Setting up a family trust

Initial consultation offer:

Only $200 incl. GST for a 1 hour initial consultation

Family trusts have long been popular among kiwis, with an estimated 300,000 to 500,000 in New Zealand today. A family trust is a legal way of protecting property and managing your assets, for you or your family members for the future.

Who is involved?

The main parties to a trust are:

The settlor: the person (or people) who makes the initial transfer of property to the trustees of the trust.

The trustees: generally two or more people whom the settlor is confident in to manage the trust prudently. A settlor of a trust can also be a trustee of his or her own trust. In particular circumstances it might also be fitting to have a independent trustee, such as an accountant or lawyer.

The beneficiaries: the people whose benefit the trust is established for. Beneficiaries can be named individuals, or a class, such as “children”. There are generally two types of beneficiary, discretionary or final beneficiaries. Discretionary beneficiaries have a right to be considered for payment from the trust property by the trustees, whereas final beneficiaries have a legal right to trust property the date the trust finishes.

How is a trust created?

A trust is created when the settlor transfers the property to the trustees of the trust. This establishes a relationship whereby the trustees are legally obliged to manage the property in accordance with the purposes set out in a document known as a trust deed. Generally, one of the purposes is to hold the trust’s assets for the benefit of the beneficiaries of the trust. It is the duty of the trustees to act in the best interests of the beneficiaries.

There are many reasons why you might set up a trust, including:

• To put aside money for a specific purpose - for example your children’s tertiary education when they come of age

• To protect assets for family members - the transfer of ownership of certain assets can enable the settlor to pursue more high risk ventures knowing those assets won’t be put at risk if the settlor faces any personal liability and is pursued by creditors

• To manage assets of a family member who is unable to mange their own financial affairs

• To protect assets from potential relationship property claims

• To change tax liability

Whether you are thinking of setting up a family trust, or want to get advice on the management of an existing family trust, the team at Dawsons can help with any related queries. We are running a limited time offer on initial family trust related consultation appointments for only $200 including GST, click below to book now!