Are Trusts still worth it?

The Trusts Act 2019 ("Act”) came into force on 31 January 2021. The Act resulted in some major changes to all existing and future Trusts in New Zealand. The Act is intended to make Trust law simpler, more transparent and ensure Trustees can be held accountable. Changes have left many wondering – are Trusts still worth it?

Trustees Executors’ Trust Manager Katya French says “it’s important not to lose sight of the fact that there are still very good reasons why a trust might be right for your circumstances. A well-structured and well-managed trust provides a tool for preserving what you have and keeping it safe. In today’s uncertain times for businesses and where blended families are common, asset protection becomes essential”.

Although Trusts do not offer the same tax advantages as they may have done in the past, they are and remain a useful tool for estate planning and asset protection. With that in mind there are three key reasons why a Trust might be right for your circumstances.

1. Business Purposes

• You may be self-employed or a director of a company and wish to separate your business and personal assets. A Trust can help protect your personal assets from any business risk such as creditor claims.
• You want to ensure the continuity of family ownership, for example, manage the distribution of your farm or business to the next generation.

2. Personal and Family Asset Protection

• You may be keen to keep assets within the family. Trusts can be used to pass on wealth from generation to generation and preserve assets from becoming relationship property or part of a blended family. Trusts can allow you to take care of specific people following your death in the way that you intend.
• You may want to assist your children or grandchildren with funds for specific purposes such as education and maintenance. A Trust can help to ensure funds are available when they are needed.
• Trusts are perfect for providing ongoing support to those with special needs, require ongoing assistance, or who have difficulty managing their own finances. Trustees can pay for living and maintenance expenses from the Trust, while keeping the bulk of the fund prudently invested.

3. Provide long-term support to Charity

• Philanthropy is on the rise. Many of our clients prefer to set up a charitable trust during their lifetime, so they can see their wealth helping others and have the opportunity to discuss their objectives with the Trustee or Trustees.
• The Trustees Executors Charitable Foundation also permits the establishment of a sub-trust. This allows our existing foundation to hold money for a specific charitable purpose but also provides efficiency by consolidating various ongoing management costs with the foundation.
• A testamentary charitable trust is another way to pass on your wealth for a good cause. This is done by making certain arrangements in your Will and is a cost-effective way to give to a charity or charities close to your heart. A testamentary bequest may also be used to create a sub-trust within the Trustees Executors Charitable Foundation or to donate to the Foundation or an existing Sub-Trust.
• If you are involved with an existing charitable trust, Trustees Executors may be able to assist by either becoming a trustee of the trust or by assisting with practical matters such as the preparation of accounts and filing your annual return with Charities Services as agent for the Trustees.

Talk to one of our Trust Specialists

Trustees Executors specialises in Trust and estate planning. We can provide advice on the establishment of Trusts, and reviews of existing Trusts and advice and establishment of charitable trusts including structured giving.

For a complimentary consultation to discuss how we can help you achieve peace of mind call 0800 878 783 or email [email protected] to talk to one of our Trust specialists.