Family trusts are extremely popular tools for protecting your assets both during your lifetime and after.
A trust exists where one or more people (‘trustees’) hold and own property for the benefit of another person or persons (‘beneficiaries’). A family trust is a trust set up to benefit particular members of a family.
Throughout our lives we work to accumulate assets for ourselves and our loved ones. However, even with the best of intentions, situations can arise which may place these assets at risk. A family trust can be tailored to your family’s needs and goals, they are a flexible and enduring structure with which to organise and manage succession planning affairs.
It is estimated that one in every ten people in New Zealand has a trust and we believe that they are something that every Kiwi family should consider.
We’re a technology savvy office and operate on the basis that quality legal services should be accessible and affordable for everyone. We can discuss with you what your family’s goals are and offer a number of fixed price packages to meet your needs.
Setting up a trust
The trust deed is the founding document of a trust, it sets out the duties, powers and obligations in respect of the trust property and the trustees must abide by it. It also provides for the operation and management of the trust. It is therefore very important to carefully consider your objectives for establishing a trust, and who you wish to include in its administration, to ensure the trust deed accurately reflects this.
After discussing your goals we will prepare a trust deed that meets your needs while offering legally robust protection for your assets.
Benefits of having a trust
- Providing a credible, professional and independent structure for future administration and distribution of your estate to loved ones.
- Preserving assets for the continued use and enjoyment of family (e.g. the family home) and the ability to cater for any special needs of a loved one (e.g. a child with a disability).
- Confidentiality and anonymity regarding ownership of assets, as family trusts are not publicly registered and therefore can be kept confidential.
- Possible tax planning benefits.
- Adding complexity to the structure of your affairs, making it more difficult for any future claimant to access certain assets and providing protection from any future relationship property and creditor claims.
- General flexibility to deal with law changes such as protection against various forms of wealth tax that may be introduced in the future (ex. death duties or inheritance tax).
Administering your trust
Creating a trust and transferring assets to the trust is only the first step in forming a flexible vehicle for the administration and protection of your assets. If you wish to maintain the integrity of your trust and continue to benefit from the asset protection that it can offer, then it is imperative that your trust is properly administered at all times. Responsibility for administering the trust lies with the trustees and failure to do so is one of the most common reasons that the Courts will ‘look behind’ a trust structure and ‘attack’ its assets.
To help maintain the integrity of the trust, it is recommended that the trustees at least do the following:
- Meet annually to review the trust’s affairs and assets and to consider the needs of the beneficiaries.
- Consider whether there have been any further advances or gifts made to the trust — such as:
- the transfer of personal funds to the trust to fund the purchase of trust assets; or
- the cost of any improvements (e.g. alterations, additions, renovations, landscaping, etc.) made to a trust asset and paid for out of personal funds.
- Record any such further advances or gifts.
- Ensure all trust transactions are duly authorised by appropriate trustees’ resolutions, and that all such resolutions are kept in a trust manual or minute book.
- Prepare any necessary annual financial statements for the trust.
Wakefields offers a subscription service for annual trust administrator support to assist with all of these duties and ensure that your trust is administered correctly so that it is able to stand up to any potential challenges.