Rachel Withington
Associate
tel:072620455
mailto:rachel.withington@hobec.co.nz
Qualifications
- LLB, BMS, University of Waikato 2013
- Admitted to the Bar in New Zealand 2014
Contact
- DDI: +64 7 262 0455
- M: +64 27 507 5167
- E: rachel.withington@hobec.co.nz
Rachel is an Associate in our Property and Commercial team.
Rachel completed a Bachelor of Laws and Bachelor of Management Studies majoring in Economics at the University of Waikato in 2013. Rachel was admitted as a Barrister and Solicitor of the High Court in October 2014.
Rachel is experienced in working with private clients and their related entities and has expertise in a range of areas, including:
- Residential, commercial, rural and horticultural conveyancing.
- Commercial, rural and horticultural leasing.
- Asset protection, including trust establishment, trust management and trust wind ups.
- Estate and succession planning.
- Elder law, including occupation right agreements, residential care subsidies and loans, reverse mortgages and enduring powers of attorney.
- Financing.
Outside of work, Rachel enjoys spending time with her family and making the most of all that the Bay has to offer.
Rachel Withington's Expertise
Rachel Withington's News & Resources
Residential Care Subsidies
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.
Retirement Villages – Occupation Right Agreements FAQ’s
There are several things you need to have in place in order to move into a retirement village.
Residents need to have a valid Will and Enduring Powers of Attorney in relation to Property and Personal Care and Welfare.
Your solicitor will need to provide the village with copies of your Enduring Powers of Attorney prior to taking occupation of the unit.
Moving into a village will also involve signing an Occupation Right Agreement (ORA) with the retirement village. An ORA sets out the terms on which you can live in the village and the rights and obligations of both you and the village.
You will be required to pay an entry payment on settlement, being your purchase price to live in the Unit.
You will not own the unit like a freehold property, instead, you are given a right to occupy the unit and to use the village’s common areas.
Below we provide information to answer commonly asked questions around ORA’s.
What if my Trust is funding my entry payment?
Most villages don’t allow a Trust to be recorded as the licensee under the ORA.
If the entry payment is being funded by a Trust, there will need to be background documentation which records how those funds are being advanced, for example, by way of loan or by way of capital distribution.
If the Trust is advancing those funds by way of loan, Trustees need to consider the DMF and any additional charges that will be deducted by the operator on termination of the ORA and how that will be treated.
Most villages have a direction for payment on termination form that can be completed to record that on termination, the termination proceeds are to be paid to the Trust.
What if I change my mind?
Residents under every ORA have the benefit of a 15 working day cooling off period. Residents can terminate the ORA within 15 working days of signing it without having to give any reason. The DMF will not be charged where residents terminate under the cooling off period.
Some villages offer a 90-day money back guarantee. This guarantee allows residents to terminate the ORA within 90 days of the commencement date, if they are unhappy with their decision to move into the village or it does not meet their needs. The DMF will not be charged where residents terminate under the 90-day money back guarantee. Residents need to meet certain criteria to cancel under this right.
What is a deferred management fee (“DMF”)?
A DMF is the operators charge for managing and maintaining the village, your unit and the facilities.
The DMF is charged as a percentage of the entry payment up to a maximum 30%.
Some villages offer a choice in DMF at either 30% or 25% with the latter option having a higher entry price.
The DMF accrues over time, generally between the first 2 to 5 years of residency.
The DMF is charged on termination of the ORA, and is deducted from the monies owing to the outgoing resident.
What is a weekly village fee?
The weekly village fee is the resident’s share of the village outgoings which are payable by the operator.
Generally, the weekly village fee is charged monthly by direct debit.
Weekly village fees can be fixed, or subject to change. Generally, where a weekly village fee is subject to change, it is increased by the percentage change in CPI on 1 April in each year.
When the weekly village fee ceases to be payable differs between villages. Commonly, the weekly village fee ceases to be payable on the termination date of the ORA, provided the resident has vacated the unit and removed all of their possessions.
Will I incur any additional ongoing costs?
Separately to the weekly village fee, residents will be liable for all utility costs consumed in respect of the unit, such as electricity, gas, telephone, internet and in some cases water. Some villages purchase such utilities in bulk and build these costs into their weekly fees.
Where the unit is a serviced apartment, residents will also be liable for ongoing weekly service fees for services such as meals, laundry, cleaning etc.
