For a life-long provider, nothing is more satisfying than knowing that your family is well cared for and will continue to be taken care of even after you’ve passed. To ensure that the wealth you’ve worked hard to build will be protected to benefit your family, one thing you can do is set up your own family trust.
At its core, a family trust is a legal arrangement where assets—such as real estate properties, shares of a company, and bank accounts—are placed into a trust by an individual or couple, known as the settlor(s), for the benefit of their chosen beneficiaries. In most cases, beneficiaries are the settlor(s)’ children, grandchildren, and other relatives. However, the settlor(s) also have the right to exclude beneficiaries from the trust for whatever reason they deem necessary.
The trust is managed by a trustee, who could be the settlor(s) themselves, trusted family members, or professional entities like lawyers and accountants Dunedin, located in Central Otago, is where you may find reliable professionals who are experienced in estate planning and, in particular, family trusts in New Zealand.
What sets a family trust apart from other estate planning strategies is its flexibility and control. In particular, it allows settlor(s) to specify how assets are managed and distributed both during their lifetime and after their passing. In NZ, where the preservation and distribution of wealth are significant concerns for families from all walks of life, family trusts offer invaluable peace of mind.
What Are the Benefits of a Family Trust?
The benefits of establishing a family trust are manifold, and they resonate deeply with the financial aspirations of Kiwis:
1) Probate Avoidance and Privacy
Assets held in a family trust typically bypass the probate process, ensuring a faster and more private distribution to beneficiaries. This confidentiality is particularly appealing to families who value discretion in their financial affairs.
2) Flexibility in Asset Management
Family trusts offer unparalleled flexibility in how assets are managed and distributed. This is especially beneficial for families with diverse assets or complex familial dynamics, as it allows for tailored solutions to meet particular needs.
3) Tax Benefits and Asset Protection
Through strategic tax planning, family trusts can help minimise tax liabilities and protect assets from potential creditors or legal claims. This dual benefit is especially relevant in New Zealand’s quickly evolving tax landscape.
How Can Accountants Help You Set Up Your Family Trust?
In setting up your family trust, you’ll need the financial and legal expertise of an accountant and a lawyer, respectively. The following is what the former can help out with:
Understanding Your Goals as a Client
To set up a family trust that fulfils your objectives, your accountant needs to know what your different financial aspirations are. Is the trust for asset protection? Is succession planning the main goal? Knowledge of your purpose can help your accountant draft a family trust deed that will suit your specific needs and preferences.
Collaborating with Legal Professionals
Accountants work hand in hand with lawyers specialising in trust law to ensure they are on the same page when setting up the trust. Together, they navigate the legal intricacies of trust establishment, ensuring compliance with NZ’s regulatory framework.
Evaluating and Transferring Assets
Your accountant will also assist in evaluating your assets and determining which ones are suitable for transfer into the family trust. This process keeps the trust adequately funded and positioned for long-term success.
Tax Planning
With their expertise in tax planning, accountants devise strategies to minimise tax liabilities within New Zealand’s tax laws. In particular, they identify deductions and credits, which maximises savings for you and your beneficiaries.
Drafting Financial Documents
Accountants play a vital role in preparing financial documents for the trust deed. They go through meticulous planning and documentation, making sure that your financial needs are met and the family trust remains compliant with applicable laws, especially those concerning taxes. This attention to detail is crucial for the effective administration of the trust.
Administering the Trust
Beyond its initial establishment, accountants can continue to support you by administering the trust. This includes tasks such as tax filing, investment management, and financial reporting. All these tasks are vital for the trust’s smooth operation.
Reviewing and Updating the Trust
A family trust is not a static document that you can simply set up and forget. In fact, regular reviews and updates are essential to ensure that the trust remains aligned with your evolving needs and ongoing regulatory changes. Your accountant facilitates this process and ensures that your trust stays optimised for the future.
A well set-up family trust will offer unparalleled benefits for safeguarding your assets and securing your family’s financial future. With the guidance of your accountant, you’ll be able to navigate the complexities of establishing and maintaining your family trust with full confidence—thus building a solid financial foundation for the generations to come.