Shelley Hanna: Incapacity can hinder access

Q I am wondering if you were aware of the process involved in the lump sum withdrawal of funds from one's KiwiSaver account after the age of 65? Sadly my husband is incapacitated so I handled his withdrawal under an Enduring Power of Attorney. I was surprised by the amount of documentation that was involved, plus having to go to a JP/lawyer to get it all stamped, verified and witnessed before sending them off. What happens if a person is incapacitated but has not given anyone Enduring Power of Attorney?

I have had comments from many people about the surprising lengths they have to go to, to get their money out of KiwiSaver at age 65. This is partly designed to ensure that KiwiSaver funds are paid out to the right person. It is also a chance for Inland Revenue to check that Member Tax Credits were only paid to those who were entitled to them - and not paid to members while they were living abroad.

When members reach the age of eligibility they should contact their provider for the appropriate withdrawal forms for their scheme. Generally the forms will need to be signed under oath - hence the need for a lawyer or JP. There is probably a JP living near you - look under "Justices of the Peace" in the Yellow Pages. They can also certify documents and their service is free.

A person may become incapacitated as a result of an accident or an illness such as a stroke or dementia. If, as in your case, they have signed an Enduring Power of Attorney in Relation to Property before this happens, then their nominated attorney can act on their behalf in relation to their assets, including KiwiSaver. It is prudent for everyone to appoint an Enduring Power of Attorney in case something happens to them. It can be filed with your lawyer along with your Will.

What if there is no Enduring Power of Attorney? In this situation (if the KiwiSaver account is worth more than $5000) the next of kin will need to apply to the Family Court for a Section 31 order for the appointment of a property manager.

Application should to be made to the court closest to where the subject lives and must be supported by medical certificates. There is no application fee. The court will appoint an independent lawyer to act for the subject and they will report back to the court with their recommendations. Each property order made by the court lists the specific rights and powers given to the property manager appointed by the order. There are strict controls over what the property manager can do, and they must act in good faith and with reasonable care. Property managers must act in the person's best interests and their actions can be examined by the court.

The application process usually takes a month or more, unless it is very urgent.

An Enduring Power of Attorney is definitely preferable, so for those readers who do not have one it is worth talking to a lawyer. Like a valid Will, it makes life easier for your family members at a time when they may have to make a lot of difficult decisions.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free by calling 8703838. The information contained in this article is of a general nature and is not intended to provide personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.