I would think about it as a retirement fund, which would immediately benefit you because you would no longer have to save as much for that purpose (keeping the KiwiSaver contributions going, of course, to the extent they are matched by your employer or Government).
The original writer should of course get legal advice of her own. And I am absolutely sure she would rather have her mum around!
A: You make a really good point about keeping at least part of an inheritance separate.
Last week’s correspondent, who is 22, said, “I would love to buy another house with my boyfriend late in my 20s, I want to travel and live overseas once my masters is completed, and I want to have financial freedom to not work throughout motherhood in my 30s.”
So it sounds as if she plans to mingle her inheritance with her boyfriend’s money. And it’s probably fair to assume she would expect their relationship to last forever.
However, Stats NZ says, “Around one in every 20 marriages ends in divorce within five years, while one in every three marriages ends in divorce by the 25th wedding anniversary.” And I expect the break-up rate is higher for those who live together but don’t marry.
We all think, “That won’t be us” at the start. But nobody knows what the future holds.
Under NZ law, if you are married, in a civil union or in a de facto relationship for more than three years, and the relationship ends, the Property (Relationships) Act applies, says the NZ Law Society.
“The PRA presumes that each partner contributes equally to their relationship, even though that may be in different ways, and it aims to provide a just division (almost always equal) of the relationship property when the relationship ends, taking into account the interests of any children involved.”
When you first inherit money or assets, it is separate property – but only if it’s not “intermingled” with relationship property. Intermingling happens if you use inherited money to buy assets used in a relationship, such as a house, or you reduce the mortgage on your house, or you put the money in a joint bank account, or similar.
To avoid intermingling, you can invest the money in your own name. Or you and your partner can enter into a contracting-out agreement, or pre-nup – either before or during the relationship – that could specify that at least some of your inheritance stays out of the relationship pool.
The tricky part is asking your partner to do this early in a relationship. Nobody wants to acknowledge that it may not last. And if you wait until you start having doubts, your partner may well refuse to come to an agreement at that stage – especially one that could make them worse off if you separate.
Last week’s correspondent should discuss her situation with a lawyer – perhaps using some of the inheritance to pay the fee. Then she can say the lawyer “made” her set things up with her boyfriend in a way that keeps at least some of her inheritance in her own hands – just in case.
Retirement village the answer? …
Q: Just a suggestion to the 80-year-old lady with a $200,000 mortgage in last week’s column. Sell her house, and pay off the mortgage and debt.
With the remaining money, buy a modest apartment in a retirement village. I did this four years ago, and can manage all my living costs well on my single NZ pension.
Weekly fees remain the same for the rest of my life, no maintenance, no rate increases, no worries, security, and lots of fun and laughter with fellow residents! The best thing I ever did!
A: Retirement villages certainly work well for some people – as long as you go in with your eyes open about the financial situation. Generally, the kids don’t inherit as much as they otherwise would have, but I think that’s fair enough.
For a slightly more nuanced view on retirement villages, read on.
… Although
Q: Last week you said, “…a retired couple would be more desirable tenants and therefore more able to negotiate a longer lease than younger people.”
Ha, Mary, you made me laugh, especially in the context of your other comment: “Gosh, life at your place doesn’t sound quite as much fun as the retirement village ads suggest.”
No one gets into some retirement villages unless they are at least 70, and the older you are when you enter, the sooner you’ll be gone. The whole premise of the retirement village industry is based on life expectancy and turnover.
It’s an actuarial game. The retirement villages filling up the Herald with full-page ads – sometimes even displacing ol’ Harvey Norman – are selling the dream of a prolonged healthy life, but as my neighbour says, “we wouldn’t be here if there wasn’t something wrong with us”.
Disclosure: I’m 85, and in a retirement village, where we don’t just live in houses or units or flats, rather Villas. Capital V. (Sotto voce: I bought the dream. How’s that working out?). For all of that, we do manage to laugh a lot.
A: Keep up that laughter!
