2019 Trust Act - are Trusts still worth it?

[Beano]

Do you know how other trusts have been able to extend beyond the 80 years ?
It would be nice to set up a trust that extends to the length of many of the property leases and being able prohibit the sale of the properties.

[Bluecoat]

The new Trusts Act 2019: key changes.

https://www.interest.co.nz/personal-finance/104600/trust-lawer-tammy-mcleod-says-large-proportion-trusts-are-now-likely-not

https://www.stuff.co.nz/business/119266913/top-lawyer-closed-his-family-trust-and-others-should-follow-suit

https://www.lawsociety.org.nz/practice-resources/practice-areas/trusts/the-new-trusts-act-2019-key-changes-to-consider

[Anthonyacat]

I've been saying for years that the benefits of a trust are often (or even usually) outweighed by the compliance costs. Is only going to become even more prominent with the new changes.

[Beano]

I've been saying for years that the benefits of a trust are often (or even usually) outweighed by the compliance costs. Is only going to become even more prominent with the new changes.

Over say the last 40 years would you have had many thousands of clients that saved hundreds of thousands of dollars through the trust distribution ?
This is based on the company tax being higher than the beneficiaries.
It was a sad day when they changed the rule so the beneficiary had to be 16 (about 21 yrs ago.some beneficiaries paid no paye for over a decade!) but with many beneficiaries not working till 22 there still is great benefits!

[Anthonyacat]

Over say the last 40 years would you have had many thousands of clients that saved hundreds of thousands of dollars through the trust distribution ?

Personally I haven't had thousands of clients, nor have I been working (or alive...) for 40 years. So no. The Minor Beneficiary rule has been the case since before I trained as a CA. Though yes, I expect a lot of wealthy people retained a very large amount of their wealth by distributing large amounts to their young ones prior to that rule change. I think it was a pretty unfair tax setup, but certainly would have encouraged clients to take advantage of it, had I been around.

However, a major consideration with beneficiary distributions that many aren't aware of is that when funds are distributed, the beneficiary has legal ownership of those funds. In most families perhaps not a big deal (especially if the kiddo doesn't know about it - but that won't be the case under the new law), but what do you do when your 19 year old comes along and demands their current account be paid out? You've just allocated them $50k per year since they were 16 to save on some tax. Legally, hard to say no.

[Beano]

Personally I haven't had thousands of clients, nor have I been working (or alive...) for 40 years. So no. The Minor Beneficiary rule has been the case since before I trained as a CA. Though yes, I expect a lot of wealthy people retained a very large amount of their wealth by distributing large amounts to their young ones prior to that rule change. I think it was a pretty unfair tax setup, but certainly would have encouraged clients to take advantage of it, had I been around.

However, a major consideration with beneficiary distributions that many aren't aware of is that when funds are distributed, the beneficiary has legal ownership of those funds. In most families perhaps not a big deal (especially if the kiddo doesn't know about it - but that won't be the case under the new law), but what do you do when your 19 year old comes along and demands their current account be paid out? You've just allocated them $50k per year since they were 16 to save on some tax. Legally, hard to say no.

Explained at 16 transfer was not done till the late twenties .(first beneficiary used the money to purchase an unecumbered house which she still owns)
Youngest (who wants to be an accountant) wanted the interest instead of dividends (to receive the withholding tax instantly rather than wait to start working :-) due to the tax changes and high property prices the trust needs to "topup" the balance to enable the purchase of a unecumbered house while still in the twenties .. hopefully not too many decide to live in London as a fee simple unit could cost £2m :-( )

[Beano]

Personally I haven't had thousands of clients, nor have I been working (or alive...) for 40 years. So no. The Minor Beneficiary rule has been the case since before I trained as a CA. Though yes, I expect a lot of wealthy people retained a very large amount of their wealth by distributing large amounts to their young ones prior to that rule change. I think it was a pretty unfair tax setup, but certainly would have encouraged clients to take advantage of it, had I been around.

However, a major consideration with beneficiary distributions that many aren't aware of is that when funds are distributed, the beneficiary has legal ownership of those funds. In most families perhaps not a big deal (especially if the kiddo doesn't know about it - but that won't be the case under the new law), but what do you do when your 19 year old comes along and demands their current account be paid out? You've just allocated them $50k per year since they were 16 to save on some tax. Legally, hard to say no.

Hi Anthony . Do your clients distribute to the beneficiaries a small amount every month or enough for a new car every few months or a larger amount like a unecumbered house every couple of years?
Having a discretionary trust we can choose who has the shares, car and who has the house.

[BlueSky]

However, a major consideration with beneficiary distributions that many aren't aware of is that when funds are distributed, the beneficiary has legal ownership of those funds. In most families perhaps not a big deal (especially if the kiddo doesn't know about it - but that won't be the case under the new law), but what do you do when your 19 year old comes along and demands their current account be paid out? You've just allocated them $50k per year since they were 16 to save on some tax. Legally, hard to say no.

Exactly, which is why one needs to be careful going forward.
If you were to distribute income , say paying beneficiaries Uni fees what this this still be a good structure for profits retained in LTC?
Or changing shareholding of current LTC? I understand you cannot simply reverse the 80/20 shareholding (high/low income ratio) due to the fact of owner bias contribution.

[propertyfinder]

Asset planning, is a trust's strong point....we're all gunna die and wills are too easily overturned/challenged.

Eg
one of my kids is my fav and the other is a ratbag.... my will leaves everything to the good one and nothing to the evil one. No no no says the judge I don't care what you wanted when you were alive, now that you're dead I will decide how your estate is divided between your kids.

If you don't want that to happen, get a trust.

Cheers
Spaceman

Will it matter, though? You'll be dead - you won't know that the judge has given your estate to your rotten kid! :-)