QA recent Q&A mentioned families that are persuading their parent or parents not to go into a retirement village. So sad. It’s a form of elder abuse. It’s not their money, and no child should expect an inheritance. If they get one — well lucky them.

For instance I know an elderly widow in a two-storey house, knee problems and big grounds. She wanted to move into a level retirement village. Her only son said, “No way are they going to take all my inheritance!” Her son works overseas.

What a difference in my own case. Four children. My husband and I had lived in an old villa. The day of his funeral — our children came back from overseas for his funeral — I had a couple of viewings at a retirement village. I’d already worked out one that would suit me, as he wanted to die at home. They all viewed it and read the fine print and said, “Mum, if this is what you want, go for it.”

They’re all happy I’m in a secure place with no maintenance.

ALucky you. But your friend’s situation is not okay.

Could you help her? Perhaps assist with research to find out what her financial situation would be after a move to a retirement village — or find someone who could help her with that research.

While it sounds as if the son doesn’t deserve any inheritance, that might be too tough for his mother. But if she knows he will probably still get something, perhaps a move would be workable. After all, he won’t have to share his inheritance with siblings.

Alternatively, perhaps she could move to a single-storey home or apartment.

I know it can be awkward to discuss these things. But your friend has already opened the topic of conversation with you. This is a chance for you to really make a difference to someone’s life.

If you do an online search on elder abuse, there are several websites that might be helpful.

QSee attached a text I received purportedly from Inland Revenue. I am a registered tax agent at IRD and knew no refund was due to me.

I sent this text on to my account manager at IRD (all tax agents have one), and he checked and confirmed they had not texted me and this is a scam.

If you click on the link in the text it takes you to a very real looking MyIR login page.

What does the scammer get out of this? I figure they somehow record your login and password details and at some later date log in and change your bank account at IRD for refunds to a mule’s NZ bank account. And hey presto! The next time you are due a refund it goes there and from there offshore and lost forever.

In these days of automatic IRD assessments for most taxpayers this could easily happen. So, be aware.

AThanks for your warning. It seems there are more and more scams like this out there.

Banking Ombudsman Nicola Sladden, whose organisation has led the development of a fraud documentary series running on Monday nights on TVNZ, says, “A key message is to be wary about clicking on links. And only access your banking platform directly — not via a link.”

This doesn’t apply just to banks, of course, but any organisation. You did click on the link, which is a worry. But you took the wise second step, to contact Inland Revenue via your normal route, not via anything sent to you. Phew!

QThank you for all the advice on laddering term deposits. We have done just that, and are seeing how beneficial it is to have money available at regular intervals. We are retired, so laddering works for us.

However, one gripe is that we are encouraged by our bank, ASB, to do all our banking online (we do). So when it comes to term deposits it’s easy to do everything I need to do from my phone.

But I’ve since been told that for a slightly better rate we need to phone the bank directly. Wait, what! That is really annoying, and why can’t we be rewarded for doing what we are asked to do (bank online) and get the highest rate available without this annoying phone call? Or have I got this all wrong?

AASB responds, “We welcome customers to work with us in whichever way suits them best.

We understand some people prefer to speak to our team in person or over the phone, and we have a dedicated investments line (as well as our normal contact centre), where customers can get guidance and advice on the right product or investment to meet their needs.

“Our online term deposit process is simple and easy to use, but we recommend customers who want to talk through their options to reach out and have a chat with us.”

Okay, I said, but do you sometimes give customers a higher interest rate on term deposits if they call the bank?

“As a general rule, we offer the same rates online as over the phone, but we are happy to talk to customers about their individual circumstances,” said the spokesperson.

All rather vague. But you’re not the only one who has reported getting a better rate — on a term deposit or mortgage — by phoning their bank. It seems worth making that phone call, annoying though it may be.

QAlthough this is not a recent experience of changing banks, I doubt if the circumstances have changed.

When we switched from BNZ to TSB the change was pretty seamless (although at the time TSB still had to enter all our payees by hand!)

The big negative was losing the history once the account was closed. For tax reasons and for checking back on payments made or received, all that history went!

If the Commerce Commission is looking into changing banks, perhaps they could look at leaving access to the records at the previous bank for a defined period? Failing that, don’t close your bank account completely. Keep a few dollars in there to ensure you don’t lose access immediately.