What is wrong?
Q: My question is – why are so many New Zealanders complete and absolute failures financially and in their lives generally? What is wrong with us as a country that so many don’t have any resources and are dependent on the state?
The “cradle to the grave” mentality seems to have turned many of us into losers, only able to blame others and to put our hands out – I mean, start a Give A Little page.
Just look at the numbers on benefits of all types. Look at the very low KiwiSaver average balance. Look at the number of retirees dependent on NZ Super. Etc. I look forward to hearing your views on the subject.
A: Firstly, I’ve got a question for you: why are so many New Zealanders living good, productive lives, supporting and contributing to others, and making this a great country to live in?
Of course there are some who struggle, for all sorts of reasons. But in my experience very few people don’t try when they are strong enough to try – perhaps with the help of the state. And then, down the track a bit, they may be able to join the lucky ones.
A friend of mine, a criminal lawyer, tells me sometimes about the backgrounds of people she represents in court. If you lived through their circumstances – from being born with handicaps to growing up with abuse to living through adulthood with none of the resources many of us take for granted – I wonder how well you would do.
In a poem originally titled Judge Softly, written in 1895, American suffragist, author and preacher Mary Lathrap says, in part:
“Pray, don’t find fault with the man that limps, Or stumbles along the road. Unless you have worn the moccasins he wears, Or stumbled beneath the same load.
There may be tears in his soles that hurt, Though hidden away from view. The burden he bears placed on your back, May cause you to stumble and fall, too.
Don’t sneer at the man who is down today, Unless you have felt the same blow, That caused his fall, or felt the shame, That only the fallen know.”
The poem concludes, “Take the time to walk a mile in his moccasins,” a phrase that some say originated with Native Americans.
It’s hardly great poetry. But the ideas are worth thinking about.
See you later
Q: Just a quick note to say thank you for your columns in the NZ Herald. I have recently subscribed to the premium reader subscription, so I have been going like the clappers to catch up on your past letters etc.
I enjoy your responses, often with little bits of humour chucked in for amusement – and your advice and reasoning is always 100% understood. Thank you.
I just read the letter in your July 5 column titled “Biased and socialist?” I thoroughly enjoyed your response and I silently hoped the person who wrote the letter has the good fortune to stumble upon hard times and learns a thing or two about charity and humanity – or that he meets someone who has to work two or three jobs just to feed his family, keep a roof over their heads, keep warm, have food, clothing and an ability to still help others.
Enough of my prattling. Again, thank you.
A: Thanks for a heartwarming letter. I receive quite a few like it, but don’t usually run them in the column. Still, it seems appropriate to include one at Christmas time!
The person who wrote the July letter you refer to was very unhappy with some of my comments in the column, which he saw as biased and “somewhat socialist”. He was also angry with the media in general, politicians, and a “left-biased judiciary and universities”.
What’s more, “We now have so many on a benefit in NZ (including NZ Super) that we have become unproductive as a nation.”
In your hope for the man, I note you write of “the good fortune to stumble upon hard times.” Interesting. It’s certainly true that a life with no challenges is dull. He might find Mary Lathrap’s poem enlightening.
This column is taking a break until January 31. But in the meantime, the Business Herald will run some excerpts from the updated version of my No 1 bestselling book Rich Enough? A laid-back guide for every Kiwi, published earlier this year.
Thank you to everyone – happy, annoyed, puzzled, troubled or hopeful – who has written to me through the year. Sadly, more and more of your letters don’t get published. There just isn’t room. But keep trying.
Short letters have a better chance. And it works better if you have a specific question rather than, “What should I do with my money?”, which takes a whole book to answer. While letters from middle-aged and retired people are always welcome, I would love to hear more from younger people too.
Note that some letters make it into the column several months after you send them. And if your letter is published, keep an eye out over the next few weeks for follow-ups from readers. They often make really good points. See today’s first Q&A for an example.
I hope everyone has a yummy, restful and restorative break.
* Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
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