Additional services charges for services such as hairdressing and podiatry, will be charged in addition to the regular fees.
What if I need a higher level of care?
Residents and their families should make enquiries as to what facilities or options are available for higher levels of care, such as serviced apartments, care suites and hospital/rest home facilities.
It is important to understand what terms apply to transfers within a village, for example, will you be charged a transfer fee and if so, how is this calculated.
Where a village offers care suites under an occupation right agreement, residents need to understand the DMF structure which will apply. Generally, where residents transfer from an independent living unit to a care suite, the DMF that has accrued under the independent living unit will not be applied to the care suite, and a second DMF will be charged on the care suite.
Often a DMF under a care suite will accrue at a faster rate, such as 12% in the first and second year of occupancy, and 6% in the third year. Some villages charge an initial % on the commencement date.
Can I terminate the agreement?
You can terminate an ORA at any time on giving the required notice and the ORA will terminate on your death or the death of the survivor of you (in the case of joint residents).
There are limited grounds on which the operator can terminate an ORA, such as where you can no longer live safely in the village, if you breach the terms of the ORA in a material way, if you cause any serious damage or distress to someone in the village, or you have permanently abandoned the unit.
When do I receive the money owing to me following termination?
Generally, residents will not receive the monies owing to them until the unit is re-licensed to a new resident, that resident has signed their ORA, the cooling off period has expired and they have settled their entry payment.
Some ORA’s provide that interest will be paid on the monies owing to a resident for the period from the date that is 6 months following the termination date until the date the resident is paid. Some ORA’s provide a village contribution rebate whereby the DMF starts accruing back/gets credited back if the unit hasn’t been re-licensed within 9 months.
If you are thinking of moving into a retirement home, contact Holland Beckett’s team for expert advice on ORA’s and planning for this phase of life.
Bright-line Tax Changes – What You Need To Know
It is a bright day for some property owners this July with the relaxing of the Bright-line Test requirement.
What is the Bright-line Test
The Bright-line test sets a out a timeframe where if a sale of a residential property occurs, the profit gained may count as income and therefore be taxable. However, some exceptions or rollover reliefs may apply that sidesteps the Bright-line rule.
The Bright-line Test Historically
From its inception in 2015, the Brightline test was set for a period of 2 years. A first amendment extended the period to 5 years if residential properties were purchased between 29 March 2018 and 26 March 2021. A further amendment was then made for residential properties purchased between 27 March 2021 and 30 June 2024 to have the Brightline period for 5 years for qualifying new builds or 10 years for other residential properties.
Bright-line Latest Changes
As of 1 July 2024, the Bright-line period is reduced back down to 2 years. So, residential properties sold on or after 1 July 2024 that is outside the 2-year period from when it was purchased will not be subject to the new Bright-line test. However, other tax obligations may still apply particularly to those who make a living out of buying and selling residential properties. Tax obligations may also apply if caught by the “intention test”, the idea being that if you buy a property with the intention of re-selling it to make a profit, you can be taxed.
Some Exceptions to the Bright-line Test
The Bright-line test does not apply if you are selling your main home. However, the main home must have been used “predominantly, for most of the time” during the period you own it.
The test also does not apply to residential properties transferred to the executors, administrators or beneficiaries of a deceased estate.
Rollover Relief
A rollover relief may also apply. This is when a transferee to whom the residential property is transferred is deemed to have acquired the residential property at the same time as when the transferor acquired the residential property.
Rollover reliefs may apply between transferors and transferees who are associated persons such as transfers between certain family members, some transfers of trust property, transfers of relationship property or transfers resulting from separations. However, the associated persons must have been associated for at least 2 years prior to the date of the transfer of residential property.
Conclusion
Only so much can be said in this article regarding the tax implications in selling a property. It is always prudent to seek legal and tax advice from a qualified professional when doing so. But at least the time frames for Bright-line which was resulting in profits from many rental property sales being taxed have been reduced from 1 July 2024. Please feel free to contact us for specific advice on your rental property sales.
Reverse Mortgages
A reverse mortgage is a loan for people over 60 years of age that allows them to access equity in their property in order to release cash to them.
We see plenty of clients that have benefitted from these loans in allowing them to e.g. fund necessary improvements or maintenance to their property to enable them to stay in their own home longer or for other purposes such as a more comfortable retirement in light of the increasing costs of living.
