Family Trusts?

Old Apr 8th 2009, 9:05 am
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Question Family Trusts?

As far as asset protection goes the Kiwi's seem to be big fans of family trusts. Had a meeting this week with a solicitor and he is quoting $3,000 to set ours up and put our house in it and tie in wills. Anyone else done a trust and mind sharing their thoughts on it and what it cost them please?

I think we will go ahead as it ties in with our setting up our new company nicely - but if anyone has any experience or pointers to consider would be grateful.

Many thanks.

Loolah
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Old Apr 8th 2009, 11:57 am
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Default Re: Family Trusts?

Is the benefit to reduce taxation? Thought there was no inheritance tax here upon death.
My only other thoughts from a position of ignorance, are if one of your offspring went totally wild such that you would want to 'exclude them from your will', would you still be able to? Also think about implications if you were to divorce, who would control the family pot? Upon death of one of you, how quickly would stuff pass to kids?
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Old Apr 8th 2009, 7:08 pm
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Default Re: Family Trusts?

Originally Posted by Am Loolah
As far as asset protection goes the Kiwi's seem to be big fans of family trusts. Had a meeting this week with a solicitor and he is quoting $3,000 to set ours up and put our house in it and tie in wills. Anyone else done a trust and mind sharing their thoughts on it and what it cost them please?

I think we will go ahead as it ties in with our setting up our new company nicely - but if anyone has any experience or pointers to consider would be grateful.

Many thanks.

Loolah
3K that sounds a bit steep. Ours was just over 1K to set up.

They are a good idea but get heaps of advice and from different sources.

Very god if you are going into business and you want that form of protection. But useless if you sign stuff as a personal guarantor - same applies to a limited company, which might be a better bet.

Depends on what you want to protect really.

Get good advice

Best of luck with the business
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Old Apr 8th 2009, 9:29 pm
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Default Re: Family Trusts?

Our first Trust was a cheapie - and ended up being a complete waste of time and had to be dissolved. We set up a well crafted Family Trust 3 years ago - with a very reputable firm of lawyers who specialise in Trusts. Cost us close to $ 3000.00 , but is working very well. You will need to update your wills when you set up a Trust . See if they will throw that in as a freebie. Just saw that you wrote he will cover wills etc. Sounds like a good deal. Just ensure that the Firm specialise in Trusts as it can be costly to correct mistakes.

Last edited by Hokey-pokey; Apr 8th 2009 at 9:32 pm. Reason: re read original post !
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Old Apr 8th 2009, 10:04 pm
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Default Re: Family Trusts?

Originally Posted by Hokey-pokey
Our first Trust was a cheapie - and ended up being a complete waste of time and had to be dissolved. We set up a well crafted Family Trust 3 years ago - with a very reputable firm of lawyers who specialise in Trusts. Cost us close to $ 3000.00 , but is working very well. You will need to update your wills when you set up a Trust . See if they will throw that in as a freebie. Just saw that you wrote he will cover wills etc. Sounds like a good deal. Just ensure that the Firm specialise in Trusts as it can be costly to correct mistakes.
good advice HP.

Haven't had any problems with ours., but what sort of problem's could arise?

I'd also give the same advice, by the way, about accountants. Our first one, large firm offices throughout central north island, heaps of paper on the wall, blah, blah, - man they messed up big time. Only now has that mess been sorted out and at great expense.

I don't know how - but if you can get it checked out before signing on any dotted
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Old Apr 8th 2009, 10:04 pm
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Default Re: Family Trusts?

Yes it is a firm that specialises in trusts and as we are setting up a Limited Company and an LAQC too it can all be done together and tied in together with the accountants input.

It's not for any tax benefits it is for asset protection in the event of anything going wrong with either company really - it's an extension of "limited liability." The trust will own the house and the trust gifts back $27,000 pa to each of us. Plus we need wills doing anyway.

My understanding is you can cross beneficiaries off and add them after it has been set up. There is only going to be OH and me as Trustees and then the lawyer as the "Protector."

With regards to a divorce my understanding is if we can't agree on selling the property and splitting the proceeds then we stay put - gosh that'd be fun ...
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Old Apr 8th 2009, 10:07 pm
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Default Re: Family Trusts?

Originally Posted by sparkie down under
I don't know how - but if you can get it checked out before signing on any dotted
I was thinking of faxing or emailing it to my family's solicitor in the UK - my understanding is the only real difference is that here in NZ you only need yourself and partner as Trustees, not a third party - that third party is a "Protector" not a trustee and can't force a deciding vote between the two of you, but looks after the best interests of the beneficiaries.
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Old Apr 8th 2009, 10:10 pm
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Default Re: Family Trusts?

