The group understood that inherited property did not become relationship property unless it was intermingled.
But none of us knew the answer to the following question: if a person in a relationship wins Lotto or a big payout at the races, from a ticket they purchased or a bet they placed, are the winnings and the subsequent income generated from investing those winnings relationship property?
A. If it's a big enough win, who cares? Half of several million dollars would satisfy most of us.
But let's assume your woman friend wins a large enough amount to matter, but a small enough amount that she wouldn't want to share it with poor old hubby.
Whether she has to share depends on the source of the money she uses to buy the ticket or the bet, says Stephen McCarthy of Price Voulk McCarthy, convener of the Auckland Family Law Committee.
"There was a New Zealand case in 1996 that appears to indicate that, even though the person won Lotto while married, they were nevertheless able to keep the winnings themselves because the money used to buy the ticket was not relationship money," says McCarthy.
So what qualifies as relationship money?
Money in joint accounts is almost always relationship money; inherited money that is not mingled with relationship property almost always isn't. What about separate accounts?
"Let's say you and I are married. And it's quite common for your earnings to go into your account, but most of it goes to the mortgage. And my earnings go to my account but I buy the groceries.
"We're working on a common enterprise, so both accounts would be relationship property."
But what if each partner receives their earnings into their own account, and then transfers all but $50 a week into a joint account?
"If the arrangement from the word go is that we each can spend the $50 however we like," those accounts probably would not be considered relationship property, says McCarthy.
Maybe your friend could use money from an account like that.
When you stop to think about it, though, most of us always have some money in our wallets.
If your friend withdrew money from her own account and later bought a Lotto ticket, did she use her own money or the change from the groceries bought with joint account money?
The onus would be on your friend to prove it was her own money, rather than on her husband to disprove it, says McCarthy. "If you can't prove it, then it's joint money."
And, he adds, "It's inevitable, if it's a big win, that the other person will fight about it. It could become rather difficult."
Your friend might be better off just to accept that half of any winnings is a lot better than nothing.
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Q. I am writing on behalf of my father-in-law. His problem is probably typical of many people approaching retirement.
He was made redundant a few years ago and the only family income is from a benefit.
He is due to collect NZ Superannuation in November 2004.
He has saved $30,000, and should be mortgage-free by the time he retires.
At present the $30,000 is invested in bank term deposits.
How should he invest the money? I assume it isn't enough to buy an annuity.
Should he combine it into one large sum or split it into three groups of $10,000, with each amount invested in cash (fixed interest), conservative and balanced funds respectively?
A. I like your line of thinking. Annuities are always a possibility. And your last idea shows you have an eye on diversification.
But for various reasons your ideas might not work too well.
Let's look at an annuity - which would pay your father-in-law a regular amount each month until he dies. You probably could get a small one for $30,000. But I'm going off annuities for 65-year-olds. They just don't pay a very good return.
They work better, I think, for people of 75 or older who have other savings to supplement their NZ Super in the meantime.
The conservative and balanced funds are not a bad idea either, but there are periods when their returns are lower than on term deposits, after fees and taxes.
I'm assuming your father-in-law will want to spend a fair bit of the money over the next 10 years or so.
Given that, and given the relatively small amount, I think it would be better for him to stick with investments that won't fluctuate in value.
I suggest he puts $10,000 aside as an emergency fund.
That might consist of four three-month term deposits of $2500 each, that he keeps rolling over unless needed.
One could mature every January, April, July, October; the second one every February, May, August and November; and the third one every March, June, September and December.
That would give him access to money every month, but he would also get the higher interest usually offered on three-month deposits versus one-month deposits.
What about the other $20,000?
One short-term suggestion is for your father-in-law to pay off the mortgage now.
This will work well as long as he has the discipline to then put the money that would otherwise have gone to mortgage payments into term deposits.
By repaying his mortgage he is effectively making an after-tax return equal to his mortgage interest rate.
That's much better than any term deposit will pay.
So he will end up, in November next year, with more than he would otherwise have. What to do then?
Perhaps put $10,000 to $15,000 in term deposits that will mature in stages over the next 10 years, to supplement his NZ Super.
The other $5000 to $10,000 could go into one or two A-rated corporate bonds, with the idea of using that money later in his retirement.
The bonds will pay higher interest than term deposits.
If he sticks to high quality bonds, his money should be safe. And if he holds them until maturity their value won't fluctuate.
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Q. Do you know of a good predictor of exchange rates for the next 12 months or so?
I would like at least a guide to how they may change, as I am an exporter.
A. I wish I could tell you what I'm sure you want to hear, that the kiwi will fall. But the best I can do is say it might.
Then again, it might rise.
This might seem like cheating, but the best way to answer you is to quote another Q&A, in BNZ chief economist Tony Alexander's BNZ Weekly Overview.
The question to Alexander was as follows: "At a recent National Fieldays I uplifted your pamphlet headed Forecasting the NZ/US Dollar Exchange Rate.
"In it you state that, the simple truth is that you cannot forecast exchange rates.
"Not many people who try to will disagree with this statement, but why then do economists, yourself included, try to do so if you admit it can't be done?"
Alexander's answer: "Partly because the world is full of people who still think we can.
"I have spoken in front of groups of 200 people about the impossibility of forecasting exchange rates, but when it comes to question time they still ask where I think such rates are going.
"So if they are brave enough to keep asking in spite of the evidence, I'll keep guessing and saying it can't be done.
"At a more professional level, many people simply need to put some rates in when setting budgets for the coming year or so.
"So we economists give rates which in our opinion are reasonable, and if ever challenged legally down the track, the company using them can justifiably say their account projections were based upon reasonable views and not outlandish numbers they made up."
Quite a confession. But it's not much help to you, I suppose - except that you now know you might as well not bother trying to find a forecast.
That doesn't mean, though, that you have to stay exposed to the damage exchange rate fluctuations can cause.
You can hedge. Basically, that means buying financial instruments that will rise in value when your profits are hurt by forex movements, and fall when your profits are helped by forex.
Hedging evens things out - partly or fully. Ask your banker for information and advice on hedging.
* Mary Holm is a freelance journalist and author of Investing Made Simple.
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