March 2000
Good Afternoon
How to avoid losing your Family Home And Literally
Being Thrown Out In The Street.
Protect your new family home and put it in
a trust.
Trusts and wills, the vehicle we should all be using to protect
our family, family home and other valuable assets. Do you know
your lawyer well enough that you'd be pleased if they rang or
wrote to you saying, 'hey client or friend, I need to show you
how to protect your family home or investment or stop you being
thrown out in the street if you unintentionally do something to
someone and they sue you to recover the cost of the damage you
caused"? I think we'd love to hear from our lawyers when
they can solve problems we never knew we had. Setting up a trust
may cost you a couple of thousand dollars, but it's an investment
not a cost. So I ask again, have you heard from your lawyer about
wills and trusts? Probably not, maybe they don't need the work.
I think most people have a basic understanding of what a will
can do for them, except most of us are guilty of not updating
them often enough, say once every 2 - 3 years. But it's trusts
I want to cover today.
I do not confess to knowing much about trusts. But what I do
know is that a trust can prevent your assets from being sold out
from under your feet to pay for an unexpected disaster. Basically,
as I understand it, a trust is like a separate entity (the trust
account) removed from personal ownership. Valuable assets are
either purchased under the name of this separate entity (or trust)
or transferred to the entity (or trust) from personal ownership.
A private trust is usually administered by at least three (usually
separate or independent) people called trustees. One of those
trustees is often your lawyer, but all trustees are nominated
by you with their permission (some trustees may need to be paid
for any time spent administrating the trust). The trustees administer
the trust ( mostly under your instructions) for the benefit of
what's called the beneficiaries. A beneficiary is someone who
would benefit if the assets held in the trust were to be sold.
Most common beneficiaries in family trusts are yourself, your
family/children or any other person or people or organisation
you nominate.
What assets might be held in a trust? The family home and maybe
the property or properties you own associated to your business.
I'm not sure about assets like valuable artwork or jewellery.
But frankly, I don't see why anything of real dollar value can't
be placed in trust, that's something you'd need to discuss when
you set up the trust.
In a nutshell, the trust removes the ownership of your asset
from you (under law) and means it can only be sold or modified
by the trustees under your instructions for you or the nominated
beneficiaries' benefit. Therefore if you were to be sued, those
assets held in trust could not be sold to pay for any liable costs.
Here are a couple of examples which have been prominent in the
news lately where people or families have lost everything, including
the family home and family farm, due to circumstances beyond their
control.
Remember the farmer who allowed the beekeeper to place hives
on his farm property about three years ago? As the bee keeper
was driving off to place his hives, the farmer said : "Don't
drive across that bridge over there, it's not safe". The
beekeeper didn't take any notice, the bridge collapsed under the
weight of the vehicle and he was killed. OSH took the farmer to
court, claiming he was aware of the hazard but failed to repair
or distort, the bridge so was liable. As I understand it, this
case went to court twice. The first time, OSH won and sued the
farmer for being in breach of the act. The farmer appealed and
second time around the case was dismissed. However the farmer's
legal expenses were such that the family farm had to be sold to
pay for legal expenses.
Then earlier this year a tramper/recreational hunter in Christchurch
accidentally set fire to a hillside after his camp fire got out
of control. Although an experienced tramper and responsible citizen,
the camp fire sparked a bush fire. In this instance the Fire Service
took the tramper to court to recover costs plus damages. The end
result is that the tramper got a bill for about $250,000 and was
forced to sell the family home.
And something that happened to me a few years ago that left me
shaking my head in dismay over human behaviour. During the early
stages of development around our showhome site in Masterton, I
was walking back to the office with an American couple. In the
direction we were walking was a fence post hole that I had covered
with boards. As we approached the hole the American woman stopped
in her tracks and said, and I quote : "if I were to fall
in that hole, I'd sue you". Needless to say, I was left speechless
and quickly ushered her to the gate.
In summing up, what I've tried to show you is that in today's
environment we will be made to pay (dearly) for our mistakes or
misfortune. My advice is, take steps to protect your family or
life investments and make an appointment to see your lawyer today
about setting up a family trust.
The most commonly asked question is : "How
much is it"? And how the answer to that question could see
you getting ripped off.
When people are looking at a product they like, and in our case
it would be our showhome or one of our brochures, the question
most often asked is: "How much is it"?. I think you'd
agree that if you're thinking of building a new home it would
seem like a logical question. But interestingly, according to
research, it's not as straight forward as that.
So why do people ask about price, and what information do they
expect to gain from it? For the benefit of this article we'll
be referring to new homes as the product, the person thinking
of buying as a client and the seller as a sales person. Ok, so
the sales person gives the client a figure. What does the client
instantly do? They analyse the figure to see if they believe they
are getting value for money. They may think it's far too expensive
or this is cheap, but compared to what, the client can only compare
when two separate companies are selling an identical product.
And because new home building companies are never producing identical
products, it's impossible to get a comparison. Therefore a price
or price list is a waste of time, and should only be used as a
guide.
When I'm asked about pricing I tend to say: "I'm pleased
you asked that, but before I answer, let me explain how pricing
works because pricing is a subject that is very misunderstood.