AThe reason I’m asking for experiences within the past year is that the Bankers Association says switching banks is easy these days, and I want to check if that’s true.

Still, you make an interesting point for other people changing banks.

Hopefully, the Commerce Commission will look into your idea. In the meantime, your suggestion is a good one. It might also help to print out your bank statements before leaving a bank.

QIn your last column you had a query from someone whose kids had been left $30,000 each by the grandparents.

We had exactly the same thing happen for our kids five years ago. We used the money as a deposit on a rental in Palmerston North (we live in Northland).

Yes we had to add to it to meet the 80 per cent threshold, but it has turned out to be a winner for the kids. In the next few years we will sell it, repay ourselves and the bank, and the kids will each have a substantial sum for a deposit on their own houses.

Just a thought, and I know not everyone has the ability to do what we have done.

AAn interesting idea. I assume the property doesn’t need your regular contributions to help cover mortgage and other costs, or that you can afford that.

There are risks, though. Owning a rental property in a distant place means you probably have to hire a property manager to be Johnny or Jenny on the spot if something goes wrong. And as one property investor said to me, a property manager can turn out to be a problem in themselves.

Another risk is that you could lose money on the investment. Your property might develop unforeseen problems, or house prices in general might have fallen — although if your kids use the money to buy their own homes the latter issue shouldn’t really be a problem. They would be buying in much the same market as you would sell in.

What if one of your offspring, by then an adult, doesn’t want to buy a home? Presumably they would just invest their money elsewhere.

There’s one other worry. I hope you’ve followed the law — as outlined in the next letter.

QRecent letters to you have sought advice as to investment of inherited funds which have been left for minors. The essence of the questions seems to be how to put the money into the names of the children and to achieve the minimal tax on the interest earned.

The starting point is always the Trusts Act 2019, which states in section 20 that: “(1) For the purposes of an express trust the age of majority is 18.”

In other words, any funds which are gifted by will or trust to a minor (“inheritance”, “legacy”, “bequest”, “share of residue” etc) must remain in the hands of and in the name of the appointed trustee/s until the beneficiary reaches age 18. There is specified provision for funds to be used for beneficial purposes prior to that age.

The proper course is for the trustee to invest funds in accordance with the rules set by the Trusts Act and by established precedent. The trustee remains in control of the funds. Say the chosen investment is in a bank. The bank must be told that this is a trustee investment. The standard RWT tax rate for trustees of 33 per cent will apply until 1 April 2024, when it will increase to 39 per cent.

When the trustee files annual tax returns for the estate or trust then they may be able to achieve a lower tax rate for the minor beneficiary if there has been an actual distribution of income to or for them during or shortly after the tax period.

Failure of the trustee to follow this course leaves them vulnerable to violation of the Trusts Act, which is also known of course as a breach of trust. This should not be taken lightly, even in family situations, as trustees are personally liable for losses caused by breach of the rules. All trustees have a duty to be familiar with the rules!

AGosh. I didn’t know all this, and nor it seems did the families who have written about taxing the inheritances of under-18s at lower tax rates.

Apparently their investments must be taxed at 33 per cent — and 39 per cent from next year — until the child is 18.

I struggled a bit to be sure I understood all the legalese in your email, so I asked you further questions. Here’s the gist of it:

Under the law, when someone dies a trustee holds their property until it can be paid to beneficiaries. Generally, if a beneficiary is under 18, the money would be given to them when they turn 18.

“The trustee may release funds for the minor’s welfare prior to them reaching age 18,” you said. “Welfare generally means for their education, maintenance or advancement, and does not mean so that they can accumulate or save the funds.”

I also asked what happens if, say, a grandparent gives money directly to someone under 18 during the grandparent’s lifetime. You replied that this is called an “inter vivos” gift, and there is no trusteeship involved.

“Therefore the young person could invest the money and have it taxed at their own rate. Or they could use the money to buy a hot car, bitcoins etc that the grandparent would not have approved of.”

Fair point!

This suggests that families who have given inheritances to under 18s should check the legality of what they’ve done — and perhaps challenge their lawyers over poor advice. Thanks for writing.

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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 are personal, and 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 [email protected] or click here. 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.