August, 2018 - Parry Field Lawyers

“To go fast, go alone. To go far, go together”

Returning from a conference it is always important to reflect on some of the themes and key learnings while they are fresh. I’ve just come back from three days at Te Papa with around 500 attending the biennial Philanthropy Summit 2019 which is organised by Philanthropy New Zealand. This post describes the highlights and gives a chance to type out some reflections.

Overview

In this post I am going to explain what I attended at the conference (info here) and set out any key learning from that – perhaps the particular stream of which of the four workshops I chose and what I took from the keynotes will even help others who attended and went to different sessions. Also, I am linking within this post any of the content I recorded (with permission) so that others can benefit from it, if they choose to do so. I host a podcast called seeds which is a platform for sharing interviews about inspiring people as well as other challenging content that helps build up the ecosystem of knowledge here in New Zealand. Where a session was recorded on video will add those links too. The reason for making the effort to record and democratise access to the information is that I have been challenged by Kaye Maree Dunn recently who asked in a Korero, “so, who is not in the room??” When we are having our discussions this is important to ask – and the follow up is how can we at least make content more accessible to those who are not able to attend for whatever reason. Seeds is one way to empower those who could not be there by spreading the knowledge.

Conference Overview

The theme was “The Future of Trust” and the conference was organised by Philanthropy New Zealand with 19 sponsors such as AMP Capital (and a big shout out to Rebekah Swan and Emily Woodland who invited me along). I enjoyed attending the conference because it got me out of the silo of only being with other lawyers or professionals – there were few of those here. Instead, those in attendance were mainly from large and small Community Trusts, private family foundations as well as people on the ground working in a variety of charities and social enterprises. Keynote speakers included Sir Stephen Tindall and Dr Jane Goodall – there were 9 key notes in total. There were also many workshops with 4 sessions of breakouts and 8 running at each for a total of 32 sessions. I counted in the program at least 140 different speakers who were involved in delivering content and there were around 500 who attended.
The event was curated well with a particularly noticeable and really beautiful strand woven through of Te Ao Maori that went beyond mere tokenism – for example, not only did key note speakers have a song sung for them when they finished, some of the topics tackled were thorny and not easy to grapple with (such as one key note “Undoing colonialism to do good: building constructive relationships between philanthropy and tangata whenua”). That session (discussed below) really raised the difficult – often ignored – issues around the current state of our society.

My hat is off to all of the volunteers and organisers led by Sue Mcabe and Yvonne Trask. These events take a lot of mahi – the content described below is good but just as important are the connections made over coffee or lunch, collaborations started and ideas shared that may only have measurable ripples some years in the future. It is possible that thought leaders in an area have connected with others and through challenges received each of their research and understanding will go deeper. The “vibe” in the room was not one of white privilege giving out grants – instead questions were being asked of how change can be empowered and enabled at a structural level and new ways of thinking about philanthropy encouraged – both from a Te Ao Maori perspective as well as looking to the next generation and harnessing their ideas as well as recognising the diverse ethnic communities in Aotearoa.

The Themes

As a way to break down the main theme of “The Future of Trust” there were many breakout sessions that you could choose from often centred around the following four themes:

• Future trends in Philanthropy: What changes are coming?

• Building trust: engagement and relationships and how to build them to in turn build capability

• The work we do: the “how-to” and a focus on the practical side to enable bigger change

• Impact: what difference are we making and how do we know?

Dinner: Disruption and the future of Philanthropy

First up for me was a dinner hosted by Sam Stubbs from Simplicity. This was an intimate discussion over some really good food with the focus on disruption and technology and how it is changing the face of philanthropy – and how it might change even more. Sam explained how Simplicity works and how it would not have been possible even a few short years ago. Operating a Kiwisaver scheme where a large amount is given away to charities is a unique business model for sure. We had an interesting debate about whether they are a social enterprise or not, probably concluding that the terms fade in importance when what you ultimately need to consider is “impact” and how it is reported on – the word I am hearing more and more these days (and using myself!). I encourage you to check out what they are doing as they are seeking to disrupt the traditional banking models and drive lower prices for consumers while also doing good. It was an engaged group

Key discussion points:

• The next generation is not trusting institutions and looking for online recommendations/social media guidance – threat and opportunity;
• Consumers have desire to do good with their dollar and technology enables them to do that;
• What form does new reporting take on impact?;
• Is there a new paradigm coming where business itself is transformed (see Akina report “Structuring for Impact” released in April here and discussed in detail here).

