Is your family trust still serving a purpose? With the introduction of the Trusts Act 2019 (the Trusts Act) bringing many changes to trust law, many people are considering whether a trust is still right for them. Here are three questions to consider when evaluating whether your trust is a useful asset planning tool.
Why did you establish the trust?
Did you establish your trust decades ago when you owned a business and wanted to protect your assets from creditors? You may have been told that forming a trust would protect your assets if you need rest home care or if you enter into a relationship. It is important to assess whether the reasons you established the trust still exist or are still valid reasons for having a trust.
Are you aware of the provisions of the Trusts Act?
If you are a trustee of your trust or someone else’s trust it is important that you are familiar with Trusts Act and your duties as a trustee. There are now mandatory and default duties that trustees must carry out. These are set out in the Trusts Act but may have been modified by the Trust Deed. Your trust may still be a useful tool but you may need to make some amendments or upskill yourself to ensure you are complying with the Trust Act.
Are you comfortable with providing trust information to beneficiaries?
The Trust Act creates a presumption that “basic trust information” be disclosed to all beneficiaries of the trust. “Basic information” includes; the fact that a person is a beneficiary of the trust, the name and contact details of the trustee, and the right of the beneficiary to request a copy of the terms of the trust or trust information. Beneficiaries can also request financial information. It used to be common practice to include a large number of potential beneficiaries in a trust deed. Many of our clients are surprised to learn that their trust deed include the spouses of children and grandchildren as discretionary beneficiaries.
There are many factors that your legal advisor will consider when advising you on whether your trust is right for you. If you would like an assessment of your trust, contact us to book an appointment with one of the team at Dawsons Lawyers.
Claire Endean – Director/Lawyer
dawsonslawyers.co.nz | 09 272 0002
