There are also family and personal reasons for protecting our assets against creditors,
in relationship issues (not necessarily yourself, but what about your children?),
and advantages such as income tax splitting, keeping matters confidential, setting
up trusts for educational and other reasons.
One definition of a family trust is that it is a simple and legal way for you to
dispose of your assets by selling them into the family trust but retaining some
control over them during your lifetime and eventually passing them on to your family.
People worry about loss of ownership of their assets when they sell them into their
family trust, but there are strong control mechanisms. Usually you will be not only
a Settlor of your property into the trust, but also a Trustee, managing the assets
in the trust for the benefit of the Beneficiaries. These include yourself as well
as members of your family. Your children can receive the benefit upon your death
through the use of a family trust which you manage during your lifetime. You will
be a good Trustee, you have power to put assets into the trust and take them out,
you have the power to hire and fire other Trustees who are not Settlors like yourself.
You have the power to call up your loan to the trust, which you have given in exchange
for the sale of your assets. It is usually repayable upon demand. You have a Memorandum
of Wishes which sets out your wishes as to the disposal of your property after your
death. It is a powerful, persuasive document which the new Trustees must take into
account. You have strong control mechanisms, and although you have sold your assets
into the trust, you still retain a large measure of control.
We are often asked when the best time to set up a family trust is. The answer is
"Sooner rather than later". By forming a family trust now you fix the value
of the asset. If it is increasing in value eg your family home, then you have a
longer period to clear the debt by gifting since the free amount for gift duty allowed
by the Government is $27,000.00 for each Settlor. Of course, you can pay gift duty
to the Government to speed up the process, but why do that? The Government also
has the ability to make changes in tax legislation at any time. Generally, it is
The asset and means testing regime to assess whether you are entitled to a residential
care subsidy takes into account the value of your assets. You are not entitled to
the subsidy until you reduce your assets under these limits:
From 1 July 2007, people who do not have a partner, or have a partner
who is also in long term residential care, must have assets valued at
to qualify for the Residential Care Subsidy.
From 1 July 2007, people who have a partner who is not in care will
have a threshold of $75,000 not including the value of their house and car
or can choose a threshold of $170,000 which will include their
house or car. Both asset thresholds increase by $10,000 on 1 July each year.
Asset protection is about managing your risks. A family trust can be a very useful
tool for managing your personal risks and that of your family.
Free 'no obligation" interview
If you are considering a family trust, I will provide a 'free no obligation"
by phone or in person at my office in Wellington, to enable you
to decide whether you wish to proceed with a family trust.
The fee structure will be discussed at that time, but generally, there are
The entry level is for a limited set of documents and you "pay as you go" for the
rest if you need them.
I can set the trust up for you with a trust deed,
memorandum of wishes, a will and powers of attorney as to care, welfare and property.
The fee will be $850.00 for a single person and $950.00 for a couple
There will be a separate fee of $250.00 for the first gifting (all sums inclusive
of GST). I will then assist you further on a fee paying basis each year for subsequent
giftings if you need me to attend to them for you. The same goes for specific documents
you may later wish me to prepare. In that way you can if you wish, "build up"
the entry level package to the comprehensive asset protection plan by spreading
the time and the fees involved. I will provide the documents you need on disk.
If you require a comprehensive asset protection plan from the outset, then
the higher fee structure will apply, but you will of course receive more documents
and more service for the fee settled on.
See below for the documents which are usually
included in the comprehensive asset protection plan.
The fee structure here, for a single person is $1,995.00 and for a couple $2,495.00.
The fee structure is for a folder containing the usual documents listed below, plus
a back up copy of each document.
In addition a year of support for the management
of your Asset Protection Plan is included.
You will receive a disk setting
out a number of important documents and tuition on how to manage your minute book
and gifting programme.
Whichever decision you make, I will provide a client input form to
be completed and returned to enable me to have sufficient information to prepare
your family trust documents.
If you have difficulty filling out the form, do not worry. Do what you can and feel
free to phone me. I will to assist you fully with filling out the form.
We provide a comprehensive Asset Protection Plan which usually includes the following
A folder which includes
- An index of documents
- A Register of Settlors, Trustees, Beneficiaries and Advisors of the Family Trust
An outline on your Asset Protection Plan
A paper setting out your responsibilities
as a Trustee and an explanation as to Trust Deed requirements
Those Matters Personal to You –
- A comprehensive Family Trust deed
- A deed Appointing the Discretionary Beneficiaries
A paper providing information about Enduring Powers of Attorney as to your Personal
Care and Welfare and Property
The Powers of Attorney for Personal Care and Welfare
and for Property (two sets for a couple)
Memorandum of Wishes which sets out
your wishes as to disposal of your trust property after your death
Wills (two for a couple)
Register of Assets and Liabilities
Where a family home is being transferred into the family trust there will be an
Agreement for Sale and Purchase from yourselves as vendors/settlors to the purchasers/trustees
- A Transfer of Ownership form
- Settlement Statement
Any other documents required by your bank
such as a mortgage to secure new loan documents, and perhaps bank guarantees
There will be various registers which you can elect to use including a
- Register of Assets of the trust
- Register of Loans, Loan Repayments and Gifts
Register of Unsecured Loans
- Register of Secured Loans
Register of Distributions
Register covering the trustees’ income, capital, items and
gifts and what equity they have
Other legal documents
- A paper setting out how to operate your minute book
A calendar setting out
dates which you need to know for tax and gifting purposes
The initial minutes
of the Trust completed by us
Draft minutes for future gifting, the purchase
of assets by the Trust from each of the Trustees, the purchase of assets by the
Trust from a third party, the sale of assets by the Trust, additional loans from
each Trustee, loan repayments from the Trust to each Trustee, interest payments
on loans to each Trustee, general minute format for anything not already covered,
capital distributions, year end income distributions and end of year minutes
A Deed of Sale and Purchase or Acknowledgement of Debt by the Trustees to each of
- Diagram showing various aspects of gifting
Deed of Reduction of Debt by
way of Gift by each Settlor/Donor to the Trustees/Donees
Gift Statements for
each Settlor to file with Inland Revenue (IR196 form)
- IRD number application (IR596 form)
CONVEYANCING FEES AND DISBURSEMENTS
- Other documents as required
For the sale of the family home into the Trust (up to Transfer of Ownership stage
but not for discharges of mortgage, joint family home application, new mortgages,
bank guarantees, etc which will be quoted separately)
Conveyancing fee on above $450.00
Total $580.00 (including GST)