PONSONBY PROFESSIONALS

TALKING TRUSTS: ROB AND LYN'S

Rob and Lyn had set up a trust fifteen years ago on the advice of their accountant.

Tammy McLeod They owned their business 50/50 with another couple and at the time they set their trust up it was part of a restructure of debt, sorting out the shareholding arrangements in the business and asset protection. Not only was the trust a helpful form of asset protection with Lyn being a director in the company, it also gave them some tax efficiencies, as Rob was a stay-at-home Dad and income was able to pass through to him from the trust at a lower tax rate.

Rob and Lyn also liked having their trust as an asset planning tool. As well as their business, the trust owned their family home and bach and some other investments in managed funds. The bach was an asset that they wanted to be held long term for their two daughters who were now in their mid to late 20’s.

The trust provided the perfect vehicle to ensure that the bach could be kept in the family and the way they had worded their wishes, it would be retained unless a majority of their grandchildren wanted to sell it in the future. The trust also provided a great platform for helping their two daughters financially. It was a much easier conversation to have with their daughters’ partners that the trust required them to enter into a loan agreement, rather than if it was just Rob and Lyn!

Rob and Lyn’s accountant had always been their independent trustee. They had had a very good relationship with him over the years and they felt like their trust was well managed. However, their accountant had recently retired and sold his practice to a bigger firm. The new accountants said that they were no longer wanting to act as trustees, as the area had become so specialised and they thought the risk was too great. They suggested that Rob and Lyn set up a company where they were the only directors and shareholders of and that the company could be the trustee of the trust. Rob and Lyn thought that this sounded a bit odd – after all these years of having a well run trust they didn’t want to jeopardise their position by putting in place a structure that made them feel uncomfortable.

They decided to ask their lawyer what he thought. Their lawyer was lovely – he described himself as a GP lawyer, but had helped them with all the property transactions and their trust work over the years. He advised that due to the complexities of the trust law now, he was now advising that his clients seek specialty legal advice from someone who specialised in the area, so Rob and Lyn made an appointment with the lawyer he recommended.

The specialist lawyer explained to them that one of the most important things in modern trusts was having an independent trustee. She said it was very difficult to argue that your trust is an entity independent of you if you are the sole trustees. Further, even if it was a company, not you personally, if there was no independent element of your trust (i.e. an independent director or shareholder) it would be very hard to say that the trust was not just you, if it was ever challenged.

She said that these days “self managed” trusts were really a thing of the past and while it was not always convenient, a good independent trustee would help manage the trust and ensure that every administrative “i” would be dotted and “t” crossed. There are so many benefits to having a trust for those who need them that any pain associated with having an independent trustee would be outweighed by the gains of having a properly run, independent trust.

The lawyer also explained that lots of trust deeds do not allow a sole corporate trustee. It was important to read the trust deed and see if a company was able to act as the sole trustee of the trust. If not, then the trust deed may have to be varied, if possible, or they would need to re-think the structure of the trusteeship.

Rob and Lyn asked whether their eldest daughter could be a trustee. The lawyer cautioned against having your children as trustees while you are alive. In most cases, she said, people don’t want their children to say what they can and can’t do with the trust assets, and sometimes it may not be your children you have to worry about – it can be the people that influence them, i.e. their partners.

After the meeting Rob and Lyn decided to appoint the specialist lawyer as the independent, professional trustee on their trust. They knew they were in safe hands and that the administration of their trust would continue to be well managed, and that they wouldn’t have to worry.

For Specialist trust advice don’t hesitate to contact Tammy McLeod or the Trust team at Davenports Law.

PONSONBY PROFESSIONALS SARAH TROTMAN: GETTING READY TO REOPEN

While Auckland remains at Level 4 for longer, the rest of the country, having moved to Level 3, is swinging into action in preparedness for the increased normality that Level 2 will eventually bring.

While Level 3 is often described as Level 4 with takeaways, small businesses are permitted to operate if they can do so safely and maintain social distancing. This is the time some careful planning can go a long way to ease the transition into Level 3 and beyond.

Contact with Suppliers Making contact with suppliers now to plan for a resumption of deliveries may put you ahead in the queue. The pressure will be on once Auckland is in Level 3 and many businesses will be able to restart.

Good Communication Keeping good communication up with staff will ensure they’re on the same page and know the next steps to be taken. Make sure they have been given good notice of when they’re expected to return to premises and in what capacity. Some may be hesitant to return to their workplace and it is better you sort these issues out now before you actually get there.

