A family trust is created when a person (Settlor) transfers property to other nominated persons (Trustees) for the benefit of the persons named or described in a trust deed (Beneficiaries).

1. A family trust is able to own, sell, invest and manage any assets transferred to it or purchased by it in the same way as an individual can. All family trusts oblige the Trustees to manage the family trust’s assets for the Beneficiaries in the manner set out in the trust deed.

2. There are many reasons why you should form a family trust for example:

Estate planning:  By using a family trust you can begin to transfer assets a considerable time before you decide which of your children and/or grandchildren you wish to actually receive the assets.

Creditor protection: By placing your assets into a family trust you may protect these assets from being claimed by business creditors.

Family protection: If you have children who are financially irresponsible, too immature to handle money or incapable of making decisions, a family trust can allay any concerns over future use of the assets.

Relationship property: A family trust is an ideal way to put aside and protect assets for the benefit of children from a previous marriage. It may also be a way of protecting your assets should a relationship fail.

Protection from capital gains taxes: Currently New Zealand does not have estate duty. However talk has gained momentum recently around the reintroduction of estate duty (or the introduction of capital gains or inheritance tax). A family trust gives you a greater chance of avoiding such taxes or duties.

Education: You are able to place money for your children or grandchildren’s education into a family trust, which can cover the cost of tuition fees, books and living expenses while your child or grandchildren study.

Residential care subsidies: Residential care subsidies are subject to a financial means assessment. Assets transferred to a family trust can often be excluded from such assessment.

3. While family trusts are governed by many aspects of statutory law, a trust deed can generally be drawn up to meet your personal    requirements. The family trust area of law is subject to constant change and development, none more so than in the last twelve to eighteen months.

4. At Lane Neave we pride ourselves in working closely with all our clients to develop the very best solution for each and every task. We will carefully assess your situation requirements, deliver the best guidance and act according to your wishes.

Contributor: Ashley Taggart, Senior Solicitor, Lane Neave Lawyers, ashley.taggart@laneneave.co.nz, 03 379 3720