Barb and Roger had known each other since high school but hadn’t been in touch for a number of years.
Barb had gone off to university and became an accountant, and Roger had joined his father’s building company, completing his building apprenticeship. Barb met her husband at university, a dentist student who eventually became a successful orthodontist and Roger ended up marrying the daughter of a friend of his parents.
Skip forward 35 years and Roger’s wife had sadly died two years previously. Barb’s husband had left her for his hygienist. Roger and Barb re-connected at a dinner hosted by a mutual high school friend. Roger had three daughters in their early 20s. He had branched out with his father’s building company and they had now established their own development company and had several projects on the go at once. Their business affairs had become quite complex and there were multiple trusts and inter-entity guarantees involved.
Barb had come out of her divorce financially fine. She had given up her accounting career to look after the children from her marriage – two boys and a girl. This meant that upon separation her husband had to pay her an additional amount because of “economic disparity”. Barb’s parents had also recently died and not only did she have a freehold house and some investments as a result of her divorce, but she had also purchased a holiday home at Lake Rotoiti with her inheritance.
When Barb and Roger re-connected, they picked up on the mutual attraction they had had at high school. It wasn’t long before they were spending most of their time together and holidaying together. The kids were fine with it and pleased that their parents were now happy with their new partners.
Roger and Barb agreed that it would be sensible for Barb to move into Roger’s apartment in Milford, but they both agreed that they each had substantial assets that they each needed to protect. It was important to each of them that they protected the assets they had acquired, for their children.
Barb and Roger both had their own lawyers but agreed to go and see Barb’s as she was an asset protection specialist. Barb’s lawyer congratulated them on addressing the potential issues early on. She said that too many couples either buried their heads in the sand, thought their children would be okay with what happened in the future, or thought that their trusts would protect them.
She advised that trusts were still amazing asset protection vehicles and would do a great job of helping with the transfer of assets to the next generation, but what Barb and Roger really needed was a comprehensive relationship property agreement, setting out what their respective assets were, how they were held and what would happen in the event of not just separation, but also death. She said that too many people just focused on separation and ignored death and that the two scenarios were very different.
As Barb and Roger talked, they realized that while they wanted each other to be comfortable during their lifetimes if one of them died, they wanted to balance that with making sure that their children were okay and were able to get ahead in tough financial times. They also wanted to ensure that there were no fights within the families – they had seen this happen in friends’ families.
The lawyer recommended that they made sure that whoever they appointed as the executors of their wills and trustees of their trusts were appropriate people who wouldn’t be conflicted between the survivor of them and respective children. She gave them good advice around using professionals and making sure there was a balance of interests. They talked about structures that would give each of them security but would also ensure that their kids were okay too.
Blended families can provide situations that require quite complex asset protection structures. The key is to be like Barb and Roger and seek advice early. The longer you leave it, the more difficult it is to have the conversations and the more likely it is that children and others get involved and over- complicate the situation. There can be quite simple solutions to complex situations, but it pays to get advice from a specialist as to the best structure.
DAVENPORTS LAW, 331 Rosedale Road, Level 1, Building 2, Albany, T: 09 883 3284, www.davenportslaw.co.nz
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