bharatbhasha.com
Free Articles  >>  Business And Finance >>  Page 2822  >> 

Your Spouse in Business Matters





For many married couples, one partner is involved in a business whilst the other is not. It is rather surprising but quite common that both spouses are named as personal guarantors to financial institutions and other creditors for the business.

The truth is such personal guarantees are rarely a requirement of a contract and in case of default, the couple will lose everything.

So why do most lenders ask both spouses to be named as guarantors? Simply because they can. The lender is doing what is best for the company, not what is best for the married couple. The best thing to do is refuse to allow your spouse to be involved. This way at least one of you is not liable for the debt.

With a business entity set up as a trust, this has no negative impact on the ability of your spouse to recover property in the case of divorce or death. There is no financial impact to your spouse, but risk is greatly minimised.

Property Investment

In the case of a couple who wishes to buy property for investment purposes, consider carefully whether or not both spouses need to be included on the financial documents. For instance, if you work and your spouse does not, or you alone earn enough income to qualify for a loan, then there is no need to include both parties. Should the worst happen and the debt be defaulted upon, only one of the couple will face bankruptcy instead of both.

It might not be easy to get the lender to agree to debt service for only one member of a couple. In this case, a mortgage broker can negotiate on your behalf and will undoubtedly have much greater success finding a loan product that can be written without your spouse's guarantee. Their borrowing position is stronger and they have the necessary experience to induce a lender to agree to this term.

Commercial Leases

If you lease commercial space for your enterprise, consider changing the structure of your business so that it includes a separate tenancy company. One spouse becomes director and only the director gives a personal guarantee for a lease. Try to negotiate a fixed sum for the liability that equals no more than several months' rent. Unlimited liability could potentially destroy your financial portfolio in one fell swoop.

Business Creditors

The same advice applies to any other creditors approached for financing the enterprise. Ask that the debt be serviced without a personal guarantee. If the lender refuses to do so, then ask that a limit be placed on liability. When push comes to shove, many creditors will accept your terms but you'll never know if you do not try.

Remember that personal guarantees need not be required for every type of credit transaction your business contracts. If you must sign a personal guarantee, protect your spouse from liability and ask the creditor to limit the maximum amount personally owed on the debt.


About Author Paul Easton :

Paul Easton is working with Gilligan Rowe &amp; Associates - <a href="http://www.Gra.co.nz" target="_blank">http://www.Gra.co.nz</a> . New Zealand Accountants and are a specialist Accountant firm and experts in property and family trusts.


Article Source: https://www.bharatbhasha.com
Article Url: https://www.bharatbhasha.com/finance-and-business.php/195647


Article Added on Wednesday, December 9, 2009
LD
Other Articles by Paul Easton

Do You Have A Fiscal Game Plan For When You Conk out
? Being Chartered Accountants we are often faced with solving the financial affairs of clients passing away suddenly. If plans for economic management have not been put in place, this can cause solemn problems for those left behind. Here's a simple checklist that can help. It's our responsibility to ensure we do these things before we die: 1. Record the name of your bank account numbers and passwords. Keep this information confidential. Put it with your lawyer or your accountant or better...

How to Keep Your Spouse Safe in Business
As a structuring advisor to investors and business owners we often come across a widespread mistake that many people make. That is a spouse being offered as a guarantor to the financial institution, landlords or creditors of a business. Often their personal guarantee is even needed for the agreement to proceed yet it is given. Why? Because the advisors do not defend you and point out that it's not required. The upshot is that if total business or investment collapse happens, both spouses...

What Happens to a Trust in the Case of Divorce
? When financial woes hit a married couple the unfortunate outcome is often a divorce. Of course, this means the division of assets, along with the usual amount of bickering over that division. But if those assets are in a trust, what happens? The Creation of the Trust For the property investor or any other type of investor, a trust is always recommended for placing assets. Do take some care, however, before creating the trust. An individual's rights to the assets are affected by this legal...

Cushion Engagement Rings A Must Buy
? As a consumer, it should be your utmost concern to make sure that the things you buy are worth the money you are spending for them. That would include engagement rings, since they always come with a hefty price tag. One needs to choose only the best there is for his or her money and with so many other options out there, you need to ask: are cushion engagement rings the ideal engagement rings to give to your future spouse? What's with the Name? The name of cushion-cut engagement rings comes...