Key note: “The future of people, planet, money and technology”.

The next morning the first keynote discussed “The future of people, planet, money and technology”. There were four speakers who provided different perspectives on each aspect of that. An interesting perspective was provided by Matthew Monahan who had sold his tech start-up in America and moved to New Zealand several years ago. He talked about his philanthropy journey and helping set up the Edmund Hillary Fellowship here. Each of the other speakers (Rod Oram, Shamubeel Eaqub and Tahu Kukutai) shared their concerns about the state of our world and the need to take action individually and collectively if we want to halt the big issues facing us of climate change, economic disruption and relations between Maori and Pakeha.

Key discussion points: We have the data, we know the state of issues like climate change – what next? Do we inherit the planet from our parents, or hold it as guardians for our children?

Brave ideas

Interspersed through the days were 5 minute talks which provided short challenges. These were:
• Lani Evans from the Vodafone NZ Foundation: Declaring our intentions and launching the NZ Youth Accord – see www.nzyouthaccord.org
• Manaia King and Chelsea Grootveld from JR McKenzie Trust: On Internatioaln Funders for Indifenous People
• Sam Stubbs from Simplicity on whether companies love their shareholders more than their community
• Leighton Evans from Rata Foundation on the idea of a tradeable impact investment market
• John McLeod from J B Were on The changing shape of giving in New Zealand.

The talks by Lani, Sam and Leighton are going to be put up as a short podcast episode on seeds in the near future so be watching out for that…

Breakout 1: Investment trends and the case for impact investing

This whole breakout has been released as a seeds podcast bonus episode here because I thought the content was great and deserved to be heard by more than the 86 in the room on the day.

Description: This workshop will provide insights into the future of investing, and will pay particular attention to the role of Responsible Investing generally and impact investing in particular. The workshop will be interactive and will provide practical advice and useful insights for everyone with an interest in future-focussed investing.

I was fortunate enough to be able to help out with facilitating the Q&A session here and realy enjoyed that. Prior to that the four speakers, Rebekah Swan, David Woods, Emily Woodland and Clive Pedley had shared their perspectives on investment trends when it comes to impact investing. If this is of any interest then suggest you listen to the podcast episode.

Key themes and questions:

• how do you actually measure “impact” across diverse sectors and drivers;
• how you report on it – what shape will reports in the future take and will their be standards of how you talk about impact?
• What due diligence is needed into an entity beyond the usual financial checks when you are also concerned about impact?
• How do you build a community of investors who are willing to think in this way and could there be co-investment opportunities?

Key note: Undoing colonialism to do good: building constructive relationships between philanthropy and tangata whenua.

This was a two part session with Ani Mikaere (Te Kahui Whakatupu, Te Wananga o Raukawa) and a response to her talk from John McCarthy (The Tindall Foundation). Probably one of the most challenging sessions the questions being asked were cutting to the heart of our society and asking if we are perpetuating colonialism. At a personal level the challenge to me was to think more deeply about my attitudes and whether I am truly seeking to know and understand the perspective of others. For example, do I suggest that the headings in a document be translated into Te Reo when nothing else will change about the organisation? How do we deepen the engagement and willingness to listen closely and what does that mean practically? Those were some of the questions that surfaced for me while listening to this talk.
John McCarthy gave a response to the talk from Ani which showed that he had been grappling with similar questions in his role at The Tindall Foundation. I spoke to John afterwards and learned that they have been having someone come in every two weeks or so to provide guidance and training in both Te Reo but also the culture so that it can be better understood among the staff.