The key attraction of a reverse mortgage loan is that you don’t need to make regular repayments, and generally repayments can be made at any time without penalty. Instead, they service the interest every week, the interest is just added to the loan balance and accumulates. Your total loan is repayable upon what is commonly called a ‘payment event’, which is where you may sell your property, move into a retirement village or upon your death. There is a limited ability to transfer the loan to another property if you move.
Interest rates are generally higher than standard registered bank loans and borrowers need to understand the implications of these higher rates. In the current market, property values are not increasing as fast as they have in the past so the equity in your home could be depleted too fast given there are no increasing property values to offset losses.
Due to the accumulation of interest at a higher rate, if you wish to sell your house and purchase a new house, or move into a retirement village in future, this may be more difficult to achieve as the equity you have left in your property may have reduced to an insufficient sum necessary for the subsequent purchase.
Nevertheless, reverse mortgages can be an appropriate way of making funds available to you. The additional funds can support living expenses, healthcare costs or other needs. We are commonly instructed by banks to provide legal advice regarding these loans. Following our advice, our work involves discharging any existing mortgage, registering your new reverse mortgage and attending to any estate matters which may arise as part of our discussion.
If you require any legal assistance on a reverse mortgage, please get in touch.
I want to build in my backyard, now what?
Historically, it was very common for properties to have had some sort of “DIY” building works, whether it be a garden shed, out-house, tree house or internal renovations. These days, it feels like there is so much “red-tape” and cost that comes with doing building work on your land that is very hard to justify doing it (or doing it properly).
So, if you want to build your own shed or addition, this is what you should know:
It’s my land, can’t I just do what I want?
Unfortunately, no. There are rules in place regarding how you can and cannot use your land. This is set out in the relevant ‘District Plan’ prepared by your local council.
You may need to obtain a building or land use consent from the council. These consents give you permission to build a structure or use your land and its natural resources in a way that is not allowed as of right in the District Plan.
Do I need a building or resource consent?
This depends on what you want to do. Generally building consents will be required for any structural building work, new plumbing and drainage works, retaining walls or fences over a certain height or swimming pools. Land use consents, or resource consents, will normally be required for activities such as property development (including building additions or alterations), earthworks, or changes to use of natural resources (ie. water).
If you have engaged a builder or other professional, they will be able to tell you if you need a consent. You can also talk to your local council or look on the council’s website.
If I do need a consent, what do I need to do?
You will need to make an application to your local council. The council will decide whether to grant the consent or not, and may impose conditions on you. It can be a long and drawn out process.
If you have a builder, they will generally apply for any building consent on your behalf. If you need a resource consent and need assistance, our experienced team members can guide you through the process.
What if I need a consent and I don’t want to get one?
If you decide to undertake the work without the proper consent, you will need to be aware that you could later be required by the council to remove or modify the works undertaken. You should also be cautious if you later sell the property, so that the purchaser is not mistaken about it lawfulness of the addition/work.
Do I need to tell my insurance company?
You should talk to your insurance company before you undertake any major works, whether consent is required or not. Depending on your policy, your insurer may require you to obtain a short term construction policy, such as covering loss and damage to materials on site. They may also require documentation on completion, for example, certification from a qualified electrician that works were done to the proper standard.
Holland Beckett Law can help you to determine if your planned works need consent, or with the consenting process.
Changing the Trustees of your Trust
There is currently a Bill before Parliament that will amend many aspects of Trust Law contained in the Trustee Act of 1956. The amendments are likely to come into force in 2019. In anticipation of the overhaul of Trust Law it is a good time to consider whether the current trustees of your Trust are still the best people for the role.
There are various circumstances which may cause you to consider changing a trustee:
Change in Circumstances
A change in a trustee’s personal circumstances can have a direct impact on Trust management. For example, depending on how active your Trust is, a trustee moving overseas creates a geographical barrier that can transform into an administrative circus. With the increasing compliance obligations there are more and more documents for trustees to sign in accordance with specific witnessing requirements, so needing documents to be signed overseas is an added administration expense. In addition, having a trustee based outside of New Zealand can have significant tax implications.