What Happens to Assets Without a Trust During Divorce
? For the married couple, it is truly essential that an estate is properly structured, legally protected, and the disposition of assets in the case of separation clearly defined. If you have not yet started a trust for your assets as a property investor, perhaps this scenario will convince you of the need to do so. The Case of the Trust-Less Divorce In most cases, divorce is a messy matter. It is highly unlikely that the two parties will be able to reach an amicable agreement as to the...

Requirements of Property Investment and Bank Securities
The requirement of banks to gain security against loans should not be a deterrent to the property investor. It is important to understand that the lending institution is going to insist on covering its possible losses through the use of various types of security but a refusal to agree with these terms does not mean loss of the deal. Here are several ways that the property investor can ensure that their assets are not lost in the case of insolvency. The Hawkins Clause Assuming you have set...

Does your credit application and terms of trade work when it has to
? In times like these, every business dollar has to count and the loss of any cash out the back door by way unpaid accounts places needless pressure on the business cash flow. The provision of credit remains the foundation of the `Money Go Round' for New Zealand businesses, enabling one entity to do business with another while providing goods and services on a basis of trust, but those goods and services must still be paid for within an agreed time frame if the business is to survive. In a...

Business Advice For People Doing Business With or Moving to New Zealand
New Zealand is an attractive destination for new migrants. The benefits of having a life and doing business in New Zealand are well recognised. Great commercial success has been achieved by new-to-New Zealand migrants who have invested or set up businesses in New Zealand. Many of those people have migrated their businesses as well as set up new ventures on arrival. New Zealand's legendary environment of excellence and innovation and gets results for anyone delivers results. NZs 'can do'...

Family Trusts Planning For Sudden Events
Recessions bring about all sorts of changes. For example, in the legal world, frequently people stop purchasing houses, so lawyers run out of conveyance work. Conversely, money starts to get tight so people start to sue each other. This of course means extra litigation work for the lawyers. Recessions can also bring about some dramatic personal life changes. For instances, people can lose their job which in turn, creates monetary burden. Frequently, this hassle spills over into their...

Unique Wedding Theme Ideas Spice Up The Event
Most probably you may never get the title Best Wedding of the year, but you also do not want your wedding to be judged as boring by your guests. It is high time that you get away from all the rituals associated with weddings and add your own flavour to what could be the most memorable event in your life. Here are some of the many unique wedding theme ideas that you can adapt: Tip #1 - You do not have to choose a big wedding cake. Most weddings would never be complete without towering...

Click here to see More Articles by Paul Easton
Publishers / Webmasters
Article ID: 195647
DELINK URL from Authors Bio
REMOVE Article
Tell A Friend
Leave A Comment!
Download this article in PDF
Report Article!
Search through all the articles:


106 Users Online !
Related Articles:
Latest Articles:
 
Business And Finance >> Top 50 Articles on Business And Finance
Category - >
Advertising Advice Affiliate Programs Automobiles
Be Your Own Mentor Careers Communication Consumers
CopyWriting Crime Domain Names DoT com Entrepreneur Corner
Ebooks Ecommerce Education Email
Entertainment Environment Family Finance And Business
Food & Drink Gardening Health & Fitness Hobbies
Home Business Home Improvement Humour House Holds
Internet And Computers Kiddos and Teens Legal Matters Mail Order
Management Marketing Marriage MetaPhysical
Motivational MultiMedia Multi Level Marketing NewsLetters
Pets Psychology Religion Parenting
Politics Sales Science Search Engine Optimization
Site Promotion Sports Technology Travel
Web Development Web Hosting WeightLoss Women's Corner
Writing Miscellaneous Articles Real Estate Arts And Crafts
Aging


Disclaimer: The information presented and opinions expressed in the articles are those of the authors
and do not necessarily represent the views of bharatbhasha.com and/or its owners.


Copyright AwareINDIA. All rights reserved || Privacy Policy || Terms Of Use || Author Guidelines || Free Articles
FAQs Link To Us || Submit An Article || Free Downloads|| Contact Us || Site Map  || Advertise with Us ||
Click here for Special webhosting packages for visitors of this website only!
Vastu Shastra

Cheap Linux Server Hosting Provided By AwareIndia







Company IDS