Tammy is the Managing Director at Davenports Law and leads the Trust Law and Wealth Protection team. She is a trust and asset structuring specialist with over 25 years legal experience specialising in the areas of personal asset planning, trust law and Property (Relationships) Act. She enjoys providing clients with advice and assistance on a broad range of issues involving the structuring and establishment of asset plans, interpretation of trust deeds, the management and administration of trust funds and trust disputes. An important part of Tammy’s practice is reviewing existing asset holding structures to ensure they achieve the needs and requirements they were established to meet. She is also experienced in Property (Relationships) Act issues and advises clients on both contracting out agreements and separation. She is only one of a handful of lawyers nationally who specialise solely in the area of trusts and asset planning, and is one of the leading lawyers in her field. Tammy is a past president of the Auckland Woman Lawyers’ Association and past vice-president of the North Harbour Club, a charitable organisation on the North Shore. Tammy is a member of The Law Association Continuing Legal Education and Committee and is on the panel of interviewers for those looking to practice on their own account for the New Zealand Law Society.
James and Megan owned 50% of the shares in a bar. The other 50% was owned by their good friends, Mike and Delia. Mike and James had gone to school together and had always talked about owning a restaurant/bar together one day. That dream finally happened around five years’ ago and they opened their doors in a tourist hotspot, in central Auckland. They were keen to get lots of custom from visitors on cruise boats as more and more were visiting Auckland.
The bar went really well in the summer months and then slowed up in the winter with less visitors to Auckland, but was still viable. James and Megan had used their family home as security to raise the funds to put into the business. James had also given personal guarantees to trade suppliers and also their landlord. They owned their shares in the business in their personal names. Mike and Delia on the other hand had their family home and the shares in a trust. James and Megan had thought about a trust, but it seemed like a lot of money to set it up and then they simply didn’t get around to it.
Then in early 2020 Covid 19 struck. The bar had to close for eight weeks. The cost of closing the doors by itself was enough to put the business under immense pressure, but coupled with the fact that there would be no cruise ships or tourists for the foreseeable future, James and Mike had to seriously think about their options.
The debts were high – they owed money to their employees, their suppliers and their landlord. The bank was getting nervous. James and Mike were worried about the tax they would need to pay at the end of August. They took advice and decided to put the company into liquidation.
It soon became clear that James and Mike were in very different positions. Mike’s assets were all protected within his trust, while James were in his personal name which made it a lot easier for the personal guarantees to be called up. While Mike wasn’t looking to walk away from his responsibilities and debts, having the trust gave him options that James simply didn’t have.
Trusts are designed to protect assets and give flexibility. In good times they are like insurance – there if you need them. In bad times, your trust may give you choices. If you are in business you definitely should consider putting your assets into a trust to give you flexibility in good and bad times.
Tammy McLeod, 09 915 4386
tammy@dhlawyers.co.nz www.dhlawyers.co.nz