At the end of the day, what is pricing? It's someone else's preferred
style, shape and standard of materials and finish" (ie: The
price has been made up by using the materials and styles selected
by the housing company for the benefit of the housing company,
not the client). Remember there are more combinations in selecting
building materials than Lotto number combinations, and every time
you change the combination the price changes, that's why I say
price lists must only be used as a guide.
Then I say something like: "The cost of any house is never
determined by size, instead it's always the style and quality
of materials used. It's that which determines the overall standard
of finish and value of investment. As an example, we could build
an 800 ft² palace or a 3000 ft² box both costing the
same amount. Or - take the showhome. We have built to replicate
a turn-of-the-century colonial villa. We wanted to replicate a
style with budget less of a consideration. When we are to build
on your property, identical to the showhome it would be $213k
excluding chattels. But for the true enthusiast who wants more
authenticity and budget isn't such an issue, some clients have
spend an additional 80 - 90 thousand dollars to achieve their
desired look. On the other hand, one client budget was only $145k
& built that too, same size, same floor plan, the difference
is all based on the specification, ie: standard, quality and types
of materials used. We simply go through a simple system of matching
your preferred size, preferred style and budget.
New homes in New Zealand cost on average between $900 and $1,500
incl gst per m². Often people are trying to work out what
a house and land package will cost so they then have a dollar
figure for what they spend on land. I always suggest not to budget
for less than $1,000 to $1,100 per m². Mentally, it's easy
to work out a quick calculation of what a package will cost, with
the only other piece of the equation being the services (ie; sewerage,
water, electricity and phone etc) from source to dwelling. For
more information, why not give me a phone call on 0800-66-77-27.
Many of that collected brochures etc from the office were asked
for you & your partner's birthday & month. We did this
to send you out to dinner free on or about that day. Unfortunately
due to matters beyond our control we have to can it, just for
awhile.
Finally, most of our plans are drawn on the computer which means
that you're able to see what your new home will look like (inside
and out) either on the computer or on the printed plan before
you've finalised the working plans. This is a real benefit for
those people who have trouble visualising what a house will look
like from just ordinary plans drawn by hand.
Copy of a great article out of Consumer
magazine - Melting Moments With A Wall Oven.
|
Earlier this year Bill and Pauline Hunter of Wellington bought
a new kitchen from Wellington Kitchen and Bathroom Company
(WKBC).
A builder installed the joinery, along with new appliances
from retailer LV Martin. These included a Fisher & Paykel
wall oven, which was installed under the bench next to a set
of drawers, in accordance with its instructions. But when
the Hunters used the oven at 220°C for under an hour,
the PVC strip or edge-clashing" on the sides of the drawers
peeled off and shrivelled up.
Bill Hunter contacted the joiner, WKBC, which checked with
the importer of the PVC strip. Yes, this strip was designed
to withstand the maximum temperature of 90°C for joinery
surfaces next to ovens, as specified in the safety standard
for ovens. We have also confirmed that the glue WKBC used
to hold the strip in place was rated 90°C.
The Hunters then called LV Martin. An F&P representative
confirmed the oven has been installed correctly. The retailer
ordered some tests of the oven, sent the results to F&P
and gave the Hunters a copy as well.
The Hunters waited to hear from F&P. In the meantime
WKBC repaired the damaged to the drawers free of charge. But
the Hunters were obliged to use the oven with the adjacent
drawers pulled out, in case the damage reoccurred.
Two weeks later, F&P had not responded, so Bill contacted
the company. He was told the problem was being assessed. But
after another three weeks, he had heard nothing more, so he
contacted us.
F&P then replied to Bill's letter. It arranged to do
its own tests, which it say show the oven complies with the
safety standard. Nevertheless, F&P replaced the oven door.
The Hunters tried the oven at high temperatures with the drawers
pushed in. The problem has not recurred.
Whether it was caused by a faulty door or inadequate joinery
is unclear. But damaged to kitchen joinery adjacent to built-in
ovens is common. Joiners have told us it usually occurs with
PVC foil or "themowrapped" joinery, not PVC edging
used in the Hunter's case. We also know that such damage can
occur next to many brands of oven, not just F&P, and that
some joiners use materials that do not withstand 90°C.
F&P has told us it is aware of certain joinery materials
that will not withstand the maximum adjacent temperature specified
in the oven standard, and is expanding its installation instruction
to cover this. That's good to hear.
It is disappointing that F&P took a long time to respond
to the Hunters. Alb Carlton of F&P's range and dishwasher
division says: "We normally have a turnaround of seven
days for replying to customer letters, and admit that this
lapsed badly in this case.
OUR ADVICE (CONSUMER)
The joinery industry is working with oven manufacturers, including
F&P, to try to avoid problems with ovens and kitchen joinery.
If you're getting a built-in oven, make sure any joinery products
flush with the sides of the oven are rated to withstand temperatures
of at least 90°C, for as long as you're likely to have
the oven on. Check you have appropriate guarantees.
|
Regards
Julian Moss
Oh PS: More and more inquires and sales are from beyond the toll
free area of our office. Because of this, for your convenience I
have installed an 0800 Free-Help phone line to our office. So if
you have any questions or queries you can contact me (that's Julian
Moss) on:
0800 MOSS BROS (6677-2767)
And PPS: If you have some burning issues that you'd
like answers to, write or phone me, I'll research your subject and
give my reply in the following newsletter so that thousands of others
may benefit from the information.
|
