Asset Ownership and Control


Because you are progressive, you will accumulate assets and grow your financial wealth.

Therefore you will want to think about how you own those assets and in the future, your preference for an orderly disposal of your assets … in the fullness of time.

What is this all about?

At WISEplanning, we think this is about how you prefer to own your assets and what control you like to maintain throughout the various stages of your life.

So, it all starts with what you are trying to achieve including what we call your “estate planning goals and objectives”.

For example

Let’s say you had significant assets and you passed away earlier than expected, would you want all of your assets cashed up and deposited into your teenage son or daughter’s bank account to do with as they please? This is obviously an extreme example but actually, is not unheard of.

The point is that you will possibly look to protect the assets and also the beneficiaries of those assets by putting in place suitable arrangements.

The best starting point

Again, it all starts with what you want and what you are trying to achieve and therefore that is why it might be useful for you to incorporate certain measures of control.

The tools

Here is a brief list of some of the tools that are available that you could include in your estate plan:

  • The Will: Basically everyone over the age of 18 is advised to have a will to avoid dying “intestate”. This just means that things are difficult for those who are left as they face the task of tidying up the estate of someone who has died without a will. Also there is the danger that the government (who in this situation takes control) may not pass on some assets you have, as you might have preferred. Basically a will provides you with the opportunity to outline specific bequests and in simple terms to decide where your money and your assets go or who can benefit. A will is a simple and effective tool that can be set up online although it is usually best to seek advice from a qualified lawyer to ensure that you do not miss anything. A properly structured will that is well written will ensure that you maintain control (at least as much control as a will allows) and that your wishes are carried out when you are no longer there to have your say. The costs of setting up a will are minimal.
  • The Power of Attorney: This is an authority that a person gives to another person or a company to act on their behalf (usually while they are still alive but possibly incapacitated). There are two types of power of attorney:
  1. Ordinary power of attorney
  2. Enduring power of attorney

A power of attorney can be for a specific period of time and can also be given for the purpose of specific duties such as health care or looking after financial matters. This means that you could have one power of attorney who looks after health care considerations and a separate individual who looks after financial matters. They can also be the same person if preferred.

  • The Family Trust: These are now commonly used and became popular over the 1980s and 1990s as many people used them for tax purposes. Changes to tax law has subsequently rendered many of those types of trusts less than useful. However family trusts remain a useful tool for those that have the need for them beyond just tax considerations. For example business owners can maintain control over their personal assets by allocating personal assets to a family trust. That way in the event of a serious business mishap those personal assets, providing they have been properly passed over to the family trust for a sufficient period of time can be protected. There are many other reasons why family trusts can be useful too. However the common purpose more recently that individuals have considered family trusts is for the purpose of minimising retirement home claw back. The idea back in the day was to allocate assets to a family trust so that when one of the parties (the husband or wife) went into a retirement home that those assets in the trust were not considered by the government when means testing was carried out. This no longer applies. Family trusts may not hide assets from means testing or rest home claw back. Basically, the government looks through these types of arrangements. As I mentioned previously though, there can be many other reasons why family trusts can be a useful tool.
  • The Trading Trust: Generally these trading trusts are used by business owners to separate out certain business assets from other types of assets. Basically a trading trust is a business operated by a company in its capacity as a trustee. The trustee company is operating the business for the benefit of the discretionary beneficiaries of the trust. A trading trust can often work in conjunction with a standard family trust which can be a beneficiary of the trading trust. The use of company trustees provides protection of the limitation of liability for the company shareholder. However, directors can still face liability for reckless or fraudulent trading under provisions of the Companies Act 1993. For those whose situations are straight forward and simple, trading trusts are not usually an advantage. For those whose situations are more complex, trading trusts can provide another layer of control for business owners and investors.
  • The Joint Tenancy (or Joint Ownership): The main aspect of joint tenancy is that the survivor is entitled to ownership of the deceased’s share in the property when one owner dies. This can be a simple planning tool to help with the protection and disposition of an asset and is commonly used by husbands and wives whereby a husband and wife may intend to own the property equally and pass their share to the survivor on “beam up” day. As well as being simple to execute, it is usually cost effective as well.
  • The Tenants in Common: This approach allows for owners to hold a distinct proportion of a property. There is no requirement that a tenancy in common must result in equal shares of ownership. One person therefore can hold ownership in a greater proportion than another. The simplicity of the tenants in common structure means that owners are able to pass on their share in a property easily in accordance with the terms of their will.

TIP:   

Joint Tenancy and Tenancy in Common are both simple estate planning tools however they can have far reaching implications if not used correctly. Best to seek advice from a suitably qualified lawyer before using either of these tools (as is the case for the other estate planning tools too).

 

The “how”

There are other tools and mechanisms and what really matters is how these tools are used. That is why a proper estate plan should be a core component of any financial plan for those who are looking to position themselves most efficiently to achieve their goals. Where things are not dead simple, some advice is a good investment.

The help

Taking advice is often recommended because trained specialists might know more than you. Missing a small but important detail can grow into a big, costly mistake later – why go there?

Sometimes there can be confusion though about which professionals can carry out which parts of the advice process when it comes to estate planning and the various tools as outlined above.

BRUTAL FACT: Financial advisors (e.g. WISEplanning), lawyers and accountants all play a different role. Unless properly trained, financial advisors like WISEplanning have little or no role in terms of offering specific tax, accounting or legal advice. Similarly, lawyers and accountants generally can be quite tactical because they are detailed specialists in their respective fields of law and taxation. Estate plans should never be based on one specific article of tax law or one component of common law but rather, the settlors’ estate planning goals and objectives over the various stages of their life – that is the starting point. That is where WISEplanning as financial advisors can assist which is in the preparation of an overall estate plan. From there, the settlors can go to their lawyer who can co-ordinate the legal aspects of the plan and who will often refer them to their own accountant to take care of the taxation aspects as required. Strategy and tactics are different things and should not be confused. The financial advisor and the client can design the estate planning strategy together so that the lawyer, accountant and the client can then work together with a suitable mandate as they pull together the plan that takes into account the more intricate tax and legal considerations.

