I have been writing about the new REINZ sale and purchase agreement for buying and selling homes. It amazed me that only one quarter of people show these contracts to their lawyer before signing.
It's true the vast majority of purchases sail through fine. But some people dig themselves into some very expensive holes and become test cases the court.
Having a lawyer and accountant on your “team” is so important. There are an awful lot of problems that can be averted by getting your lawyer and accountant to give regular advice.
Accountants often say that they save more than they cost. They're an expensive bunch, but my experience has been exactly as they claim. Good ones can also look at the bigger picture of your investing and suggest ways to save tax.
They may also know tips and tricks that those of us who aren't specialists don't know about. That can include a four-year get a four-year tax holiday on your overseas investments if you immigrate to New Zealand or return from overseas.
Even if you're on the minimum wage and have no investments, an accountant may recommend starting a very small business from home so that you could claim against the tax on your day job a portion of your rent or mortgage against tax and other items such as tea and coffee and computer equipment and consumables.
Or if you're self employed, but have no investments, there may be ways with loss attributing qualifying companies (LAQCs) and other company structures to have some of your profits channelled to a non-earning spouse or children who pay tax at a lower rate.
Using a good lawyer to draft a watertight family trust and pre-nuptial agreement, if necessary, is a must. These need to be robust in court.
There are some real horror stories of trusts being bust open by ex partners, children's spouses and even the IRD. What's more corporate trustees, who control billions of dollars of family trust assets, have been accused by the Sunday Star Times of excessive fee-charging and haughty treatment of beneficiaries. The story, which is worth reading in full, was a real eye opener for anyone considering getting a family trust.
It's also important that the accountants and lawyers you use are yours – not recommended to you by a company trying to sell something.
I make a habit of attending presentations by companies that cold call me over dinner time and it's amazing how often these companies suggest that a lawyer isn't necessary, or only their lawyer really understands this product. My response to that is just look at what happened to Blue Chip investors who didn't get independent legal advice.