The protections afforded by family trusts are being tested more and more by the Courts. The common theme of recent cases is that, if the affairs of a family trust have not been administered appropriately, the Courts are more and more likely to consider it an ‘alter ego’ or ‘sham’ trust. Creditors are therefore able to attack the assets of the trust as if they were personal assets.
The gifting process, although slow and tedious, has provided an annual purpose for the trustees to consider their family trust and what activities it may have undertaken over the previous year. However, now that gift duty has been abolished, annual gifting has become a thing of the past. Without this impetus to consider your trust, there is a very real risk that the trust deed and associated documentation, will be relegated to a chapter in the history books of your filing system, never to see the light of day again.
If you wish to maintain the integrity of your family trust and to benefit from the asset protection that it can offer, then it is very important that you do not let this happen.
We would recommend that you take the following steps to help maintain the integrity of your family trust:
If you have any questions about your family trust and the way that you are, or have been, administering it, then we suggest that you contact us 04 970 3600 and we would be happy to talk it through with you.