Establishing a Trust

When we are asked by our clients how they may protect assets, including property, from creditors, one option is to transfer these assets and/or property to a Trust. While creditor protection is one of the objectives of forming a Trust, it should not be used as the only reason for setting up a Trust.

A Trust is also one of the tools that can be used when assisting an individual and their family in carrying out an Estate plan on their behalf. Other reasons for setting up a Trust are as follows:

  • Potential taxation benefits including a lower tax rate than the highest personal tax rate and the ability to income-split.
  • Control over your assets and property (together with any income that they may provide) as well as control over how the assets and property may be distributed.
  • Protection of family assets and property. This includes ensuring that they are left to members of the family that should receive them and that the assets and property are not at risk due to family members entering into unsatisfactory marriages or de facto relationships.
  • Means testing. It is possible that a Trust could help avoid means testing by Work and Income New Zealand for the purposes of government funded care.
  • Protection for the next generation. This allows an element of control over a person’s assets and property after their death, and can protect these from members of the family who may not have the necessary financial skills to look after and manage the assets.
  • Creditor protection. It is possible to "ring-fence" your assets and property from possible creditors by transferring them to a Trust. It is important that the transfer of assets and property to a Trust is completed at a time where a potential liability is neither existing nor contingent.

John Stirling of this firm would be happy to meet and discuss with clients their family and business situation with the intention of making recommendations for an Estate plan, including possibly setting up a Family Trust.

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