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ALEX BOUSTRIDGE 5 MINUTE PRESENTATION
5 MOST COMMONLY ASKED QUESTIONS
1. Should I set up a Trust?
· There are 3 key benefits in setting up a Trust. These are:
Ø Creditor protection if you own or are looking to establish a business.
Ø Relationship Property protection.
Ø Potential benefit in applying for and receiving subsidies or benefits (as your personal asset pool is decreased).
· While there can be benefits in forming a Trust, the administrative costs associated with having a Trust can at times outweigh any benefit.
· If you are considering setting up a Trust you will need to consider whether your personal circumstances might justify forming one or whether there are other ways to more effectively protect your assets now and in the future.
2. Is my Partner entitled to 50% of my assets?
· Under the Property (Relationships) Act 1976, the default position is an equal sharing regime in relationship property.
· Relationship property includes the family home and as the law currently stands it includes any equity you may have had in your family home prior to entering into the relationship.
· Most other assets only are relationship property if acquired during the course of your relationship EG wages.
· In short, yes your spouse or de facto partner can claim a 50% interest in a property owned by you if you live in that property with your spouse/partner as the family home.
· To protect yourself from this, you ought to enter into a Contracting Out Agreement (more commonly known as a Pre-nup) to classify the family home property as separate property and not relationship property subject to the equal sharing regime.
3. Can my children make a claim against my Estate?
· The short answer to this is yes. Under the Family Protection Act 1955 a parent has a moral duty to provide for their children. Even if you are estranged from a biological child, that child may be able to establish that you owe a moral duty to them and have not satisfied that. For this reason, when advising clients on Wills we often advise them to leave each child with at least 10% of the residual Estate, with the aim of extinguishing that moral duty owed.
· In saying that, of course all situations are different and when you prepare your Will we will advise you on the particular factual circumstances that apply.
4. I do not like my Employee, can I fire him/her?
· Unless you have a 90 day trial period clause in your Employment Agreement (which can only be used by Employers with 19 or fewer Employees), you can only dismiss an Employee if you have a justifiable reason for doing so and follow proper process. Generally, dismissals can be justified on the grounds of serious misconduct, consistently poor performance or a genuine restructure of your business.
· Before considering whether or not to dismiss an Employee please ensure you take legal advice to be sure you are solid footing, both justifiably and procedurally.
5. Should I have a Shareholders’ Agreement for my business?
· The short answer is yes particularly if you have two or more Shareholders.
· The benefits of a Shareholders’ Agreement are that they set out the terms agreed between the Shareholders in relation to the operation of the business and more specifically, and of more use, what is to happen when a Shareholder wishes to exit the business or passes away.
· You may find that the default Companies Act rules do not apply or are not suitable for the structure of your Company and this is when a Shareholders Agreement can be particularly useful.
· If you and your Shareholders are happy with the default Companies Act rules then a Shareholders Agreement may not be required however this is something to discuss and consider in further detail.
This information is prepared on a very general and brief overview basis and does not account for any specific factual situations. If you would like to discuss any of the information in further detail or how it might apply to your personal circumstances please contact Alexandra Boustridge, aboustridge@crlaw.co.nz.