In the past, many people would put up a family trust just to keep estate duties and taxes low, as well as to make the most of residential care subsidies. However, recent changes in the law have made people wonder: is a trust still worth it?
Is it worth the trouble?
New Zealand put an end to death duties in 1993. This means those who inherit money or property from someone who died do not have to pay taxes on the inheritance. In addition, the government is looking more closely into applications for residential care subsidies and trusts. Putting up and operating family trust costs money. You want to make sure it is worth the trouble. If your sole purpose for a family trust is to avoid taxes and qualify for subsidies, then it is probably not advisable for you to put one up.
On the other hand…
A family trust is very useful for taking care of your family after you are gone. You can specify how the trust is to help the beneficiaries: for example, to pay for college, or for the care of a family member who cannot care for themselves. Business owners can use trusts to protect their assets from relationship claims or other financial problems. Finally, a family trust can also serve as a will, dividing assets among heirs according to the wishes of the property owner. Family trust lawyers could explain the ins and outs of setting up a trust, so it is in your best interest to consult with one.
Benefits of a family trust
A family trust gives you peace of mind. You put control of property and assets into the hands of trustees. The trustees must follow the rules of trusteeship. They have to keep careful records of all transactions. This protects your assets from any mishandling or any squabbling after your demise.
A family trust is still a good idea in many circumstances. However, you must be careful. The structure of the trust and the assets must be acceptable to the courts. Otherwise, people may be able to contest and invalidate it. This is where it is wise to consulting with family trust lawyers to help you avoid that.