You’ve worked hard to get where you are today. You provide well for your family, have a home, a car and some savings in the bank. So how do you protect your major assets for yourself and your family? If you live in New Zealand the answer could be as simple as putting your home in a family trust.
Family trusts are a good option for people wanting to protect their main assets while at the same time retaining a degree of control of them. In most cases it means major assets, like your home and/or rental investment properties are put into the trust.
Some of the main benefits of a family trust include:
- Having assets in a family trust may protect them from third party claims – both predators and creditors!
- Estate planning to provide for and benefit future generations.
- Trust assets may be exempt from asset testing for the residential care subsidy and other welfare benefits.
- Protecting against potential reintroduction of estate duties.
- Leaving it too late. It’s too late to transfer your property to a trust when creditors are knocking at the door or you are about to go into rest home care. The gifting process takes many years so it’s important to get it started as soon as possible!
- Sham Trusts. A trust can be overturned if it is found to be a sham. Far too many individuals risk this by setting up a trust but not following through with keeping up to date minutes and gifting. Many also fail to keep the trust assets and accounts separate from their own making it difficult to distinguish from their personal assets. Lack of proper administration and having an “independent” trustee who is not involved in the decision making process of the trust but “rubber stamps” transactions are some of the common reasons for trust being declared a sham.
- Set up a family trust early – ideally when you buy your first home, this way you can increase the trusts wealth over time and wont have as much gifting to do.
- Educate yourself – Talk to a lawyer and find out what documentation and record keeping is required then keep a separate file with all your trust information. Know what else needs to be done, such as updating wills and completing annual gifting so you can keep your trust up to date.
Download Family Trust Resources: NZ Law Society – The Family Trust
Please note that Trusts are a complex area of law. This article is of a very general nature and is intended as a brief introduction to the topic only. It does not include specifics and there are many aspects that have not been raised at all. It should therefore not be used as a basis for making decisions. Our lawyers would be happy to meet with you and give advice pertaining to your situation. Get in touch to set up an appointment to meet with one of our family trust lawyers.