November 8, 2017

Family trusts are a big thing in New Zealand with estimates suggesting there are between 300,000 to 500,000 of them in our small country. But what exactly is a family trust? Put simply, it is a legal deed that is set up to protect the ownership of assets. It’s a popular way of protecting property and managing assets. For example, some people set one up to protect the family home from potential failure of a business venture. Used in estate planning, it can ensure that your wishes are carried out after you have passed.

It might sound simple, but it’s not quite that straightforward. A family trust is a complex matter and it is not for everyone. You need to examine your circumstances to see what works best for your situation. Setting up and administering a trust involves costs and professional knowledge. Additionally, it means decisions about your assets will be made by the trustees.

Terms to know

  • Settlor/s – the person/s who sets up the trust by legally transferring ownership of the assets to the trustees.
  • Trustee/s – family members, lawyer, or an accountant
  • Beneficiary/ies – those who benefit from the trust
  • Trust deed – the legal document naming the trustees, listing the beneficiaries, and outlining the rules for administering and managing the trust.

A settlor can also be a trustee and a beneficiary. However, they can’t be the sole beneficiary.

While there are advantages to placing your assets in a trust, there are also other things to consider besides the costs involved. You want to understand what effect this would have on your estate planning and you will need to create a new will. You need to make sure your clauses are watertight. Having a family trust does not mean that the transfer of assets can’t be challenged in a court of law. If you decided to use a family trust, you need to enlist professional help in creating it.

If you already have a family trust, you might consider having it reviewed to make sure it is compliant with current legislation. The robustness of family trusts is coming under considerable scrutiny as a result of the Law Commission Review. This has been a massive wake-up call for Trustees.

We’ve created our Trust Review service to examine your Trust set up. We take a look to see if we can identify any administration gaps. We also make sure your Trust is compliant with legislation and that Trustees are meeting their obligations and your Trust is meeting its objectives.

So, the family trust is about maximising benefits you may be entitled to and protecting your assets from relationship property, family, and creditor claims while preserving value for future generations.

Our Trust Review service will ensure your Trust is robust and compliant. During your Trust Review we’ll provide recommendations for any changes and improvements to ensure your trust is aligned with your goals and intentions. Where applicable, we will forward instructions to your lawyer for any necessary changes.

Call us on +64 27 669 0747 if you’d like to know more, or book an appointment online.

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