Ageing Trustees
A trustee displaying early signs of dementia or another long-term medical illness should not be taken lightly. Trust Deeds typically direct that all decisions must be unanimous. If a trustee is deemed to have lost mental capacity then unanimous decisions are no longer possible. A mentally incapacitated trustee cannot sign any documentation, including Agreements for Sale and Purchase of Real Estate and even a Deed of Retirement of Trustee to enable them to be removed from Trust property. It is advisable to retire a trustee that falls into this category before they lose their mental capacity. Otherwise, an application to the Court is the only way in which you can remove the trustee and enable the Trust to continue to operate. This is a costly process that can take a number of months. It is important to note that while Enduring Powers of Attorney are very useful documents for dealing with a person’s affairs, they cannot be used for removing a trustee from a Trust.
Adult Beneficiaries
The beneficiaries of your Trust may be your children who are now adults. Perhaps it is suitable for a particular child or children to play a role in the administration of the Trust. It is common for settlors (holding the power of appointment of trustees) to appoint their adult children as replacement trustees in their Will if the Trust is to operate beyond their passing. However, involving your adult children in the Trust during your lifetime could be a beneficial learning experience and lighten the load on other trustees, rather than waiting until your death to thrust the new-found duty upon them.
Professional Trustees
A professional trustee’s retirement from accounting or law may be on the cards or you have moved your Trust’s affairs to a new firm. Appointing a new professional trustee or a trustee company could be a prudent change and is often easier to do while your existing independent trustee is still around and able to sign documents.
A change in trusteeship is usually formalised by a Deed of Retirement and Appointment of Trustees to be signed by the retiring, continuing and new trustees. Once the deed is signed, it can then be used as the base document to implement the change of ownership of the Trust’s assets. This could include real estate, shares and other investments. Bank accounts and insurance policies also have to be updated.
Changing the trustees of your Trust is not a two minute task, however, it is a process that enables the smooth operation of your Trust which ultimately benefits all involved. Holland Beckett can guide you through the process. Please do not hesitate to contact us if you have any queries.
Upcoming Changes in Trust Law
Trusts are a firmly established mechanism for protecting and managing assets in New Zealand. The upcoming changes in trust law are long overdue. However, such changes are also sure to call into question the country’s fixation with family trusts.
The Trusts Bill (“the Bill”) was introduced on 1 August 2017, following multiple reviews conducted by the Law Commission, which branded the Trustee Act 1956 (“the Act”) as out-dated and inaccessible. The Bill is to replace this Act and also the Perpetuities Act 1964. It is intended to make trust law more manageable by clarifying the key features of a trust, outlining trustees\' powers and obligations and streamlining administration processes.
The Bill outlines 5 mandatory trustee duties which cannot be negated by the terms of a trust. Trustees will have the duty to know and act in accordance with the terms of the trust, act honestly and in good faith, act for the benefit of beneficiaries or to further the purpose of the trust, and to exercise their powers for proper use.
The Bill also establishes 10 default trustee duties which must be performed by a trustee unless modified or excluded by the terms of the trust. These default duties largely reflect the current law. Both classes of duties will provide trustees with a clear understanding of their role and aid in beneficiaries holding trustees accountable for their actions, omissions and decisions.
Trustees will have to come to terms with disclosure requirements in favour of beneficiaries; a courtesy many beneficiaries are not afforded today. Part 3 of the Bill incorporates the presumption that basic information in relation to the trust’s affairs must be provided to beneficiaries. The provisions specify core documents which must be kept and for how long and the factors to be considered when determining what information should be shared or withheld.
Part 4 of the Bill contains provisions concerning trustees\' powers and indemnities. Trustees\' powers are currently minimal and scattered throughout the Act. The powers under the Bill are clear and flexible; providing trustees with more discretion in managing, investing and distributing trust property.
In some aspects, the Bill endeavours to make trust administration easier and inexpensive. For example, costs are to be minimised through no longer having to apply to the court for straightforward or contested changes of trustee appointments. The High Court will still have jurisdiction to review a trustee’s act, omission or decision, extend a trustee’s powers and give orders. However, alternative dispute resolution is encouraged throughout the Bill.
Whilst the Bill will undoubtedly modernise a considerably out of date piece of legislation, the focus on trustees\' mandatory and default duties, together with the new beneficiary disclosure requirements, will impose greater compliance obligations on trustees. The additional costs of compliance may cause some to question if the administrative hassle begins to outweigh the actual benefit of keeping or forming a family trust in certain circumstances.
The Bill has yet to have its first reading, so it is crucial that settlors and trustees of existing trusts continue to be aware of the proposed changes outlined above in anticipation of the changes coming into force.
Please do not hesitate to contact us if you have any queries.
This article was written for First Mortgage Trust.