Published: 25 November 2013
Pages: 21

Introduction

The recent decision of the NZ Court of Appeal in B v Chief Executive of the Ministry of Social Development¹ has caused some consternation. A number of lawyers have raised questions about this particularly in respect of potential liability and the need to notify insurers.

This paper will therefore look at:

(a) The background to the Court of Appeal decision and why lawyers may have advised clients to use trusts in this way;
(b) What the Court of Appeal actually decided;
(c) The likely consequences for individual clients;
(d) The extent of any risk/liability for lawyers; and
(e) The next steps you should be considering.

Before exploring what the Court of Appeal decided and the implications of that decision, it is useful to look first at the legislative background. We will not explore the legislation in detail, but will summarise the points that are significant for present purposes.

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¹ [2013] NZCA 410.

Course outline

• The Implications of B v Ministry of Social Development
• Gifting Arrangements – the legislation
  • Gifting limits
  • Gift duty
  • What is a couple?
  • Trust reversal
  • Deprivation of income
• The Court of Appeal Decision
  • Legislative provisions
  • Arguments by the applicant
  • Retrospective legislation?
• Different Circumstances, Different Outcomes
  • Parallel trusts
  • Estates and wills
• Lawyers’ Potential Liability
  • What advice was given?
  • Will your clients be affected?
  • Has there been any actual loss?
• What Should You Do Now?
  • Review your files
  • Send out a standard letter to clients who are affected
  • Should you notify your insurer?
  • How do you advise clients in future?