Family trust lawyer – points to consider with a trust

Asset protection: Many people work hard to earn their income, savings and investment. They want to protect these to pay for their retirement, a round the world trip or maybe college fees for their children. For many residents of the Hibiscus Coast area, creating a family trust is the preferred method of protecting assets and sometimes they can also make tax savings too. Lots of people have created trusts and many folk think they can hide assets inside a trust and carry on as before. This is not the case and there are stringent conditions and laws to follow for both the creation and administration of family trusts. This post has some insights into considerations about trusts but it is in not offering you legal advice. So, do visit a qualified Orewa, Silverdale or Warkworth family trust lawyer before starting out.

Is your trust set up with the right intention: If need be, a trust can be challenged in courts. And if the courts feel there is not the correct intention, they can declare a trust null and void. For example, if a trust is set up just to avoid paying taxes or maybe to prevent a new spouse from gaining access to your long-held assets, this may be dissolved by the courts. A trust is not a vehicle to prevent a wife or husband from being awarded their legal share of matrimonial property if there is a break-up. Many times people have tried to cheat a spouse out of their just deserts but the courts have found in favour of the partner who is claiming half ownership of the joint assets. In another case, in 2011, the tax department (IRD) won a defining case when two doctors who had set up trusts to avoid paying income tax had their trusts dissolved. This is because the people concerned could not justify the creation of their trusts for other purpose than the avoidance of taxes.

Family trust lawyer Silverdale

Protect your wealth – image Stuart Miles

Control and ownership of assets: In a family trust, the trust becomes the owner of the assets, once the transfer is executed. This means that you have no control over the assets any longer. The Trust is the legal owner of any assets placed within it and the Trustees make any decisions.

Further those decisions should be for the best interests of the Beneficiaries not for the previous owners’ benefit. This can put a hindrance to activities like renovation of a home held in trust. What normally is a routine work would then have to be endorsed by the trustees before work can be started. It could get a lot more complex if you were to attempt to sell the home. A Warkworth trust lawyer can throw more light on this and thus should be consulted.

Fees for the formation of a trust: A lot of people are under the misconception that the only fee incurred in the formation of the trust is the lawyer fees. Far from it. There are other costs like the Trust Deeds, valuations and regular legal fees for the sale of a property. Remember, that you are selling your assets to the Trust so you need to use a normal Sale and Purchase Agreement. Also, if you have a mortgage on a property which you are putting into the Trust, then the mortgage will have to be cleared and a new one taken out with your lender since the Title to the property will be different. This will also attract fees from the bank.

As far as valuations go, any asset must be sold at the current market rate. The IRD is very strict on the valuation of assets which is why you are strongly advised to have a professional valuer assess your property.

Ongoing fees: For a trust to be truly effective, it has to be managed well. Some people try to administer their trust themselves but you need to be very careful that all of the paperwork is completed and filed correctly, if there are any deviations, the IRD can and will audit the trust with the potential consequence of dissolving the trust and personal financial penalties for the Trustees.

Family trust lawyer

To be on the safe side, and to be honest, the paperwork is tedious for most people; there is no other alternative than to go for a professional trust management service or a trust administration lawyer. This would entail a management fee being paid to the professional manager. The professional manager would either be an accountant or a lawyer. The trust is mandated by law to file tax returns every year or annually. All this would entail fees and expenses paid out to the respective parties.

Forming a family trust, a summary: From the discussion above, it is abundantly clear that forming and managing a trust is not a small thing to do. There is a lot of planning, some potentially hefty fees and a considerable amount of ongoing paperwork to administer.

To make matters simpler, it would be advisable to use an Orewa, Silverdale, or Warkworth family trust lawyer. This would avoid the complications that can occur when the trust has to comply with the complex legal regulations. If the lawyer is engaged right from the very beginning, it would make for the smooth functioning of the trust.

https://hibiscuscoastlawyer.co.nz/