support

A letter of wishes can convey personal messages to beneficiaries, offering emotional support and encouragement during difficult times. This can help beneficiaries feel connected to the settlor's values and intentions even after their passing.

Non-Binding Nature

Since a letter of wishes is not legally binding, it allows trustees or executors some leeway to adapt the wishes to practical considerations while still being guided by the settlor's intentions.

Conclusion

In summary, a letter of wishes is a valuable tool in estate planning and trust management, providing clarity, guidance, and context for the management of assets. It enhances communication between the settlor or testator and their beneficiaries, helps prevent disputes, and expresses personal values. By taking the time to create a well-considered letter of wishes, individuals can ensure that their intentions are understood and honoured, ultimately providing peace of mind for themselves and their loved ones. Consulting with legal professionals when drafting a letter of wishes can help optimise its effectiveness and alignment with overall estate planning goals.