Strategy first – tactics second.

The estate planning strategy (the settlors clearly defined needs and objectives over their life) provides the overarching structure for planning whereas the technical aspects that relate to tax, accounting and the law form part of the planning that helps drive the success of the estate planning strategy.

People first – “money” second

Estate planning is usually about people, more so than “money”.

Often advisors and settlors make the mistake of thinking that estate planning is about money (assets).

Often it can be more about the personalities and the circumstances of the beneficiaries than the money itself.

It can be those aspects that are critical in the formation of an over-arching estate planning structure that provides the guidance for the more detailed mechanisms that can be deployed including the tools as outlined above so that a sound and enduring overall estate plan can be engineered, monitored and successful over time.

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Peter Flannery

“Helping everyday Kiwis who expect more … to live their lives the way they want”

 

Peter was raised on the family farm in Kamahi, near Edendale in Southland. He is an investor, business owner and a first generation financial advisor, having entered financial services in 1983 in Southland.

 

Peter now lives in Christchurch with his family. His hobbies include family time, spending time with friends, exercise, reading a good novel and time on the deck at the bach.

 

Peter founded WISEplanning in 1987. His 500 clients live across New Zealand and a few overseas. The ongoing expansion of WISEplanning now includes offices in Invercargill, Christchurch (HQ) and Auckland.

 

Peter is known among his clients for challenging common practice and conventional methodology.

 

He argues “People tend to follow the crowd, which is interesting, because most people are both time poor and money poor, so why follow them?”

 

He is known to many around New Zealand as one of few to warn in 2004 of the coming global financial crisis (The GFC) that suddenly erupted in 2008. His views were considered controversial at the time. Peter credits Warren Buffett and his partner Charlie Munger for his most useful learning’s about investing.

 

Peter believes education continues throughout life. Some highlights from his recent continuing education include:

 

• The formal Financial Adviser training through Massey University in Palmerston North,

 

• The Entrepreneurial Coaching program through The Strategic Coach in Vancouver, Canada,

 

• The Business Owner/Manager Program through The Icehouse in New Zealand,

 

• The Peak Performance Program through Glazer Kennedy, Baltimore, USA

 

• The High Performance Program through The Elite Professionals Program in New Zealand

 

• The Experts Academy through Brendon Burchard, Sydney, Australia

 

• The Millionaire Mentor Program through Scott Harris, The Gold Coast, Australia.

 

As an investor, he is regularly researching markets and analysing potential investment opportunities and likes to point out to anyone who will listen that discipline around the investment method is key to success.

 

Peter has developed programs and tools that help everyday kiwis who expect more out of life to succeed sooner.

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Miriam Woon

Miriam has been with the WISEplanning team for a few years, bringing with her enthusiasm and extensive customer service skills to the role.

 

She emigrated to New Zealand from the Netherlands and spent her teenage years in the Bay of Plenty before moving to Auckland to begin her studies in Travel and Tourism. Employment in the Tourism industry eventually led Miriam to start her “8 year OE”. Whilst managing ski chalets in the French Alps, she met her future husband. They moved to Cardiff for a few years before moving to Canterbury in 2008, and now works remotely from Nelson.

 

Miriam is the Operations Manager for WISEplanning’s clients. Her passion has always been to work closely with individuals to help them improve their work and life skills.

 

Miriam enjoys spending time with her two sons, husband, family and friends. She has a passion for running, skiing, photography, exercise, reading and really enjoys dealing with people.

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Sean Yang

Sean is the Portfolio Coordinator for Clients at WISEplanning and brings his enthusiasm, professionalism and well developed customer service skills to the role. Sean was born in Beijing, China and obtained his Bachelor Degree in Economics (majored in Statistics) in China and Graduated Diploma in Accounting and Finance at University of Canterbury.

 

Sean has worked in the finance sector specialising in Investment Advisory for more than 10 years. He is experienced in dealing with clients’ queries and providing support to Financial Advisors.

 

He is an organised person with a strong customer focus. Sean enjoys spending time with his two daughters, wife, family and friends. He has a passion for sports such as soccer, badminton and swimming and really enjoys dealing with people.

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Theo Zbijowski

Theo Zbijowski is the Financial Paraplanner at WISEplanning who brings his friendly and enthusiastic attitude to the role.

Theo graduated from the University of Canterbury with a Bachelor of Commerce majoring in Accounting and Finance in 2016.

Now that he has completed his degree, he is looking to continue to develop his skills and knowledge of the industry by becoming a Financial Adviser.

He is a conscientious person who maintains a strong work ethic as well as a professional attitude. Theo enjoys spending his time playing sports such as squash, tennis and table tennis; while also enjoying the company of his friends and family.

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Kim MacKenzie

Kim has been with WISEplanning since mid 2016 and is our Client Services Specialist. She brings enthusiasm for customer service, professionalism, good time management and efficiencies to the role.

 

Kim and her husband have been based in Christchurch for over 20 years and originated from Central Otago where they both grew up. They have three teenagers so Kim know’s first hand how busy managing life, money, kids and family can be.

 

Kim enjoy’s spending time with family and friends, should do more exercise than she does and recently brought a bach where her family and friends are now creating time spent memories that she hopes will carry her kids through to adulthood.

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