Originally Posted by Am Loolah
Yes it is a firm that specialises in trusts and as we are setting up a Limited Company and an LAQC too it can all be done together and tied in together with the accountants input.

It's not for any tax benefits it is for asset protection in the event of anything going wrong with either company really - it's an extension of "limited liability." The trust will own the house and the trust gifts back $27,000 pa to each of us. Plus we need wills doing anyway.

My understanding is you can cross beneficiaries off and add them after it has been set up. There is only going to be OH and me as Trustees and then the lawyer as the "Protector."

With regards to a divorce my understanding is if we can't agree on selling the property and splitting the proceeds then we stay put - gosh that'd be fun ...
Our trust is similar and our accountant (new accountant) advised us to have third trustee, like a sleeping partner - takes nothing out of the trust and gets nothing in any event. The IRD can get sniffy about just partners/spouse owning a trust. Don't know - might be worth mentioning
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Old Apr 8th 2009, 10:50 pm
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Default Re: Family Trusts?

Another thing which made family trust's popular, and particularly putting property in a family trust, is asset testing particularly in regards to retirement and aged care along with 'futureproofing' any changes to any superannuation funds. If you don't own the asset (even though you may live in it) you won't have to sell it to get certain care or benefits.

A trust can have provisions in case of divorce or dissolution of the trust. Just make sure it is included.
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Old Apr 9th 2009, 12:12 am
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Advice I've had from other business owners is to set the trust up sooner rather than later as it seems less like a place to squirrel away your assets from potential creditors and litigants if your business fails/gets sued.

Personally I have very little in the way of assets in NZ and I am more likely to get litigaed against here rather than fail as a business owing suppliers, sub-contractors, etc (as I don't have any!). Hence the trust is probably a year or so away - so there you go, LardyL ignoring advice as usual......
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Old Apr 9th 2009, 2:29 am
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A Trust will also protect your hard earned family wealth from potential " gold diggers ".
For example, if your kids/ grandchildren shack up with someone and then split up after a couple of years , then that individual could potentially be entitled to 50 % of your childs inheritance. Likewise their inheritance may have to be split up between step children and divorced partners etc.- people you have no blood connections to.
Its all about protecting your assets for the benefit of your nearest and dearest.
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Old Apr 9th 2009, 3:08 am
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Fortunately my kids are very unlikely to be shacking up in the next decade, on the other hand I could be sued for tens of millions of dollars if some of my work fails to get the client what they want/need
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Old Apr 9th 2009, 3:53 am
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Our kids better not be shacking up for a decade or two either! The thing is though you need to start drip feeding into a Trust , ? upto 50k a year like Am Loolah said. Think you can run into difficulties if you try to set one up in a hurry in order to protect vast sums/assets. Also a Trust needs to be seen as being active, not just as a hoarding post.
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Old Apr 9th 2009, 7:30 am
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Yeah at the moment I wish I had a spare $50k to do anything with, all tied up in UK and in the business 'fraid......but we can live in hope.

In spite of that life here is great, much better than the rat race in the UK where we were earning 3 or 4 times as much and had probably 20 times the disposable income.

Happy church mice better than miserable fat cats I'd say
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Old Apr 9th 2009, 11:27 am
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Default Re: Family Trusts?

Originally Posted by Am Loolah
I was thinking of faxing or emailing it to my family's solicitor in the UK - my understanding is the only real difference is that here in NZ you only need yourself and partner as Trustees, not a third party - that third party is a "Protector" not a trustee and can't force a deciding vote between the two of you, but looks after the best interests of the beneficiaries.
mmmm - had a situation with a 'protector' today. House going for sale - the couple are moving down to Hamilton and will take a fair whack under the CV just to go. Anyway, it went to auction yesterday and didn't sell but there are offers coming in on Tuesday so I asked the solicitor to email me to say that they could sign on behalf of the trust but to leave out the reserve amount (that they'd had for the auction).. I got a one word reply "nope". So, he obviously doesn't agree with them 'taking the money and running' and can put a brake on it. It probably is in their best 'financial' interests but right now they just want to go (and the wife will have to go in 5 weeks anyway no matter what happens) and if they end up losing a deal because of it, is it really in their 'best interests'? This is something I'd want to be clear about before signing up - advice is grand and appreciated but after that...... no thanks.
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