Is an inheritance relationship property
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RNZ
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susan.edmunds@rnz.co.nz
I'm about to receive an inheritance from a family member. I'm wondering, will this become relationship property?
My partner and I have been living together for three years, and I'm wondering whether he'll be entitled to half.
I spoke to Mark Henaghan, a law professor at the University of Auckland about this.
He says no, it won't automatically become relationship property, but there's a pretty big caveat to know about - if it gets intermingled with anything that is relationship property, it will.
That means, if you take your inheritance and use it to pay off the mortgage on the home you both live in - if you have one - it becomes relationship property.
If you want to keep it separate, you need to hold it in a separate account and use it for separate purposes.
Henaghan said, if you used it for something separate, but then your partner helped increase its value, they might then be entitled to a share of that increase.
Generally, relationship property is assets you've gained during the relationship, such as the family home and contents, even if one of you brought it into the relationship, your earnings through the period, your investments and non-personal debts.
Separate property refers to things like inheritances and gifts, heirlooms, taonga, property under a trust and property, apart from the family home, that was acquired before your relationship began.
If you have questions or think you might need a contracting-out agreement, which can be used to keep property separate, a lawyer will be able to help.
Is it better to get health insurance now or put the same amount of money aside each month into a manage fund to pay for your health needs as you age?
I asked my 78-year-old aunt, who has lots of health conditions and is now paying $10,000 a year for insurance, and she wishes she did the managed-fund thing. Health insurance seems to turn you down so easily and they won't touch you, if there's ACC involvement - the dilemma my mum is facing now with trying to get knee surgery.
At least a managed fund would give you freedom, but I guess it depends on your appetite for risk in the short term.
This is a really interesting question. I looked at the
cost of health insurance this week
and you're right, it gets dramatically more expensive as you get older and more likely to need it!
I can see why the managed-fund idea appeals, but I think there are a couple of problems with it too. You'd need to have a good idea of how much you want to have saved, which is probably quite hard to predict, particularly because the cost of treatments can change a lot, as technology improves and Government funding changes, among other things.
As you say, there is a risk that you'd need treatment before you'd built up enough money to pay for it.
It would also take a fair amount of discipline to stick to that as a separate savings and investment goal, especially when you're young and have competing financial needs.
Then, when you're older, it would require discipline again to keep the money aside for potential future health needs, when you might have other things you want to fund.
I asked Genesis Advice financial adviser Edward Glennie what he thought. He said health insurance made more sense.
"The problem is people might think they are putting money aside for their health needs, but the line can easily be blurred with somebody's income needs in retirement," he said. "Then, when they need to access the managed funds/investment to pay for an operation or medical treatment, the money might not be there.
"A better solution is to keep health insurance in place and just increase the annual excess. You could, say, make it $5000 and then perhaps put savings aside to cover the excess, when or if they need it.
"Having a managed fund is not really freedom, because unless you are extremely disciplined, the money might be used for something else.
"The only time I've seen someone do it was when they were extremely wealthy, when they have the money already to pay for any surgery.
They can afford to self-insure for their medical needs.
"Building up a meaningful capital base via managed funds for someone like your aunt, aged 78, would take too long and potentially leave her open to too much risk in order to generate the returns needed to pay for expensive surgery."
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