Forward Fifty: September 28, 2017

Law/puzzLes | 9
Property ownership issues
EXERCISE THE MIND
For many New Zealanders, their home is
their biggest asset so it’s worth taking some
time to think about the way you own your
home.
There are two common legal forms of
property ownership in New Zealand. A
majority of couples own their properties as
joint tenants. The significant feature of this
form of ownership is that on the death of
the first spouse, the property automatically
passes to the survivor by way of a rule of
law known as Survivorship. It doesn’t matter
what’s in your Will, your surviving partner
will take the entire property in his or her
own name.
The second common form of legal
ownership where two (or more) people
own property together is as tenants
in common. Quite simply, this form of
ownership allows for property to be
owned in distinct shares – most commonly
as tenants in common in equal shares.
Significantly, the rule of survivorship does
not apply and as a consequence what
happens to your share of the property on
your death depends entirely on what you
state in your Will.
Life Interest Will
If property is as tenants in common, you
are free to leave your share of the property
as you choose in your Will. Often, a couple
will leave a Life Interest in their share of the
property to their spouse or partner. This is
called a Life Interest Will.
A Life Interest Will leaves your share
of the property to your Executor(s) /
Trustee(s) with instructions that they
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allow your spouse or partner to live in the
property for the remainder of his or her
lifetime. Upon the ultimate death of the
survivor, your share of the property then
goes to the final or residuary beneficiaries
of your Will.
Residential Care Subsidies
As discussed above, if property is
owned as joint tenants, on the death of
the first spouse or partner, the whole
property passes to the survivor. Should the
surviving spouse or partner require longterm
residential care at a later date, they
will have to meet the Ministry of Social
Development’s (the ‘Ministry’s’) criteria
before qualifying for a Residential Care
Subsidy.
Under current Ministry policy, only the
income from a life interest is assessed in an
application for a Residential Care Subsidy.
There are strong anti-deprivation clauses
in the Social Security Act 1964. Any decision
to place your home into a tenants in
common structure must be for legitimate
estate planning purposes and not as a device
to qualify for a Residential Care Subsidy.
Changing the way you own your home must
also be done in conjunction with the rules
and regulations set in place by the Ministry.
As with all areas of law, it is important
that you seek good advice from a team who
understand how this area may impact on
you. At Harmans we have experience dealing
with estate planning strategies. Give Fleur
McDonald a call on 03 352 2293 to arrange
an appointment to discuss your situation.
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