John Key - An Advocate of Family Trusts?
The trouble with being in the wrong place at the wrong time is you hear things which you have absolutely no right to hear and even less right to comment on. That unfortunately happened to me last week – twice!!!
The first conversation occurred between what is probably considered amongst the legal profession as two leading lights in their respective fields. For confidentiality sake and because I am not partial to being sued, I’ve changed a couple of the details but in the main the conversation went something like this:
“Hello Pete, I was hoping I’d find you here”.
“James, how nice to see you. Been meaning to call – got buried in the ABC Case”.
“Ummm. Heard about that. Nice win.”
“Pete, I want to talk to you about Mary Smith – you know the file I sent you a couple of weeks ago.”
“Yes ... I’ve read the file. James, I just can’t see this case being a winner. Mary Smith took absolutely no legal advice before investing in that finance company. Although thats a bit of an oxormoran – investments companies are meant to help you grow your money not lose it.”
“I know that Pete. And the Company is in liquidation. But perhaps we can sue the Director.”
“And what exactly is that going to do? All his assets are in Trusts. Been there for years. And hes got a Professional Trustee who I know. They would have made sure those Trusts are run right. Doubt we’d be able to bust the Trusts.”
“Not right Pete.”
“I know but there it is. Now how about a game on Sunday ....”
In this instance, I felt like being swallowed up by the large bookcase I was standing behind. I knew the truth in the conversation I had just heard. The Trusts had been set up years and years ago. The Professional Trustee would have taken all steps to run the Trusts right which meant there wasn’t much chance of a successful Trust bust. Not that it seemed it was going to even come near to that. If Pete wasn’t going to take the case, I doubt there’d be any other good litigator wanting to have a go.
My day of being in the wrong place at the wrong time, didn’t stop there. In the afternoon I was at my Doctors, sitting patiently in the waiting room. It’s not called a waiting room for nothing. Every time I go to the doctor, I have to wait. Patiently. So as you do when bored, you take notice of your fellow human beings and what they are talking about. This conversation that I overheard I didn’t feel too bad about. After all, we were in a public place. But I desperately wanted to say something. Which I couldn’t. Butting in would have been just plain rude. Here’s a bit of a replay of the conversation. Again, because Auckland’s a small town, I’ve changed some of the details.
‘Jane's going to lose everything. And Patrick's left her.”
“Thats bad. Is it over XXXXX Company?”
“Ummm. They mortgaged their own home to invest. Now they’ve got to sell their place. She’s so upset. I’m quite worried about her. Lost a lot of weight.”
“The papers say it all XXXX’s fault. He knew the company was in trouble. But he doesn’t care. His house is in Trust. I know cause my sister cleans for them.”
“If National gets in, they’ll do something about that. John Key won’t let people hide behind Familt Trusts. I think he’ll do away with them.”
“That’d be good. It’s not fair that they get to keep their BMW's whilst everyone else loses their home”
At this point the conversation ended as one of the women was called in by her doctor. Lucky her. Her waiting time was over. Patience. Patience. Patience.
That night, over a tall glass of vodka and orange, with no ice, I mused on both conversations.
Was having a Trust such a bad thing? Was having a Professional Trustee wrong? Did only dodgy people set up Trusts? Would John Key pass legislation to abolish Trusts?
My clients set up Trusts for loads of different reasons. Asset protection was one of them. But then what’s wrong with wanting to protect what’s yours. After all, most of us work hard enough for it. And it was true that I did help people run their Trusts. But that was my job as a Professional Trustee. Not much point in having a Trust if it wasn’t run right.
The majority of my clients weren’t dodgy people. They were ordinary mums and dads who wanted to look after their assets for their families’ sake. Some of them were in business for themselves. But they were good businesspeople, trying to make an honest living, not trying to scam other people out of their homes.
Besides I thought, putting assets into a Trust wasn’t the issue. It was how those ‘dodgy people’ ran their lives and their companies that caused damage. Having a trust to hold their assets had nothing to do with it. And as for John Key. Well I just couldn’t see it somehow. Looking at his background, work history and his campaign slogans, I reckoned John Key would be an advocate of Trusts.
Key was a man who came from a state housing background. Which meant of course he had a pretty good idea of how average New Zealand lived. He’d worked for a Bank in the finance sector so he’d be use to seeing Trusts around. And during his campaign he espoused the view that NZ could do economically better.
Seemed to me, Key believed in building up wealth, assets and economic reserves. And what better place to do that than in a Trust where assets were protected now and for future generations. Now he’d won the election, he was facing a tough challenge, coming to power in times of financial turmoil. Equity markets and credit markets were in deep disarray. Liquidly in the banking sector was a bit of a problem.
Yep he had his work cut out alright
And he was going to need good people around him to help make NZ ‘economically better.’ The people on his team would probably be like him. They would be at the top of their game. Undoubtedly, they would have already built their wealth and would be willing to lend a hand to help the country build hers.
And those people would surely have their assets in Trusts. After all, Trusts help protect and build assets. So my little grey cells brought me to the conclusion that Key wouldn’t be striking down Trusts - if he did, he’d strike at the very heart of the people who were going to help him get his job done.
Too much thinking. Clearly, there was no better time than right now to have assets in Family Trusts. That decided, I thought another vodka and orange was in order ...