Review Processes A review of your current processes may be necessary as there could be changes that need to be made to meet current standards. Any downward move in alert levels will be bringing more customers your way, so make sure you’ve investigated all options for maximising every sales opportunity with every customer.

Now that mandatory record keeping has been introduced, the onus is on the business owner to ensure customers either scan the QR code or manually sign in on a paper register. Failure to do so could result in a fine of up to $1000 for the business owner. Health and Safety Stringent health and safety protocols are in place for a reason and this may mean a change to office layout or workflow and the number of people permitted on the premises at any given time. If you are preparing to re-open in level 3, business owners can visit their premises to reorganise anything required such as setting up social distancing requirements during level 4, once a level drop has been announced.

Good hygiene practices such as hand sanitising, social distancing, masks and perspex screens are essential in every workplace. The government has signalled that, if necessary, they will tighten health and safety practices to leave little room for Delta to wiggle its way in. We all need to do our part to keep Delta out.

If you have had to make staff redundant during lockdown has this left you short staffed once trading is allowed again? With the tight labour market it may take extra time to find the skills you need so an early start to the process may be required.

Get yourself a Business Mentor But perhaps one of the best things a small business owner can do is seek help from a business mentor. Mentoring can provide support in a number of valuable ways, from learning time management skills, obtaining HR or financial guidance, sharing a problem and getting help to solve it, to generating new ideas and being connected into relevant networks. But most of all, business owners that have had a mentor say one of the biggest benefits is just having that sounding board and at times like these, independent, experienced advice can be a lifeline. (SARAH TROTMAN, ONZM)  PN

www.businessmentors.org.nz

LOGAN GRANGER: Cybersecurity tips for your business

We thought with another lockdown or lockdowns (who knows by the time this is published!) and with you and your team back working from home and remote working environments, it is a good time to review your cybersecurity.

The reality is any business is exposed in the current environment and we are seeing more and more intrusions of a cyber nature for clients and in the media and a greater degree of skill being applied by criminals.

Here are some basic and non-exhaustive cybersecurity tips to help you combat cyber-attacks:

1. Conduct a security risk assessment. Understand the critical threats to your business, such as system failures, natural disasters, together with malicious actions, and determine the possible impact they have on your business. You should conduct regular security assessments, especially those businesses that have client records or must adhere to certain standards and regulations. Regular assessments help you understand your current security measures and help you adjust the level of security your business needs.

2. Train your employees. Make your employees aware of the risks; train and keep them up to date on common scams and avoidance techniques. Because threats constantly evolve, you must frequently review and update your training to ensure it is current.

3. Use multiple layers of protection. Implement a password policy that requires strong passwords, that are regularly updated and changed; ensure you have a firewall, VPN, and antivirus technologies to ensure your network and endpoints are not exposed to attacks. Implement Multi-

Factor authentication, and hard drive encryption.

4. Keep software up to date. Unpatched and out-of-date software allow breaches to your security. Cybercriminals exploit software and vulnerable businesses using a variety of tactics to gain access to your computers and data. Don’t forget to keep your cell phones security up to date as well.

5. Create cybersecurity policies for your team. Write and distribute clear rules and instructions on cybersecurity best practice for your team. This may change from business to business, but you may consider policies on social media use, bring your own device (BYOD), authentication requirements, and such.

6. Back up your data. Daily (or more frequently) backups are a requirement to recover your data from any form of loss or corruption, or security breaches. There are many types of backups, tape, disk, cloud, on site, and offsite; it pays to have several, so if one fails another has it covered. Remember it's not just the backing up of data that is important, it’s the ability and speed of data retrieval as well for many businesses, as downtime can significantly impact your business’ ability to generate income.

7. Know where your data is. The more places you spread data, the greater the risk that unauthorized people will have access to it. Therefore try to limit the spread of your data and ensure when it is in multiple places you have good security practices for all of it.

8. Control access to computers and devices. Each access point creates an individual risk, so limit access to specific data your team needs to perform their jobs. Plus, keep administrative rights restricted to highly trusted team members with the skills and security awareness to keep your business safe.  PN

Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this article; always see your professional advisor before taking any action that you are unsure about.

JOHNSTON ASSOCIATES, 202 Ponsonby Road, T: 09 361 6701, www.jacal.co.nz