Key themes and questions:

• How much do we each know about the past and have we thought about what the implications are for the present?
• What does meaningful engagement look like and what shape does that take?

Breakout 2: Bridging the generational divide to redefine philanthropy

This was a fun session with four young people who have each started their own charities/businesses or gotten involved in some way with movements that challenge the old ways of thinking. The description of the session was:

Millennials are doing things differently, redefining generosity, disrupting traditional models with radical collaboration, harnessing technology and social capital to drive positive impact. But how can we work together better across generations? We know there are challenges from succession planning, to funding youth-led change. Share your questions, concerns and opportunities leading us to find common ground so that together we can re-define philanthropy. We know you’ll leave with golden nuggets to take action on!

This session was recorded on video here.

It will also be released as an audio episode of seeds soon.

Key themes and questions:

• how do you transfer wisdom between generations – is it a baton passing? Is it another wave rolling in? Do you reinvent / disrupt the old ways or adapt the old and combine with new thinking?;
• how do you identify and encourage those young people with skills coming up and give them opportunities for leadership – and potentially failure too – so that they can learn and grow;
• What does the next generation need, particularly millenials, who may want to be fluid with how they use their time and what they are supporting/

Parry Field’s Senior Associate Steven Moe was recently interviewed by E Wen from The Teen Entrepreneurs:

Why did you start the Seeds Podcast?

I wanted to tell good stories, and podcasts are a great platform to connect via audio and go deep with people to really find out what makes them tick.

We can get to the ‘why,’ not just superficially stake over what people ‘do.’

Our interviews typically last for an hour, so I can ask guests about their childhood, that time they lost someone close to them, what it meant to move countries…

All that then informs the second half of the interview, where we do talk about what they are doing.

My hope is simple: to tell stories that inspire others to start their own.

What’s your Story and the back story to Seeds?

My day job is as a lawyer helping entrepreneurs, so I kept meeting people with amazing stories but often no platform to share their own journeys and what they have learned on the way!

The podcast provides that platform and now has more than 80 such stories.

I did a history degree and so for me, the Seeds podcast is like recording contemporary history, so that a moment in time is crystallised and others can learn from that.

I try to get real diversity so every week the listener will be surprised at how different it is to the last week.

For example, I might jump from an entrepreneur to a poet, to someone with a disability – but consistent across all of them is that these are people acting with purpose in their lives who look to make our world better.

As for me personally, I love to read stories and write them and tell them and have also lived in six different countries for more than a year each, so I appreciate the incredible diversity and beauty of our world.

Seeds is one way for me to help get some good stories out. I grew up here in New Zealand (despite my accent) and returned at the start of 2016 after 11 years overseas working for an international law firm in Tokyo (four years), London (three years) and Sydney (four years).

In my work as a lawyer offshore I had gotten used to large scale commercial transactions (occasionally in the billions of dollars!).

On my return, I was looking to do things differently and embrace the mid-life crisis of ‘what my purpose’ was. So, I have had a shift in focus while continuing to work as a lawyer.

That led me to write Social Enterprises in New Zealand: A Legal Handbook (a free ebook I send out to anyone who wants it).

I also wanted to find ways to ‘add value’ and kept meeting amazing people with stories that deserve to be told but had no platform for that.

So that was the reason I explored the idea of a podcast and Seeds was born from that.

As for the name, Seeds look dead – give them the right conditions and new life springs up.

I want each interview to be like a seed that people listen to and something may grow from it in their own lives.

What does Social Entrepreneurship mean to you?

To me, it is about connecting the heart (why we want to do something) with the mind (the rational business focus).

Too often we let ourselves be dictated by our mind and pursuing a career and leave our hearts behind.

Social enterprises unite the heart and mind because you are using your mind through business to advance a social or environmental cause which is driven by your heart.

So, you can start a business you believe in!

The next generation gets this stuff easily – in the entrepreneur incubators I see many initiatives that have some social or environmental outcome they are aiming for as well.

Imagine you have been transported back in time. Reliving life as a teenager, what would you want to change?

