Starting a business in New Zealand? Discover how to protect your personal assets and avoid disputes with trusts, shareholders agreements, and proper legal planning. Talk to Core Legal today.

Protecting Your Assets in Business: Why Early Planning is Essential

At Core Legal, based in Masterton and Wellington, we frequently see the consequences of business owners not properly structuring their affairs. One common story? Friends go into business together with only a handshake—and years later, when things go wrong, they face expensive disputes and personal liability.

A recent case saw a business fail when one director lured clients to a competing company. With debts mounting, creditors sued the business and the directors personally, due to the absence of formal agreements and asset protection measures.

Here’s how you can avoid this fate.

1. Set Up a Trust Before Going Into Business

A family trust is one of the most effective ways to protect your personal assets from business-related liabilities. It removes assets—like your family home or company shares—from your personal ownership, helping shield them from creditors if something goes wrong.

However, trusts need to be:

• Established before entering risky ventures

• Properly administered (with annual meetings, accurate records, and trustee decisions)

Remember, a poorly managed trust won’t hold up in court.

Also note: Trusts alone don’t protect against relationship property claims. If you’re in a relationship and want to keep certain assets separate, a contracting out agreement is usually required.

2. Document Everything in Writing

Verbal agreements and handshakes are risky. You should have:

• A signed shareholders agreement (to govern share transfers, disputes, or incapacity)

• Clear employment contracts and supplier agreements

• A formal lease agreement for your premises

Shareholders agreements are crucial if there’s more than one owner. Without one, a spouse could inherit shares upon death—potentially disrupting the business.

3. Get Your Will and Powers of Attorney Sorted

Your Will should reflect your company ownership. Shares can be gifted separately depending on your company constitution or shareholders agreement.

Also, if you lose mental capacity, your business could be in limbo unless you’ve appointed:

• An Enduring Power of Attorney for personal and financial matters

• An alternate director or a company Power of Attorney to manage your business role

4. Act Now—Not When It’s Too Late

Many business owners wait until issues arise before seeking legal advice. But by then, it’s often too late. Sorting your legal affairs upfront is faster, cheaper, and more effective than going to court to fix preventable issues.

Contact Core Legal Today

At Core Legal Masterton & Wellington, we specialise in helping business owners protect their assets and future-proof their ventures. We offer fixed-price initial consultations so you can understand your options from day one.

Contact us today to ensure your business and personal affairs are secure, clear, and protected from the start.