Why protecting your business means protecting your people

Link below to my latest article featured in the February edition of NZ Entrepreneur e-Magazine
NZ_Entrep article

Is your back covered?

How would your business cope if something were to happen to you or another key person? How would your family be affected?

Manage those risks which can lead to financial ruin and obtain a free review from someone who puts your best interests first.

Jon Collier AFA, BCom
Authorised Financial Adviser
Risk specialist

Mob: 027 524 7970         Email: jonc@apexgroup.co.nz

Are you sure you have a Trust?

Many of us have established Trusts on the advice of lawyers or other professionals with the intention of protecting and maintaining control over the use of our assets. However, time and time again I find those who have established Trusts and since undertaken a gifting process do not fully understand their responsibilities as a trustee (most are in relation to their own trust) nor how the Trust should be properly administered to ensure it can withstand any future legitimacy challenge.

As a result, many Trusts in New Zealand are unlikely to serve the very purposes for which they were created should they be challenged at a future point, leaving Trustees potentially liable should beneficiaries be able to demonstrate they have not understood and executed their Trustee responsibilities.
With currently no regulatory body in existence to supervise Trusts, the only time that you do get to see if your Trust is compliant or not is if it ends up before the IRD, WINZ, the Official Assignee or the Courts. In those cases it would be far too late to try and fix any problems.

If you have a Trust, then consider whether you would benefit from a review in respect of the following:
1. Is there an Independent Trustee
2. Are the classes of Beneficiaries still suitable
3. Who exercises the powers of Appointment
4. Is your Gifting still appropriate given changes in Gift Duty/WINZ rules
5. Have any additions or removals to the Trust been properly recorded
6. Who keeps the Trust Minute Book
7. Is a Register of Trust Assets being properly maintained

If we take WINZ as an example, when applying for a residential care subsidy, they require the original documentation together with supporting valuations for the original settlement of an asset into the Trust. If the Settlement occurred 20 or 30 years ago (as is often the case) those records can be hard to come by unless at least one of the Trustees has been focused on properly maintaining the Trust Minute Book.

Effective Trust administration does come at a cost, so be aware of what these costs are in your decision to establish and maintain a Trust. Don’t simply assume that setting up a Trust is a good idea should you not be prepared to understand what is actually required on-going.

If you are unsure of whether a Trust would be beneficial to your circumstances or if you think your existing Trust would benefit from a review, I am happy to put you in touch with the right professionals to discuss further.

Jon
jonc@apexgroup.co.nz
027 524 7970

The changing face of financial advice – challenges and opportunities

Presented to 100+ Chartered Accountants at NZICA last night on the above.
There are huge benefits for clients from closer working relationships between those Accountants and Financial Advisers who are adapting their business models to the rapid change in our respective industries…

In sickness and in health…

I recently wrote an article on private health insurance for young families featured in OhBaby! magazine. Have a read below:

https://joncolliernz.wordpress.com/wp-content/uploads/2013/07/ohbaby-health-insurance.pdf

Interest rates are low now, but…

The battle over interest rates has been well publicised. Banks continue to campaign hard for your new and/or existing mortgage debt with all manner of incentives to get customers on board. But what happens when interest rates start to go the other way. Are you prepared?

While the media has predominantly been focusing on the rates war and how people can make the most of it, I urge you to think ahead. And a crucial part of planning ahead is considering the impact on your finances if the rate on your loan goes up. Do you have a financial plan in place to manage this situation?
If not, then perhaps worth considering the following tips:

1. This one might sound a bit obvious, but make the most of low interest rates and pay as much of your loan as you can now. If your repayments have gone down because of interest rates, you might consider keeping them at the previous higher repayment to reduce your debt faster.
2. Consider fixing part of your loan. If you’re worried that increasing rates would make it hard to meet your repayments, you could fix some or all of your lending now while rates are at a more comfortable level.
3. Pay off your most expensive debt first. If you have a personal loan with a higher interest rate, make sure you pay it first.
4. Making small increases to your fortnightly or monthly repayments can have a significant impact on the total payments made over the term of your loan. For instance, if you had a loan for $200,000, with a 5.25% interest rate over 30 years, your fortnightly repayments would be $509.48 and at the end of your term you would have paid a total of $397,394.
5. By reducing your loan term to 25 years (instead of 30), your fortnightly repayments would go up to $552.84, but most importantly at the end of your term you would have paid a total of $359,344. Yes, your repayments go up by $43.36 a fortnight, but not only would you repay your loan 5 years earlier, you also would have saved $38,050.
6. Alternatively, if you maintained status quo and your interest rate increased by just 2% from 5.25% to 7.25%, your fortnightly repayments will have increased by $120 to $629 per fortnight and you would be paying $490,944 over a 30 year term!While the above examples may appear manageable, chances are your own mortgage debt and repayments will be a lot bigger – particularly if you live in Auckland!

With such a big financial decision, it’s important you make the most of what’s on offer and that you have a long term financial plan, which will help you get out of debt faster. With interest rates still at record lows, you could be forgiven for thinking rates are likely to increase at some point over the next 30 years, perhaps sooner rather than later!

Regardless of whether you are considering a house purchase or already have existing mortgage debt, do not be put off getting help when doing so may stand to save you tens of thousands of dollars in interest!

Buying your first home with KiwiSaver

Not only does KiwiSaver include a number of benefits designed to help you reach your retirement goals, it also offers two features to help members buy their first home:

■  First Home Withdrawal
■  First Home Subsidy (contact Housing New Zealand Corporation).

Both of these options may help members to buy their first home, or the land on which to build their first home. The withdrawal and subsidy may be available to members who have previously owned a home and are in the same financial position as a first home buyer.

If you are interested in finding out more, get in touch!

Transferring your Australian Superannuation to NZ

The New Zealand and Australian governments have confirmed that from 1 July 2013, transfers between KiwiSaver schemes and Australian complying superannuation funds (Australian Funds) will be possible.

Here are some of the key points:

• It will be voluntary for KiwiSaver scheme and Australian Fund providers to accept transfers into their schemes.
• Transfers of retirement savings between countries will be exempt from entry and exit taxes (subject to non-concessional caps in Australia).
• From 1 July 2013, KiwiSaver members will no longer be able to withdraw their KiwiSaver savings in cash when they emigrate to Australia permanently.
• If Australian Funds are transferred into a KiwiSaver scheme, the KiwiSaver rules will apply to those funds, except that those funds:
  • will be locked in until the investor reaches age 60 and retires
  • won’t be available for a first home withdrawal
  • will not be counted for the Government annual contribution
  • can’t be taken to a third country.

For more information and assistance with transferring your Aussie Super to NZ, get in touch!