I often ask guests what they would change. Most say … nothing!

I agree with that. Because each of us have our circumstances and the journeys that formed us. Embrace it, learn from it, let it shape you and give you empathy with others.

Really listen. Stay curious.

When I was 20, I moved to Japan for a year to teach English. Many people said I should finish a degree and start work but my reasoning was:

1. Don’t make choices that mean you will live with regrets and ‘what ifs’
2. When I am 90 looking back on my life, taking a year out to explore the world will have made me a richer person. It did!

What has been your biggest obstacle in establishing Seeds?

One thing is that I get very little feedback from listeners. I know 22,000 people have listened across all the episodes, but I don’t know their identities or if it really helped them, apart from they keep listening and numbers grow!

So, it can be a little lonely to work hard on something like this and get little feedback.

However, when I do get feedback, it is usually enough to keep me going – like someone who wrote to thank me as it had helped them in a career decision.

Someone else thanked me for recording their father’s life as he died two months later of his cancer.

If you listen and subscribe to Seeds – leave a rating or review so I know what I’m doing right!

What’s one piece of advice you’d give to young people finding their own way in entrepreneurship?

Take time to reflect and know who you are before you decide what you will do.

Peter Drucker was one of the most influential thinkers on management of the last century. He was born in 1909 and died in 2005 so his life spanned a century during which he wrote 39 books and countless articles. While I had heard his name before, he came to my attention recently when I was preparing a reflection about what we each are building with our lives here. He had made a story famous which I used and so it sparked an interest to learn more about him as well.

So when I came across a piece by him in a compilation book of articles called “On Leadership” by the Harvard Business Review, I was curious to see what he had to say on the topic of what makes an effective executive. Essentially his argument is that to be an effective leader it is not so much about charisma or whether a person is introverted or extroverted. Instead he boils it down to eight essential questions or patterns of behaviour which really set them apart. Some of the key ones were:

Thinking and saying “we” rather than “I” – authority comes from gaining others trust so consider what the organisation needs not what you need;
Developing of action plans – specify what the results are that you want and understand where the constraints are to achieving them. Include check in times and also the ability to pivot to seize new opportunities;
Taking responsibility for decisions and communicating those – accountability is important so be clear about who makes decisions and regularly review processes;
Focussing on opportunities, not problems – putting out fires and solving problems is short term and to grow an organisation needs to seek out new opportunities. Match your best people with the best opportunities; and
Running productive meetings – be clear about the reason for meeting and finish them once that objective is achieved. “Good executives don’t raise another matter for discussion”. Then follow up to summarise the meeting and agreed next steps.

The short article was consistent with other things I have read by and about Peter Drucker as they always emphasise having a strategic approach focussed on the long term. For me the key takeaway was the first point mentioned about the words we use. It is tempting in our individualistic culture to talk about ourselves and “I” more than emphasising team and “we”. But the language that we use is a model for how we actually perceive things and so it is important to be conscious and deliberate in how we choose our words.

The Legal Mashup is back!

With a focus on social enterprises, not-for-profits and charities, Parry Field Lawyers will be having another free evening of discussions on the topics you want to hear about.

When? Tuesday 4th September at 6pm.

Where? XCHC, 376 Wilsons Road, Christchurch

RSVP to Steven Moe at stevenmoe@parryfield.com with a question or topic you want to be covered and we will add it tot he list and cover all we can!

We look forward to seeing you there

Social enterprises have become a trending term in the business world over the last year, as proven by the more than 1,600 delegates attending the Social Enterprise World Forum in Christchurch last year. But what are some of the concerns with the legalities of social enterprises? And what actually is a social enterprise, anyway?

What is a social enterprise?

To start with, we need to get the definition right. In New Zealand the Ākina Foundation works in the social enterprise sector and its definition is a good one: Social enterprises are purpose-driven organisations that trade to deliver social and environmental impact.

The key word there is purpose. Traditional business has had more of a focus on profit than purpose. In fact, that focus on profit is baked into our business model. For example, how important the shareholders of a company are and the focus on the directors returning profit to them.

