• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook
Results 1 to 9 of 9
  1. #1
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,084

    Default Trust restructure advice

    Who are the current favourites for trusted Trust advice, specifically re-structuring a (simple) family trust and wills now that the kids are all adults.

    Specific questions;

    a. If an adult child is made a trustee of the family trust, containing family assets including the family home, does that affect their 'First Home Buyer' status when it comes to Kiwi Saver/Kiwi Build?
    b. Given that the trustees are listed on the property documents ' as trustee for the XYZ Trust', does changing the trustees trigger a full 'Sale and Purchase' process, or just a (hopefully cheaper) re-documentation exercise?
    c. Is it generally a good idea/normal practice for named beneficiaries (i.e. the adult children) to be trustees?
    DFTBA

  2. #2
    Join Date
    Oct 2013
    Posts
    1,602

    Default

    GRA are good trust-expert accountants, but you'd probably be better talking to a lawyer.

    My good-but-not-quite-expert understanding:

    A: Yes I am fairly sure First Home status under Kiwisaver relies on a name never being on a title of land. Trustees names go on the title instead of the trust.
    B: Does not trigger a full sale and purchase process. And does not reset the Bright Line test (there is a specific exemption in legislation). I don't know about the cost of redocumentation, but you would presume it to be cheaper.
    C: NOT normal practice for named beneficiaries to be trustees. My personal opinion not good idea either. Trustees have the power to control the trust. Having the main beneficiaries in full control risks temptation and self interest and potential for sham trust and etc... For a normal family trust the trustees would be Mum + Dad + Close Friend or Lawyer or Other Professional Trustee
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  3. #3
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,745

    Default

    Quote Originally Posted by Anthonyacat View Post
    NOT normal practice for named beneficiaries to be trustees. My personal opinion not good idea either. Trustees have the power to control the trust. Having the main beneficiaries in full control risks temptation and self interest and potential for sham trust and etc.
    Although I agree with the first sentiment Anthonyacat describes above, my view is the risk of a sham Trust is less than sibling / beneficiary conflict. Any sibling beneficiary who is a Trustee risks being seen in an unfriendly light by other sibling beneficiaries who are not Trustees.

    Quote Originally Posted by Anthonyacat View Post
    For a normal family trust the trustees would be Mum + Dad + Close Friend or Lawyer or Other Professional Trustee
    Agreed.

    But as the parents age and die, replacement Trustees can become a vexing dilemma.

    I held a PoA for both and I was co-executor of my mum and dad's Will, but not a Trustee of their Trust, by my choice / insistence. Events after their death made me most grateful to have made that decision.
    With all the Draconian new laws for residential rental LLs, perhaps AirBnB would be better? To avoid any hassle in Hawke's Bay, consult Be My Hostess. Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  4. #4
    Join Date
    Oct 2013
    Posts
    1,602

    Default

    Quote Originally Posted by Perry View Post
    ...my view is the risk of a sham Trust is less than sibling / beneficiary conflict. Any sibling beneficiary who is a Trustee risks being seen in an unfriendly light by other sibling beneficiaries who are not Trustees.
    I did mention this directly prior to sham trust - I called it 'self interest'. But yes you've certainly unpacked the concept.
    AAT Accounting Services - Property Specialist Accounting - AATAccounting.co.nz
    Lower fees for investors, traders & real estate agents!
    [email protected] for more information.

  5. #5
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,084

    Default

    For a normal family trust the trustees would be Mum + Dad + Close Friend
    This is where we are now, but friend has moved overseas and with the kids all coming of age, I thought it might be a goods time to review things.
    DFTBA

  6. #6
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,563

    Default

    How is the Trust really operated? Do Mum + Dad really make all the decisions, and then the third Trustee just rubber stamps the odd document and minute?

    In the ideal world all Trustees should be fully involved in making all decisions. The third Trustee should know fully what is going through bank accounts, plus have at least annual meeting.

    If this hasn't been the case, and probably won't be the case in the future, are you better just having two Trustees, but ensuring you have signed Trust minutes for each decision (plus annual accounts, annual meeting minutes etc). NOTE , you would need to check your Trust Deed as you might need 3.

    In general a third Trustee is better and helps the Trust have independence, plus on titles for land it makes it a lot clearer. But if the third Trustee isn't involved, then is that worse than not having one?

    If you are going to replace your third trustee, generally this would be an independent trustee. Your children are not independent and are likely to also be beneficiaries. Meaning you would have 3 beneficiaries running the Trust, which isn't ideal. Also are your children going to act in the best interests of the Trust, or their best interests? For example I'm not a trustee in my parents Trust.

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  7. #7
    Join Date
    Jun 2005
    Location
    Auckland
    Posts
    5,084

    Default

    Thanks Rosco - apart from one house move, nothing has really happened for the trust - the financial statements are as boring as they can be, and the trust has no bank account, just the property.
    DFTBA

  8. #8
    Join Date
    Mar 2007
    Posts
    118

    Default

    Quote Originally Posted by cube View Post
    Thanks Rosco - apart from one house move, nothing has really happened for the trust - the financial statements are as boring as they can be, and the trust has no bank account, just the property.

    Then why have the Trust? Was it to protect the house in case of credit litigation?

  9. #9
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,563

    Default

    Quote Originally Posted by cube View Post
    Thanks Rosco - apart from one house move, nothing has really happened for the trust - the financial statements are as boring as they can be, and the trust has no bank account, just the property.
    A Trust should really have a bank account! Just one of the things that helps to make a Trust legit!
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. Advice On Joint Tenacy part share to Trust
    By JAGGZ in forum General (NZ)
    Replies: 2
    Last Post: 18-08-2016, 03:29 PM
  2. Non-Resident Mortgage Restructure Query
    By GeordieKiwi in forum Finance, legal and tax (NZ)
    Replies: 3
    Last Post: 10-07-2016, 12:45 PM
  3. Restructure
    By wxc in forum Finance, legal and tax (NZ)
    Replies: 9
    Last Post: 20-11-2015, 10:43 AM
  4. Need advice on Family Trust
    By NomoneyNotalk in forum Property Investment (NZ)
    Replies: 3
    Last Post: 21-12-2012, 01:41 PM
  5. General trust/mortgage/tax advice request
    By Marjie in forum Finance, legal and tax (NZ)
    Replies: 10
    Last Post: 03-04-2012, 07:59 PM
  6. Forming a trust to protect property...advice needed please.
    By crackennz in forum Property Investment (NZ)
    Replies: 11
    Last Post: 31-12-2011, 11:55 PM
  7. rental propertys restructure?
    By mu1222 in forum Finance, legal and tax (NZ)
    Replies: 10
    Last Post: 10-01-2010, 06:30 PM
  8. Restructure Loan for Positive Gearing
    By loogmord in forum Property Investment (NZ)
    Replies: 5
    Last Post: 11-05-2006, 10:17 AM
  9. Restructure Advice
    By matt004 in forum Finance, legal and tax (NZ)
    Replies: 2
    Last Post: 11-10-2005, 11:37 AM
  10. house prices
    By Kristine in forum General (NZ)
    Replies: 3
    Last Post: 30-12-2003, 12:45 AM

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •