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It is common for parents to help children financially - whether it is a deposit for a first home, help with debt, or business support. However, when that money changes hands, it is important to be clear: was it a gift or a loan? This simple distinction can have significant legal and financial consequences, especially when it comes to estate planning. What is a Gift? A gift is a transfer of money or property made with no expectation of repayment. In legal terms, once given, the money no longer belongs to the giver. Key features of a gift: It is unconditional. There is no written or implied agreement for repayment. The recipient is free to use it however they like. It can affect future Family Protection or Relationship Property claims. It can affect the ability to qualify for residential care subsidy or other Government support. Family Relationships Care needs to be taken where you are gifting money to your child and their partner, such as to help them into a property. Should that relationship break down, the partner would not necessarily be required to pay back any portion of the gift, therefore walking away with half of the gifted money. Dealing with banks If you are taking out a mortgage or loan with a bank, gifting certificates are often required where a family member is advancing a portion of the purchase price. This is so the bank isn’t in competition with anyone to get their money back should the bank loan end up in default. There are ways to record this on terms acceptable to the bank, while also protecting the advance. The document needs to be worded in such a way that doesn’t impede on the banks rights to be “first in line”. Estate implications If you have made significant gifts during your lifetime, this can reduce the assets available in your estate. If you give more to one child than another, it could cause disputes or be challenged under the Family Protection Act 1955 by children who believe they have not been adequately provided for. What is a Loan? A loan, by contrast, is money given with the expectation it will be paid back, either on demand or on agreed terms. Key features of a loan: It may be interest-free or interest-bearing. There is usually some record of it (e.g. a loan agreement or promissory note). It may be repayable on death or earlier. It can be secured (e.g. against property) or unsecured. Better protection A loan provides protection in the scenario where you are advancing money to your child and their partner. If this relationship later breaks down, you can “call up” the loan and have this paid back. You can then re-lend the money to your child once the separation is complete for another purchase, if you choose to. However, as noted above, when banks are involved they will usually not allow a loan with interest or a specified repayment date, as this can affect the banks priority if the loan is defaulted. Estate implications A properly documented loan becomes an asset of your estate. Your executors can call the loan in after your death. This is especially useful if you want the amount to be eventually divided fairly among all children but are happy for one child to have the benefit of it in the meantime. Beware of time limits under the Limitation Act 2010 If a loan is not properly documented, or if there is no clear date or mechanism for repayment (such as being repayable “on demand”), you run the risk that the loan becomes unenforceable over time. Under the Limitation Act, the right to enforce a debt usually expires six years after the cause of action arises. If the loan is repayable on demand, that six-year period may begin as soon as the money is transferred - unless otherwise specified. To protect your estate, it is important that any loan agreement includes clear repayment terms and triggers for demand, to ensure it remains recoverable. Why the Difference Matters Failing to document whether financial support was a gift or a loan can lead to: Disputes between siblings over whether the recipient should get more than others. Relationship Property claims, especially if a child separates and their partner claims half of what was received. Unintended tax or trust consequences, if the money was meant to be protected. Expired claims, if the estate cannot legally recover the loan due to limitation periods. How to Protect Your Intentions Document it clearly: Use a deed of gift or a formal loan agreement. This helps your family and your executors understand your intentions. Include repayment terms: Clearly outline when the loan is due, how it can be demanded, and what triggers repayment - this avoids limitation issues. Consider your Will: Your gifting or lending decisions can affect what is in your estate - make sure your Will aligns. Talk to a lawyer: A small amount of advice now can save thousands in legal fees (and family stress) later. Whether you are helping your children financially now or planning for what happens after you are gone, be clear about your intentions. A well-planned estate not only protects your assets but also your family relationships. If you are unsure whether past financial help was a gift or a loan - or you want to formalise it - talk to the Holland Beckett Succession and Estates team. This article was first published for First Mortgage Trust, July 2025 newsletter.

With interest rates beginning to drop now might be a good time to consider replacing your current financial provider. When you refinance you are taking out a new loan and using this to repay your existing loan. Here’s a rundown of key factors to keep in mind before making the switch: Lawyers Most banks will require you to have a lawyer to help you through this process. They will liaise with your current bank advising them of your intent to refinance, advise you on your new loan contract, receive your new loan funds and use those funds to repay your current loan. They will also ensure the existing mortgage (i.e. the instrument registered on your property’s title) is properly discharged and register the new mortgage on your property’s title. They also advise on any legal risks or obligations associated with the refinance. It is important to involve your lawyer at the start of the refinancing process so that they can ensure that everything runs smoothly. Compare rates and consider break fees Look at the interest rates offered by the new bank versus your current one. Take into account break fees - if you are refinancing during a fixed term under your current mortgage you may be liable to pay break fees. Break fees, also known as early repayment charges, are penalties that lenders charge borrowers when they repay a fixed-rate mortgage early or refinance to a new lender before the end of the borrower’s fixed interest rate term. You should get in touch with your current bank to see how much these may be. It is important that you have borrowed sufficient funds to repay all lending as well as any break fees. Cash contribution You should negotiate a cash contribution or a cash back. This is a special incentive that banks offer for switching to them and is essentially a reward or bonus for choosing them, the idea being that it often reduces your out-of-pocket-expenses. Most banks will offer a lump-sum payment of 0.8% - 0.9% of your total lending which is paid directly to your bank account after settlement. You generally do not have to pay back the cash contribution as long as you meet the terms and conditions of the loan offer, like keeping the account open for a certain period of time, typically a minimum of 3 years. However, if, for example, you refinance to another bank within that period you will most likely need to repay the cash contribution on a pro rata basis. Insurance Your new lender will need to be noted on your insurance certificate. Some banks also have specific requirements around insurance, so it is important that you check with your insurance company that your current policy is sufficient. Security Your lawyer will need to know if there are any existing guarantees or other securities which will need to be released and or discharged with your current bank. Banks do not automatically release these or bring them to your attention once lending has been repaid. If your new lending involves a company or a trust additional legal advice may be required.