Social enterprise flips that around and places the primary importance on purpose over profit. While these are businesses which are trading and they need a profit to continue, there is often some other reason for their existence beyond the money factor. In the past we might have relegated this ‘do-good’ approach to the realm of charities and not-for-profits. Social enterprises bring purpose front and centre and, perhaps most critically, provide a self-sustaining model for achieving good in society. Think about it – how are charities and not-for-profits operated? Often they are dependent on grants or funding streams, which may dry up over time and as the political climate or giving habits of donors shift. Social enterprises are longer-term solutions that often address real needs in a practical way. They seek to combine the heart of charity with the profit-making mindset of business.

Other factors making social enterprises different

This all may be intriguing, but what are some of the additional elements that set social enterprises apart?

1. Purpose: This should be clearly defined and set out

2. Profit distribution: A percentage should be reinvested into the purpose (how much is a point of debate)

3. Asset lock: May provide for the distribution of assets on wind-up to another similar entity acting for a comparable purpose, and

4. Reporting: Transparency and clear communication of how the purpose is being fulfilled and its tangible impact.

In New Zealand, there is no bespoke form of legal entity for social enterprises. If an entity has most of the elements above then it may start calling itself a social enterprise. In other words, there is no box to be ticked on a form or a particular legal structure that signals to the world that intention. This is in contrast to countries such as the United Kingdom, Canada and the United States that have adopted legal structures better suited to social enterprises.

Legal forms of social enterprises

Often a social enterprise will end up being a limited liability company. Some may choose to become charitable entities, either as charitable trusts or companies. There is a tension here, of course, because a charitable entity cannot return profits to investors. That means they are not the best option to raise money (investors seek a market rate return). In contrast, while a company may attract investors, it can be difficult explaining that the business has more than just profit in mind.

A good argument can be made that we need some new legal form that sits in the middle between a charity and a profit-making entity and embraces the best of both those structures. Such a ‘social enterprise company’ would certainly raise the profile of the sector and provide a means to empower those individuals who want to combine purpose and profit.

How might all this affect traditional business?

By now, you will recognise that the intention behind social enterprises is not new – people have acted in ways that go beyond profit for years. Often the outlet has been through charities (think op shops) so, in some ways, ‘social enterprise’ is just a fresh term and new way of expressing older concepts. What is clear is that it aligns with the next generation seeking purpose in their work. Often job interviews are not ending with questions such as, “Will I get a company car”, but instead, “How will my role contribute to society?”

Traditional business can learn from the approach of social enterprises and even be involved in supporting them in different ways, such as:

Social procurement: Consider how goods and services are secured. For example, at the next board retreat have lunches from a social enterprise catering company?
Purpose and vision: Whatever your business, it can be helpful to write down your purpose and vision. Get your ‘why do we do this?’ right as that can also help motivate staff, and
Impact: What is the footprint of your business? Who are your suppliers? Who do you employ? Is your corporate social responsibility policy gathering dust in a drawer?

Social enterprises are a growing force, but they will only have true impact if they can scale. To do that, they need traditional companies to better understand what they are and support them too.

Challenges ahead for social enterprises

Some of the challenges have been hinted at already such as gaining access to funding and finding buyers for the products made, or the services offered.

At the upcoming conference at Te Papa in April, Perspectives on Charity Law, Accounting and Regulation in New Zealand, there will be a session about social enterprises and where they fit in the not-for-profit world. Many charities are actively exploring what it might look like for them to start a social enterprise to diversify their income streams. Increasing education and awareness about the role social enterprises can play remains a challenge for the sector.

Another more subtle challenge is when businesses adopt the term ‘social enterprise’ as a way to entice consumers to buy what they are offering. This could result in the entire sector being discredited and dilute the true value of what the term stands for.

Looking ahead

This is more than a passing trend. The social enterprise sector is growing and it provides an alternative way of thinking about doing business. Whether or not you choose to be involved in starting a social enterprise or working for one, the principles that sit behind them have broader application to all businesses that are looking to have a positive impact on the world.

