A Different Side to Death

Unfortunately (or perhaps fortunately) we don’t live in some sci-fi world where we get to exist forever and ever. But it does mean a bit of forward planning around our earthly possessions is needed to protect them for loved ones (or from creditors perhaps)… **Tim Riley **tells us a little about wills and trusts.

Do you think about death much? I do. My wife thinks I have a morbid obsession with it (although I guess any obsession about death is by definition morbid). But I don’t think I have an obsession. I just don’t want to die. I really, really don’t want to die. Although, having said that, I don’t want to live forever either. Imagine how tedious that would get. Like the Christian idea of heaven – some place where everyone loves everyone and nothing ever happens – for eternity. It actually, as Chris Hitchens used to say (before he died) would be a kind of dictatorship where you are forbidden from having any thoughts or emotions of your own, but are forced to think the same as everyone else. Forever. It seems like a ghastly parody of what it means to be human.

As at the date of writing this I haven’t seen the Neill Blomkamp film Elysium yet. I understand that in Elysium no one dies. Every disease is curable. I don’t know how they deal with overpopulation. Maybe they don’t have babies. Hopefully by the time you are reading this I will have seen the movie, and can answer these questions – not that this will help you much. Anyway, one thing that struck me about the concept of Elysium is that they wouldn’t need wills, trusts, and inheritance laws there, thus depriving lawyers of a reasonably significant area of practice. (They probably don’t allow lawyers there anyway. I’m pretty sure heaven has a ‘no lawyers’ policy.)

But here on earth, we do have death and we do need to sometimes think about wills and trusts. Just to clarify what we are talking about, a will is a document that tells people what to do with your stuff (and your body) when you die. When it comes to your body, we really only have two choices being burial or cremation. I like the Tibetan practice of taking bodies up to a hilltop to be eaten by vultures. But we don’t offer that option in NZ. (Maybe because we don’t have vultures, although seagulls would probably be just as effective).

A trust is a kind of a legal fiction which says that you don’t own your stuff for you anymore, you really own it for someone else (which is usually you plus your family). The advantages of owning your stuff for someone else, rather than for yourself are, I think, threefold:

1. You can still use it and do whatever you want with it when you are alive, but when you die you (well, it won’t actually be you will it) don’t have to go through the rigmarole of leaving it to other people, as the other people already kind of own it.
2. The people you owe money too can’t actually get their hands on your stuff to use to pay back the debts you owe them. Of course, I am not suggesting that you would deliberately not pay your debts, or even that it is not right and proper for your creditors to sometimes get their hands on your assets, but it can be pretty difficult explaining to your spouse and kids that they have to move out of the family home as someone else owns it now. Or explaining to your employees and contractors that someone else owns your company now.
3. At some points in the history of our socialist paradise the Government has seen fit to make retired people who have worked and paid taxes all their lives sell their house and every last possession they have before the state will consider giving them any financial assistance to meet the costs of retirement (usually referred to by the euphemism ‘asset testing’). The beauty of a trust is that because you own your stuff for someone else and not for yourself, it can’t be considered as your stuff and therefore the state can’t require you to sell it to qualify for government assistance. The only example of this currently is the rest home subsidy, but there have been more in the past and there will no doubt be more in the future.

Wills and trusts are often talked about together, but it’s certainly not mandatory to have both of them. However, if you do want to set up a trust then it definitely makes sense to have a will with it. (For that reason wills are often referred to in legal circles as the ‘scoop of chips’ document). (No they’re not – I just made that up). The reason you should have a will if you have a trust is to ensure continuity of the trust after you die and to control the sort of people you want to take over running the trust after your death.

Normally, trusts are set up by two spouses with the beneficiaries being themselves, their children, their grandchildren, their parents and their siblings. These kinds of trusts are called ‘discretionary trusts’ which means the trustees have the discretion as to which of the beneficiaries get the benefits of the trust. The initial trustees will be the two spouses plus a professional trustee (usually the family lawyer or accountant) and the spouse trustees will have the right to dismiss trustees and appoint new trustees. The problem is, as I mentioned earlier, that everybody dies. In order for the trust to keep on functioning smoothly (and also so the beneficiaries on your side of the family get looked after), you need someone you trust to take over your trustee role after you die. If you knew exactly when you were going to die, you could use your power of appointment to appoint the new trustee just before your death. Apart from condemned prisoners, most people don’t know when the exact moment of their death will be. So the way to deal with this is to specify a person in your will (usually the executor of your will, but not always) who will have the power of appointment of a new trustee to replace you after they die. It may be them or it may be a third person (so you want this person to be someone whose judgement you trust).

Earlier, I listed the three main advantages of trusts. The only real disadvantage is that they cost a bit to set up. Most lawyers charge around $1,500 to $1,700 plus GST but (shameless plug coming up) I can offer a special deal to Techos’ Guild members of $1,000 plus GST. And what’s more, if you buy a trust I’ll throw in a free will! And a scoop of chips.

“All God’s children, they all gotta die. The young ones, the old ones, they’ve all got to die”. So says Nick Cave in ‘The Curse of Millhaven (from the album Murder Ballads). Nick does not mince words, but he’s right of course. So bearing Nick’s advice in mind, a little time and money spent now on wills and possibly a trust may just make things a little easier for your family and friends when you pass on to that great film set in the sky.