What fam­ily trusts do

Kapi-Mana News - - OPINION/NEWS -

What are fam­ily trusts for and when you might need one?

Trusts are for the pro­tec­tion of as­sets.

Money, prop­erty and in­vest­ments be­long­ing to a trust are held sep­a­rately from those for whom the trust has been es­tab­lished (the ben­e­fi­cia­ries).

Here are some ex­am­ples of the kinds of pro­tec­tion avail­able:

Cred­i­tors. If you are a sole trader or a pro­fes­sional with­out lim­ited li­a­bil­ity, your home and other sig­nif­i­cant as­sets, if placed in trust, could be pro­tected from cred­i­tors or from any­one claim­ing dam­ages from you for neg­li­gence or a mis­take made by you.

Re­la­tion­ship break­downs. Trust as­sets are not ‘‘re­la­tion­ship prop­erty’’ avail­able for equal di­vi­sion be­tween spouses or de facto part­ners if they sep­a­rate.

Though there are ex­cep­tions that may al­low claims to be made against trust prop­erty, a trust can still be a use­ful tool for pro­tect­ing prop­erty from the con­se­quences of a re­la­tion­ship break­down.

In many in­stances, ad­di­tional agree­ments be­tween a cou­ple may also be re­quired for ad­e­quate pro­tec­tion.

Pro­tect­ing chil­dren. Trans­fer­ring as­sets into a trust for chil­dren can pro­vide pro­tec­tion from claims by a child’s part­ner, de facto or mar­ried.

As well, a trust can pro­tect spend­thrift chil­dren from them­selves by pre­vent­ing them from get- ting their hands on cap­i­tal that they might waste.

Spe­cial needs chil­dren. A trust is prob­a­bly the best way to pro­tect funds set aside for the sup­port of a spe­cial needs child.

Chal­lenges to a will. As­sets put into a trust, where the value has been fully dis­posed of by a gift­ing regime, are no longer the per­sonal prop­erty of the tes­ta­tor of a will. As a re­sult, those as­sets are as a rule pro­tected both from fam­ily pro­tec­tion claims and from changes to tes­ta­tors’ wishes be­ing im­ple­mented af­ter their death.

Rest home care. If as­sets have been held in a trust for a suf­fi­cient time and gift­ing has been com­pleted within re­quired lim­its, they are un­likely to be as­sessed as part of an ap­pli­ca­tion for a rest home sub­sidy, so re­main avail­able for the fam­ily.

As well as the above, trusts can some­times in­ci­den­tally re­duce in­come tax.

How­ever, you need to be care­ful that tax eva­sion is not the pur­pose of set­ting up the trust or that the trust is not seen by IRD to have that pur­pose.

For a trust to pro­vide ad­e­quate pro­tec­tion and to with­stand scru­tiny if chal­lenged, both the set-up and the on­go­ing op­er­a­tion of the trust will be cru­cial. Ex­pert ad­vice is there­fore es­sen­tial.

Fol­low­ing the ar­ti­cle on work­place re­struc­tur­ing, B asks: If I am told the new po­si­tion of­fered will come with an un­spec­i­fied in­crease in salary, can I en­force that if no ex­tra salary is given, and can the job de­scrip­tion be changed with­out agree­ment?

Un­less you agree on the amount of the new salary, you can­not en­force any spe­cific salary in­crease, but you could bring a griev­ance claim for a fail­ure to act fairly dur­ing the bar­gain­ing process.

This will not re­sult in a salary in­crease, but com­pen­sa­tion may be payable for the dis­ad­van­tage you suf­fered.

If the job de­scrip­tion is in your em­ploy­ment agree­ment, it can be changed by con­sent, or if the agree­ment al­lows changes to be made by your em­ployer.

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