If you are approaching or have already reached 65 years and think you may require long-term residential care, did you know you may be entitled to a residential care subsidy? What is the average cost of residential care in NZ per annum? This annual cost of residential care varies based on a range of factors such as location, level of care and accommodation type. Health New Zealand – Te Whatu Ora sets a maximum contribution for reach region, being the highest amount a resident can be charged for standard care. Currently in Tauranga the maximum contribution is approximately $1,294.86 per week. What is a Residential Care Subsidy (“RCS”)? A RCS covers the difference between the actual cost of care and the applicant’s assessed contribution towards the care costs. The RCS is paid directly to the care facility by Health New Zealand – Te Whatu Ora. The subsidy covers the cost of standard residential care costs only, such as accommodation in a standard room, daily living assistance, nursing, prescribed subsidised medications, and routine GP visit. It is important to highlight that the subsidy does not cover premium accommodation charges for features such as private ensuites or superior views. An asset and income assessment is carried out to decide whether you are in a position to pay for yourcare yourself, and if not, your residential care subsidy entitlement. What is the asset assessment for a RCS? If you\'re 50-64 and single with no dependent children, you automatically meet the asset test. If you’re 65 or older, the asset limit for individuals or couples where you are both in care is $284,636 or less. If you’re 65 or older, and you have a partner who is not in long-term residential care you have two asset limit options: $155,873 or less, if you don\'t want to include the value of your house and car; or $284,636 or less, if you do want to include the value of your house and car. What is the income assessment for a RCS? An income assessment will be carried out to determine the applicant’s contribution towards the cost of care. For the purposes of the income assessment, income includes: NZ Super, Veteran\'s Pension or any other benefit. 50% of private superannuation payments. 50% of life insurance annuities. Overseas Government pensions. Contributions from relatives. Earnings from interest and bank accounts. Investments, business or employment. Income or payments from a trust or estate. The following is note included as income: Any money your partner has earned through work. A War Disablement Pension from New Zealand or any other Commonwealth country. Income from assets when the income is under: $1,236 a year for single people $2,472 a year for a couple when both have been assessed as needing care $3,707 a year for a couple where one partner has been assessed as needing care. Can I gift assets in advance of moving into residential care? You can gift assets to, say, family, friends, charity – but only up to a point. There are two allowable gifting limits: 1. Gifts made within the 5 year period: You are allowed to gift up to $8,000 of assets per couple per year in the last 5 years from when you apply for a RCS. This is a total of $40,000 of assets over the 5 year period with some spreading permissible during this period. If you and your partner apply for a RCS at the same time, this amount will double to $80,000. 2. Gifts made outside of the 5 year period: You are allowed to gift up to $27,000 of assets per couple per year outside of the 5 year period. It is important to note that before gift duty was abolished in 2011, the allowable gifting threshold which applied in the context of gift duty was $27,000 per person per year. This does not align with allowable gifting in the context of RCS and can often catch applicants out. Any gifting in excess of these limits will be considered as deprivation of assets. In addition, interest not charged on outstanding debts can be capitalised when assessing eligibility for a RCS as part of the financial means assessment. Will I be eligible for a RCS if I have a Trust? Whether you are eligible for a RCS when you have a Trust will depend on your gifting history. There is an expectation that trusts will voluntarily assist with long-term care costs. Where there is a closely held family trust with a history of providing for an applicant, trust income must be assumed to be available unless there are particular circumstances that demonstrate it is not. Will I get to retain any of my pension? If you are successful in applying for a RCS, a majority of your pension (or other NZ Superannuation or benefit) will be applied to their care costs. You will retain a personal allowance of $56.58 per week. In addition, you will receive an annual clothing allowance of $354.89 which is paid on 1 April in each year. Residential Care Loans What options do I have if I am unsuccessful in applying for a RCS? Where an applicant is unsuccessful in applying for the RCS, they can consider a Residential Care Loan (“RCL”). A RCL is an agreement with the Crown to provide a loan for the cost of an applicants care. To be eligible for a RCL, the applicant must own a property with an unencumbered title. A caveat will be registered against the property’s title which secures the loan. The RCL will be paid on the earlier of: The sale of the property; or Within 12 months of the date of the applicant’s death. Figures are assessed and updated annually on 1 July. These limits are accurate at June 2025.