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The position of a trustee is an important one, and an annual (or more frequent, if necessary) review of the trust
is essential if a trust is to provide the asset protection that it was set up to achieve. Case law shows that,
where a trust is not properly administered, the Courts have been willing to ‘look behind’ the trust structure to
attribute its wealth to the beneficiaries personally. This means that, if a trust is not administered properly, you
may undermine any asset protection benefits of the trust
To help ensure a trust is being administered effectively, we have provided a non-exhaustive checklist for you and your fellow trustees to consider. Please take the time to go through this checklist, ensuring that you and your fellow trustees consider each of the matters raised. If you have any queries, we encourage you to contact us to discuss further.
TRUST DEED & OBJECTIVES
Is the Trust still necessary?
Does the Trust Deed still meet the needs and objectives of the Trust?
Have the Trustee’s indemnity clauses been reviewed?
Briefly list the assets of the Trust
Have all the Trust assets been legally purchased by or gifted to the Trust, and those transactions formally recorded (eg. by way of an Agreement for Sale & Purchase, Deed of Acknowledgement of Debt, Deed of Gift, etc)?
Are all the Trust assets held in the names of all the Trustees?
Have all property improvements and asset acquisitions made by the Trust been financed from the Trust's own funds?
Are all the Trust's assets adequately insured?
If any Trust asset is covered by a 'sum insured policy', has the sum insured amount been reviewed to ensure there is adequate cover?
Has a Memorandum, Letter or Expression of Wishes been executed by the Settlor(s) that reflects the current wishes of the Settlor(s) regarding the administration of the Trust?
Does each Appointor have a Will that specifically provides for the delegation of their power of appointment & removal of Trustees on their death (ie. provides for transfer of control of the Trust)?
Does each Settlor have a Will that specifically provides for the forgiveness of any debt owed to them by the Trust?
Has each Trustee granted a General Power of Attorney & Deed of Delegation to cover the performance of the Trustee's duties while they are outside of New Zealand or physically incapacitated?
Has each Settlor granted an Enduring Power of Attorney in Relation To Property?
Has each Settlor granted an Enduring Power of Attorney in Relation To Personal Care & Welfare?
TRUST DEBTS / GIFTS
Do you know the current outstanding balances of all debts owing by the Trust?
Has all the Trust's debts been formally recorded (eg. by way of a Deed of Acknowledgement of Debt or Loan Agreement)?
Has every forgiveness (full or partial) of a Trust debt been formally recorded (eg. by way of a Deed of Forgiveness of Debt)?
Has every property or cash gift to the Trust been formally recorded (eg. by way of a Deed of Gift)?
TRUSTEES RESOLUTIONS / MINUTES / RECORDS
Have the Trustees formally met in the last 12 months (or thereabouts) to review the general administration of the Trust (ie. held an annual Trustees meeting)?
Are all records of the Trust safely & securely stored in an orderly manner in a readily accessible place known to all the Trustees?
Have all decisions regarding the Trust and its assets (eg. property improvements and asset acquisitions/dispositions) been recorded in Trustees' Resolutions / Minutes (ie. is the Trustees' Minute Book complete and up-to-date)?
ACCOUNTING, FINANCIAL STATEMENTS & TAX RETURNS
Is the Trust currently solvent (ie. is it currently able to pay all debts as and when they fall due)?
Does the Trust have its own separate bank account?
Have all the Trustees reviewed all the Trust's bank statements, investment reports, financial statements, tax returns, etc?
Does the Trust have an accountant?
If the Trust received income in the last financial year, have financial statements been prepared for the Turst and approved by all the Trustees, and has the Trust filed a tax return in respect of that income?
Has disclosure of all relevant financial information, settlements, gifts and distributions been made to IRD in terms of its reporting requirements for domestic trusts for the last financial year (please confirm with accountant)?
If the Trust is a non-active complying trust (ie. doesn't derive any income), has it filed a formal Non-Active Complying Trust Declaration (IR633) with IRD?
Are the Beneficiaries of the Trust clearly identified or identifiable in terms of the Trust Deed?
Have the classes of Beneficiaries/named Beneficiaries in the Trust Deed been reviewed? In particular, should any Beneficiaries be excluded or added? Is it considered inappropriate of any of the beneficiaries to be entitled to require disclosure of Trust Information to them?
Have the Trustees considered each Beneficiary's circumstances, need and any disabilities in the last financial year?
If there has been a Trust distribution to a Beneficiary in the last financial year, has this been authorised by way of a unanimous resolution of the Trustees, and the distribution paid or credited to the Beneficiary?
If no distributions have been made in the last financial year, has this decision been recorded in a Trustees' Resolution / Minute?
Is there any disclosure of basic Trust Information required?
- If you are 'Not Sure' about any field, we recommend you contact us to discuss further. It may be that the Trust has not been properly administered and, to ensure you benefit from the asset protection benefits of the Trust, these matters should be reviewed.
A copy of this checklist will be emailed to you on submission.
This field is for validation purposes and should be left unchanged.