SIMPLE STEPS TO PEACE OF MIND


WHAT INFORMATION SHOULD I BRING WHEN I REVIEW MY TRUST?


Each Trust should have its own Minute Book by which we mean a central record for the Trust that contains copies of:

  • All Deeds
  • Correspondence
  • Accounts
  • Tax Records
  • Trustee minutes for all Trustee decisions

If you do not have a Minute Book or don’t know where it is kept then you should definitely have your Trust reviewed. If your Trust Advisor cannot produce the Minute Book then the same applies.

We would then need:

  • Trust Deed(s)
  • Detail of Trust Assets
  • Gifting Documents and
  • Wills

As well as the above, bring any papers you can find regarding your Trust and we will guide you from there.

WHAT WILL THE REVIEW TELL ME?

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A Trust Review will normally run between 12 – 15 pages. It contains an analysis of the initial Trust Deeds and the Assets and Liabilities that comprise your Trust.
We will then offer an in-depth review of all the documents that we would expect to be present as opposed to what we could find.

Based on the documents reviewed we will give recommendations in five areas:

1.    Initial Documents Required
2.    Documents Recording Sale of Assets
3.    Other Asset Protection Vehicles
4.    Minute Book Administration

5.    Subsequent Gifting-Preparation and Filing

The recommendations will point out any issues we have identified with your Trust Documents and how to manage you Trust more efficiently.
We will look at the administration of the Trust as if we were a solicitor acting in a legal action against you or an IRD inspector. We will point out any areas where we believe the administration has been deficient.

Finally, we will give you an estimate for the costs of preparing the documentation for fixing any errors or omissions identified in the review and to bring your Trust records up to date.

THE BENEFITS

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  • Asset protection
  • Protection from creditors
  • Retirement planning advantages
  • Protection of assets for future generations
  • Tax Planning Benefits
A Family Trust is the foundation of almost every asset protection and succession planning structure.

It will be used as a base document to protect your family’s lifestyle and retirement assets and to allow for any changes that may occur in your life.

Without a properly established and managed Family Trust you may be exposed to:

  • Having your hard earned assets, including your home, lost due to a failed relationship
  • Having those same assets lost to a creditor
  • Having your retirement plans totally derailed
  • Paying excessive tax through not minimising your tax obligations and protecting against potential new taxes ( capital gains, estate duty etc )
  • Losing control of the disposition of your assets after your demise

Asset protection

If you own assets and perceive that these could be put at risk or could have some potential for loss, then a Family Trust is for you.
A Family Trust will allow you to remove these assets from your ownership but still retain enjoyment and benefit from them. Trustees will hold these assets in a Family Trust on behalf of the family group.

The rationale for establishing a Family Trust includes ensuring your assets will be handed on to your family.

Protection from creditors

We are a country of small businesses, subject to the vagaries of business including voracious creditors. If a business should not trade successfully, creditors have recourse to your personal assets.

However, assets protected and ring fenced in a Family Trust will, in most cases, not be available to business creditors. Without such protection your hard earned assets can be subjected to claims from creditors and if successful, you may well lose them.

Retirement Planning advantages

Building assets for retirement can be a wasted exercise if those assets are subject to loss. A Family Trust can protect them so they are available when needed for retirement. Use of a Family Trust may also maximise tax advantages thus making the retirement dream that much more achievable.

Modern Trusts will allow control and access by retirees to income and capital if needed from their Family Trust, often with advantageous income splitting benefits.

Protection of assets for future generations

One of the great joys of parenthood and grandparenthood can be passing wealth to future generations to help them along life’s highway. For many families, their wealth has been passed from Family Trust to Family Trust, thus preserving it and ensuring the protection of Trusts is working for them over the decades. An inheritance should only be received by a Trust created specifically for the individual child who was to inherit the funds in the first place.

Regrettably relationships do fail and inherited wealth can pass to the estranged partners of family members if the protection afforded by Trusts is not used. Who really wants the former partner of a family member making claim on assets you have worked hard to accumulate?

Tax planning benefits

When income is received in a Trust, the Trustees can elect how it is allocated –to retain it in the Trust or distribute some or all to beneficiaries.
When such decisions are made Trustees should take into account the tax rates applying to beneficiaries and in many cases, this will result in savings of tax.
Maximising tax efficiency should be a consideration of the Trustees and can often result in considerable tax savings.
Whilst income from personal exertion (wages and salary) cannot be diverted to Trusts, investment income can be by transfer of the income earning assets to a Trust. Under current tax rates having that income taxed at the Trustees’ rate of 33% (or lower if distributed to beneficiaries in some instances) is preferable to having that income taxed at the current highest tax payer’s rate of 38%. When these rates change on 1st October 2010, distributing to lower tax rated beneficiaries will become more tax efficient.