Estate Planning With Auckland Family Trust Lawyers
Many families in Auckland use a family trust protect their assets and to plan for their financial future. Trusts are complicated legal documents and need to be set up correctly to avoid investigation by the IRD. You will undoubtedly need the help of one of the Auckland family trust lawyers to draft the trust deed, and then set up the appropriate legal entities.
Auckland Family Trust Lawyers Can Save Money And Stress
A trust document, known as a trust deed, is complex. It also needs to be written so that any assets put to the trust are properly protected. Clearly, it will be sensible to hire one of the Auckland family trust lawyers to help.
It is also important that the trust is set up properly for the beneficiaries. This can include advising clients about trying to hide income within a trust for tax reasons. This is illegal and leads to prosecution by the IRD.
Understanding Family Trusts
A family trust is a legal entity that protects assets from external claims. The assets are held and managed by trustees to provide for the beneficiaries of the trust. The management of the assets is described in the trust deed.
Common assets held within a trust include property including the family home, shares, businesses, artwork, and many other assets.
One benefit of putting assets in a trust is that they can be protected from unwanted or unwarranted claims by third parties. The reason is that the beneficiaries do not own the assets; the trust does. For example, if someone once owned a house, including mortgage-backed, this was an asset that another party could potentially aim to take control of to cover outstanding debts. However, if that house was transferred to a family trust, that person no longer owns it and so it is not an asset that could be claimed to repay any debt.
A trust can also be used in estate planning. This means that assets can be used to allocated upon the death of a person. It is very difficult to challenge a trust unlike a contentious will. Wills are frequently challenged by family members of the deceased if they feel they have been harshly treated in the disposal of the estate.
Another common use of a trust is as income for a beneficiary. For example, when they reach a specified age, they can be given a lump sum or an income. Additionally, a trust fund could be used to pay for education costs for children.
Some Benefits of Having a Family Trust
A family trust has some key legal benefits. These include:
- Asset protection
- Secure wealth distribution
- Privacy
Asset protection shield assets from business risks such as creditor claims. A family home is often used as collateral for loans or a business. If that home is in a trust the house is protected under the terms of the family trust deed.
Until recently, there were some tax advantages for trusts. However, from 2024/25 tax rates for trusts will be 39%, the same as the top income tax rate.
Trusts allow precise control over how and when assets are shared. This helps parents support children while encouraging financial responsibility.
A trust can aloe better control over asset allocation or relationship property claims. For example, if a person remarries but does not want to leave a significant amount to stepchildren, they can secure their estate in a family trust, and make their distribution from that.
The trust can also make payments, lump sum or stipends, to the beneficiaries.
Privacy is another key benefit since the details of the trust activities remain confidential within the trust documents.
The Trust Structure For Your Aims
There re numerous ways that a family trust can be set up. It depends upon the goals of the trust and the trustees.
Three common types are
- Discretionary trusts
- Fixed trusts
- Charitable trusts
Another specifically for business is a trading trust.
A discretionary trust means that the trustees have the authority, their discretion, to allocate the assets of the trust.
With a fixed trust the beneficiary entitlements are described in the trust deed. In this case, the trustees simply have to manage the documents, tax, and assets. This type of trust will be used for specific goals like education funds.
A charitable trust, as the name suggests, protects or allocates assets or income to charities specified in the trust deed.
A good Auckland family trust lawyer will advise the client on a number of issues. These include:
- Considering the makeup of the family members
- What assets are to be included
- The aims and goals of the trust
To avoid any complications and adverse tax audits, it is essential to get the set up right from the start.
Picking From The Auckland Family Trust Lawyers
There is a good number of family trust lawyers in Auckland so how do you know which to pick?
Personal recommendations from friends or family are a good place to start.
Look in Google reviews and see what existing clients think of their service and capabilities.
Some lawyers focus only on trusts. This might sound a good idea but there will often be other aspects of law that you need help with. It makes sense to work with one law firm for all of your legal requirements. A common additional area of law is property transactions. These can be intertwined with the family trust work.
Summing Up
One of the better regarded law firms with a good team of Auckland family trust lawyers is McVeagh Fleming. Click the link for more details.