Family Trust and changing Deed ?

[richard56]

Hi
Lets say you have set up a Family Trust and have placed your POPR in it.
In the future you expect that you will transfer your LTC in to the Trust.

Your hope is that one day your nieces and nephews will be brought on board as Trustees and keep the LTC running to benefit themselves and future generations.

But you are not sure at this early stage,they are still in their early twenty's,if they are going to be responsible enough to take on the role.

So you have to construct the Trust Deed when you first create the Trust... but can you change it, the Deed, in later years once the LTC have been transferred and you have decided whom you wish to run it?

Richard

[Perry]

A Deed of Variation of a Trust
is not at all uncommon.

[Anthonyacat]

As Perry has said, easy to change trust rules. Can be expensive, but not difficult.

Watch out though with LTCs owned by trusts that you don't breach the five owner rule. While I'd doubt that a single trust owning the entire LTC would cause any problems it might depending on the deed.

[Ivan McIntosh]

I support what Anthony and Perry have said. Make sure your Deed of Trust provides for you to have power of removal and appointment of the trustees.

[Rosco]

Hi Richard,

The problem is often you don't have time to rearrange, as death's or accidents aren't planned.

So I would suggest putting a careful plan together now

Question for your lawyer, upon your death, can your power of appointment pass to your nieces and nephews, but with a provision that if they are under 30 it is held on their behalf by your lawyer?

Other thoughts;
- Or are you just better to appoint a professional to gain the power of appointment, and to effectively run the Trust upon your death
- In reality, most Trusts are wound up once the settlor dies. The children generally just want to get their hands on the cash, and sell everything to get it. This can put a professional Trustee in an awkward position. I would suggest carefully spelling out your wishes in your memorandum of wishes, and if these are to keep the assets in the Trust for your nieces and nephews benefit, that you clearly spell this out and don't have any of your relatives as the Trustees or power of appointors.

Ross

[Winston001]

Mmm...although a Memorandum of Wishes can be interpreted as a clog upon the Deed of Trust, in which case why aren't the terms of the Memorandum included in the Deed?

A discretionary trust (the most common modern type) is flexible but only within the terms of the Deed. If there is an outside document such as a Will or a Memorandum of Wishes which alters the Deed of Trust, can the Trust ever be said to be certain?

And it is established law for over 200 years that an uncertain trust must fail.

[richard56]

Hi
I am confused...seems happen a lot lately

Try this for a scenario.

Your a single person with no dependents.
You put your POPR in to a trust.

Am I right in believing that you cannot make yourself the sole beneficiary in a discretionary trust ?

If that is true what do you do if you don't have anyone else...at that time...that you want to be a beneficiary of the trust.
You might want to add someone in later but right now you don't.

What do you do?
Richard

[Viking]

You might want to wonder at the wisdom of trusts.
They are going to be picked apart.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11412499

[Perry]

I thought that that a power of appointment related to replacement and/or additional
Trustees, rather than beneficiaries. The sort of thing a surviving spouse might exercise.
If the report is accurate, it's obvious that a power of appointment is a lot wider than
I had thought. But maybe the Trust[s] referred to were very different to the norm?

For one of the trusts in this particular dispute, Mark Clayton had the right to remove
discretionary beneficiaries and therefore leave himself as the sole person entitled to
receive income and capital from it. After deciding such a power of appointment could
be property and therefore relationship property, Justices Ellen France, Tony Randerson
and Douglas White said its value was the net value of the trust's assets.

[eri]

One of his companies, James Developments (JDL), lent $740,000 to the trust to help with this purchase of the property.

JDL went into liquidation three years later, owing at least $1.7 million.

Shortly before liquidators were appointed, James amended the company's accounts so the $740,000 transaction was recorded as JDL repaying earlier advances rather than making a loan.

The trust records were also amended to reflect this apparent situation, with the debt changed to be due to James personally.

JDL's liquidator believed this "correction" was a device to remove the $740,000 from the company and launched High Court action in 2012 to recover the funds from the trust.

James and the trustees of his family trust later admitted the amending of the records was incorrect but still claimed the liquidator was time barred from recovering the money.

http://www.nzherald.co.nz/property/n...ectid=11421473

[Wayne]

And the court saw right through all this and made the right judgement.