This article originally appeared on Idealog.

Several months ago we wrote an article on the key changes to the Overseas Investment Act coming into force later in the year (the article can be found here). The Overseas Investment Amendment Bill passed its third reading on Wednesday the 15^th of August and received royal assent on Wednesday the 22nd of August. The changes are expected to come to effect in October 2018.

These are the key changes that you need to be aware of if you are a non-resident foreign buyer hoping to purchase property in New Zealand:

Scope of “sensitive land” to include “residential land”

The biggest change to the Overseas Investment Act is that the scope of “sensitive land” within the overseas investment regime is being broadened to include “residential land”. This is going to make it more difficult for overseas investors to purchase residential land in New Zealand, as they will need to apply for consent from the Overseas Investment Office which will require that the investment is going to, or is likely to, benefit New Zealand.

You will not need to apply for consent if you hold a residence class visa, have been living in New Zealand for at least 12 months, have been present in New Zealand for at least 183 days of those 12 months and are a New Zealand tax resident.

We have also published a more detailed article on the effect of this change, which can be accessed on our website here.

Forestry rights and interests:

The amendment will also impose stricter regulations on the purchase of forestry rights and interests, requiring the application for consent under one of two pathways – the “modified benefits test” or the “special benefits test”.

It should also be noted that it will be the obligation of the purchase to ensure that they are complying with the Overseas Investment Act.

If you would like to have a look at the Overseas Investment Amendment Bill, you can access it here.

If you have any questions or concerns arising out of this article, please feel free to get in touch. This article is not a substitute for legal advice and you should talk to your lawyer about your specific situation.

Kris Morrison – krismorrison@parryfield.com

Paul Owens – paulowens@parryfield.com

Options for parents to help

It’s every Kiwi’s dream to own their own quarter-acre share of paradise. Unfortunately for many first home buyers today, not only are the quarter-acre sections fast disappearing into multicomplex developments, but it’s also becoming harder than ever before with an ever-rising property market. Every time you turn on the news, we hear something about the housing unaffordability in Auckland. Those south of the Bombay Hills start to get a bit glassy-eyed when listening to this on repeat. However, since the government’s introduction of the ‘LVR’ rules in October 2016 aimed at improving affordability in these markets, we must pay attention as all of New Zealand is affected.

The LVR explained

The loan-to-value ratio (LVR) is a measure of how much a lender will lend against a mortgaged property compared with the value of that property. Borrowers with LVRs of more than 80% (that’s less than 20% deposit) are often stretching their financial resources. As well, they are more vulnerable to an economic or financial shock, such as a recession or an increase in interest rates. The LVR rules permit lenders to make no more than 10% of their residential mortgage lending to high-LVR borrowers who are owner-occupiers. The effect of this means that in order to buy your first home, you now must have a 20% deposit. In the Auckland and Queenstown markets where the average property price is over $1 million, this is a big savings hurdle for the buyers who want to take their first step onto the property ladder.

Be informed

If you are financially able and willing to open your wallets to help, there are options to support your children who are struggling to meet the LVR requirements. In this article we outline some of the more common options available. Most importantly, the decision to offer a helping hand needs to be informed and time needs to be taken for each party to obtain the appropriate legal advice. Depending on the option/s chosen, there may be significant paperwork to be prepared that records the complexities of the ownership and security arrangements. This is not something that can be completed overnight. You should get the ownership structure agreed before anybody signs on the dotted line.

Option 1

Gifting some funds

In this option, your child acquires the property in their own name and a gift of equity of the shortfall of the 20% deposit is made from you to that child. Lenders typically want confirmation that the 20% deposit is the purchaser’s equity and therefore any financial assistance is generally required to be gifted. The gift would need to be documented by way of a deed of gift. If a gift is made, there’s no ability for parents to later on demand partial or full repayment. This is an important consideration from both a relationship property perspective for your child and also for your own future financial needs. You must be careful that your generosity towards your child does not get in the way of your own retirement planning. If you want to protect the gift made for relationship property purposes (if your child is in a relationship), your child should enter into a contracting out agreement to record the gifted amount as their separate property.

