Articles

Trusts

A Time to Reflect on Estate/Trust Matters

The current 'lockdown' is unprecedented. In times like these your first priority is to ensure you take care of yourselves, friends and family. However, while it is important to protect those close to you, you should also give consideration to the protection of your assets. Accordingly, it may be an opportune time to review your current estate planning to ensure everything is 'as you would like' and, if you have a trust, to make sure that it aligns with the provisions of the Trusts Act 2019 ("the Act") which was enacted this year but comes into force at the beginning of 2021.
Read more

The Family Trust and the ‘Independent Trustee’

A trust exists to hold assets for a certain purpose. For an ‘ordinary’ family trust, commonly conceptualised as a ‘mum and dad’ trust, the ‘mum and dad’ settlors ordinarily transfer their main home to trustees to hold that property for the benefit of their immediate family group. In this scenario it is common for ‘mum and dad’ to be appointed as trustees. They are additionally named as discretionary beneficiaries to ensure they may benefit from the trust assets throughout their lifetimes as well.
Read more

Getting on Top of Your Legal Affairs – What you Could do During the Lockdown Period

During this unprecedented and unsettling time, there is an opportunity here to take advantage of the phone calls and emails slowing down (for some) and use your time to address those things you have been putting off – a bit like that painting job most people have been meaning to get to.
Read more

Is Self-Isolation Pushing you Together or Pulling you Apart?

Feeling stressed or anxious about how Covid-19 (coronavirus) and New Zealand entering alert level 4 with nationwide lockdowns will affect you and your family members? Times of crisis can result in a push-and-pull effect with our personal relationships. They bring people together – only those in your household! - but difficult times can also lead to difficulties arising in our relationships with our, quite literally, nearest and dearest.
Read more

The New Trusts Act and How it Will Affect You as a Trustee

As you may be aware, the Trusts Act ("Act") has received Royal Assent and will come into effect on 30 January 2021. Amongst other things the Act codifies the duties of trustees and requires greater transparency with beneficiaries. It will affect your current trust arrangements. You should consider reviewing, updating and making structural changes to your Trust if necessary, in order to future proof your Trust. The following is a summary of the key changes and how they may affect you.
Read more

The Trusts Bill - Upcoming Key Changes to New Zealand Trust Law

The Trusts Bill is currently pending its second reading at Parliament, and is expected to come into law some time in 2019. It will replace the Trustee Act 1956 and Perpetuities Act 1964 (both quite rightly described as "antiquated and overly complex"), but will not go so far as codifying all Trust law. The Bill does take some steps in the right direction by prescribing a number of everyday, administrative rules applicable to all "express" trusts (which include all discretionary family trusts), which will help clarify and simplify certain areas of Trust law.
Read more

The New Draft Trusts Bill and its Suggested Disclosure Rules - How Could This Affect You?

A new Trusts Bill has recently been released for public consultation. This bill updates and changes various aspects of trust law. One interesting proposed change is the rights beneficiaries have to trust information. The most recent judicial case involving beneficiaries and trust information is Erceg v Erceg [2017] NZSC 28. The Supreme Court did not find that there was a presumption for or against disclosure of trust documents, but that there is an "expectation that basic trust information will be disclosed to a close beneficiary who wants it". The Supreme Court's analysis did differ from the lower Courts. The Supreme Court listed certain factors to take into consideration when courts receive a request for disclosure.
Read more

Family Trusts May Have to Get an IRD Number Even if the Trust Earns No Income

Many family homes in New Zealand are owned by family trusts. Typically the trustees are one or two family members along with a professional person suchas a lawyer or accountant. The trustees are the registered owners of the family home. The family members usually pay the rates, insurance and any mortgagepayments themselves. No rent is charged and until now there has been no need to register the trust with the Inland Revenue Department as there hasbeen no income received by the trustees. Parliament is now considering the Taxation (Land Information and Offshore Persons Information) Bill whichwill implement changes announced in the budget requiring non tax residents to register with the IRD.
Read more

Effective Trust Management and Asset Protection

"Trust busting" is the term given to an attempt made to penetrate a Trust structure and have assets held by the Trust declared by the Courts to be owned personally by an individual. The implication of Trust assets being found to be owned personally is that these assets then become part of an individual'snet worth and are an available "property pool" to former spouses/partners or creditors with valid claims against the individual.
Read more

To Gift or Not to Gift?

Gift duty was abolished from 1 October 2011 and while the legislative change itself is simple, it has surprisingly complex consequences. The abolition of gift duty has made it possible for individuals to gift assets directly to a trust and it is likely this practice will supplant the former method of selling property to a trust with a gift back.
Read more