Spring 2013 Newsletter

Estate Planning – Residential Care Loans

One of the most vexing questions that we face as we get older is how we will provide for ourselves into our retirement. This necessarily includes planning to ensure that we have sufficient funds to meet our costs in the event that we are placed into long-term residential care or a rest home. In order to determine how much we will have to contribute to the costs of long term residential care, we need to be aware of the maximum asset threshold, above which we will no longer be eligible for a residential care subsidy (‘the Subsidy’).

The Subsidy

The threshold is reassessed on 1 July each year. From 1 July 2013 the threshold has been set at $215,132 for single people or for couples who are both in residential care. For a couple where only one of whom is in residential care the threshold is $117,811, when the value of the home and car is excluded, or where combined total assets exceeds $215,132. Couples can only elect to have their assets excluded from the assessment where it is the principal residence of either a dependent child or the spouse or partner, who is not in residential care.

In assessing the eligibility for the Subsidy, Work and Income New Zealand (‘WINZ’) may include in your assets any gifts that you have made of more than $6,000 per annum over the preceding five years. WINZ may also include in your assets any one off gifts of over $27,000 per couple made prior to the five year period immediately preceding the application being made.

For those people who have assets above the maximum threshold and accordingly do not qualify for the Subsidy, WINZ offer a residential care loan scheme (‘the Loan’).

 The Loan

The Loan is interest free and secured by a caveat registered over the borrower’s home. This caveat prevents the property being sold until the debt owed to WINZ has been repaid in full.

You can apply for a reassessment of your eligibility for the Subsidy when your assets have decreased below that maximum threshold for the Subsidy.

The Loan can be drawn down at the rate of the maximum contribution towards residential care costs. From 1 July 2013 the maximum contribution ranges from $819 to $900 per week depending on where you reside. This equates to between $42,588 and $46,800 for each 12 month period spent in residential care, while you remain ineligible for the Subsidy.

The Loan has to be repaid either within six months of the death of the borrower or when the home is sold, whichever comes first.

Given the modest threshold above which a person is not eligible for the Subsidy and the high weekly costs of the maximum contribution it is imperative that planning for retirement and asset protection begins as early as possible.


Going into Business – an Overview of Why You Need a Shareholders’ Agreement

A Shareholders’ Agreement is a contract between the shareholders of a company. While it is not compulsory, a Shareholders’ Agreement is good way to provide some certainty in a business relationship, and can be as detailed or as simple as you would like. Without one, you risk a dispute at some point down the track when each shareholder has a different idea of who can do what, when they can do it and how it is done. Like a pre-nuptial agreement – you do not really need one, until you need one (at which time it is too late). Shareholders’ Agreements are also popular because unlike a Constitution, they are not registered with the Companies Office, so they are not publicly available.

Typically a Shareholders’ Agreement is signed at the outset of a business arrangement, but it is never too late – they can be entered into at any time with the agreement of the shareholders. It will usually record (amongst other things):

Are you compatible with the other shareholders?

Perhaps the most important role of a Shareholders’ Agreement is to ensure the parties are on the same page from the outset. When preparing the agreement the parties will need to consider how the business will operate. Can you agree on the role each party will have, who will provide security for company finance or what should happen if one party does not meet their obligations? If you cannot agree now, you will find it hard to agree later.

What are my shares worth?

The Companies Act does not prescribe how shares should be valued if one party wants out, and it is not always as simple as you may think. It can be notoriously hard to agree on a timeframe, process, and the value of the shares when one party is exiting the company. Many Shareholders’ Agreements will record the agreed process for when one party wants to sell their shares, reducing uncertainty and the risk of dispute.

How much control will each party have?

Shareholders own the company, while the directors manage the company. A Shareholders’ Agreement can record who can appoint directors, and what decisions the directors can make without reference to the shareholders. You might agree for example that some decisions need the approval of all shareholders, while others need a majority of shareholders, or can be made unilaterally by just one director.

Removing a shareholder / director

Your Shareholders’ Agreement might record different circumstances in which a shareholder or director can be removed. For example, if a shareholder or director has breached an essential term of the Shareholders’ Agreement, acted dishonestly or in a way that is detrimental to the business, they can be removed. This can be easier than relying on the provisions of the Companies Act, which can be limited.



Warmer Weather Ahead

Spring is here and the weather is finally warming up.  Sarah’s daughter, Rory has been visiting Roland’s Wood and having fun playing amongst the bluebells.

Walking Stars

The Cancer Society is having a fundraiser night time half marathon in Auckland on 30 November starting with a street party at 7.00pm, followed by the walk (finishing by 2.00am) during which a torch is carried in remembrance of those affected by cancer.  This event is known as “walking stars”.

The route takes walkers around some of the city landmarks.  The target is for each team to raise approx. $150.00 per head.

There are twelve women participating in the walk from Curves, Kerikeri, including Judith Graham from our office.  The team is fundraising including promoting the premiere of the movie “About Time” on 23 October and raffles.  People can also make donations online in sponsorship of their team by going to walkingstars.everydayhero.com/nz/sonya.  You can also visit the “Walking Stars” website to make a donation.

New World Mini’s

Most of you will know or have heard about the New World minis craze.  The miniature grocery items have been a very successful marketing campaign for New World with full sets being listed on Trade Me with starting bids of $160.00.

One of our own staff members has been busy trying to collect a full set by swapping the minis not needed for ones required on facebook, even though she is doing this to collect a full set for a friends grandchildren she does seem rather excited about it.

QR Code

You may have seen these around, we now have our own.  Feel free to give it a try.


All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter.  It is recommended that clients should consult a senior representative of the firm before acting upon this information.

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