Option 2

Loan from parents

If you can persuade the lender to agree to a loan to your child rather than a gift, then the shortfall of the deposit amount can be lent to your child. The terms of the loan would need to be recorded, generally, in a deed of acknowledgement of debt. This would include naming your child as borrower, interest to be payable (if any), dates for repayment, the ability for the loan to be transferred to a second or subsequent property and, most importantly, the ability to register a mortgage as security for the loan.

Option 3

Guarantee from parents

Under this option your child would purchase the property outright and any shortfall in the 20% deposit can be guaranteed by you as parents. The guarantee should be limited to the amount of the shortfall. The lender would also generally require that the guarantee is supported by a mortgage over your own property. If you choose this option, it’s important that all parties talk to the lender early on. As well, there would be a requirement for you and your child to each receive independent legal advice. The benefit of a guarantee is that there is no money required upfront. There is, however, considerably more risk should your child default in their obligation to the lender.

Option 4

Joint purchase of property

If your child can’t afford to buy their own property, you could buy a share of that property. The title to the property would then have you and your child registered as tenants in common in the shares owned. This option provides some security and potential capital gain return for you as parents. With joint ownership, careful discussion still needs to be held with the lender regarding the required securities. With this option, it’s essential that a property sharing agreement is entered into between all of the co-owners. This records the terms of the purchase, who will pay for outgoings, repairs and maintenance, management of the property, what happens if your child fails to perform their obligations and, most importantly, an exit strategy for you as parents. Again, you and your child will need independent legal advice.

Option 5

Family trusts

A family trust could be used in many of the ways explored above, if the terms of the trust deed allow this. Family trust funds could be used to distribute or lend money to a child beneficiary to help them buy a first home. Likewise, the trust could provide a guarantee or be a joint purchaser. A trust, of which the child is a beneficiary, could also be used as the purchasing entity. Once again, specialised legal advice needs to be sought regarding the trust and structuring of any lending. If your child is reliant on a government grant for part of their cash contribution, the property must be owned personally for the first six months. No family trust ownership is allowed. Although trusts have historically been used to provide relationship property protection, this is no longer the case. Trusts can also be open to claims. Whichever of the five options above you choose, you should also review the terms of your Wills or Memorandum of Wishes for your trust. As well, it’s important to ensure that any assistance, gift, loan or any potential liability under a guarantee or co-ownership arrangement is taken into account when dealing with all your children on an equal basis (if this is what you want to happen). This will help protect against claims by disgruntled siblings if similar assistance has not been provided to them.

Important to get advice

If you are financially able and willing to lend a hand to your child to help them into their first home, there are options to assist with meeting the criteria of the LVR rules. Our adviceis to ensure you take control of the decision making and get expert legal advice on the options available to you before your child commits you to something that may not be the best option for you. Parents can provide valuable support but it must work for all involved.

How can we help you?

We have dedicated teams based in our Riccarton, Hokitika and Rolleston offices who regularly advise on and assist with a variety of property matters. If you have any questions arising out of the issues raised in this article, please feel free to get in touch. You can contact Paul Owens – paulowens@parryfield.com or Luke Hayward – lukehayward@parryfield.com, ring us on (03) 348 8480 or pop in to one of our offices.

Parry Field’s Senior Associate Steven Moe was recently interviewed by E Wen from The Teen Entrepreneurs:

Why did you start the Seeds Podcast?

What’s your Story and the back story to Seeds?

What does Social Entrepreneurship mean to you?

Imagine you have been transported back in time. Reliving life as a teenager, what would you want to change?

What has been your biggest obstacle in establishing Seeds?

What’s one piece of advice you’d give to young people finding their own way in entrepreneurship?

The Legal Mashup is back!

Options for parents to help

The LVR explained

Be informed

Option 1

Option 2

Option 3

Option 4

Option 5

Important to get advice

How can we help you?

Christchurch CBD

Christchurch

Rolleston

Hokitika