I hear a lot of "property" people suggesting trusts are the better vehicle for controlling property. I am curious why you think this is so, or why not.
Trusts, I understand, remove ownership from the individual, yet they still allow him/her/them to control the asset. But what's wrong with ownership of something if one conducts one's self in a law-abiding way?
There are three main participants to a trust: the settlor who gifts to the trust; the trustee who exercises control; and the beneficiary who stands to get something out of the deal in the end. If one is all three - then the trust has, by my understanding, all the hallmarks of a sham trust, which can be unwound.
And if you are not the beneficiary you don't stand to gain at the end of the deal, so what is the point? Sure, it is possibly a good idea to put some assetts in trust for the benefit of the children, but if the kids are the beneficiaries of everything what's in it for the settlor? The trustee I would imagine has a duty to do everything with the beneficiary's best interest in mind - so pulling out $50k for a three month cruise around the Med might not be quite kosher.
Personally I hold my property investments in a LAQ Company. I am curious as to the advantage it would have been for me to have held these assetts in a trading trust, if any?
I have heard that if I were to have one or two ales too many and proceeded to plough into the back of a Rolls Royce Phantom my insurance wouldn't pay out (on account of the booze) and the Phantom's insurer could come after my assetts ie the shares in my company. Thus in this case the trust would protect the property from myself. But I could counter that by suggesting that I don't get into any property at all because there is no insurance in the advent of war damage - should New Zealand march off to war again. But taking this pessimistic approach would do nothing to aid my retirement!
Also I'm told a trust offers assett protection in the event of relationship splits. But I thought pre-nups covered that base.
So can someone please enlighten me. This is a serious question and I am eager to hear your responses.
Julian
Trusts, I understand, remove ownership from the individual, yet they still allow him/her/them to control the asset. But what's wrong with ownership of something if one conducts one's self in a law-abiding way?
There are three main participants to a trust: the settlor who gifts to the trust; the trustee who exercises control; and the beneficiary who stands to get something out of the deal in the end. If one is all three - then the trust has, by my understanding, all the hallmarks of a sham trust, which can be unwound.
And if you are not the beneficiary you don't stand to gain at the end of the deal, so what is the point? Sure, it is possibly a good idea to put some assetts in trust for the benefit of the children, but if the kids are the beneficiaries of everything what's in it for the settlor? The trustee I would imagine has a duty to do everything with the beneficiary's best interest in mind - so pulling out $50k for a three month cruise around the Med might not be quite kosher.
Personally I hold my property investments in a LAQ Company. I am curious as to the advantage it would have been for me to have held these assetts in a trading trust, if any?
I have heard that if I were to have one or two ales too many and proceeded to plough into the back of a Rolls Royce Phantom my insurance wouldn't pay out (on account of the booze) and the Phantom's insurer could come after my assetts ie the shares in my company. Thus in this case the trust would protect the property from myself. But I could counter that by suggesting that I don't get into any property at all because there is no insurance in the advent of war damage - should New Zealand march off to war again. But taking this pessimistic approach would do nothing to aid my retirement!
Also I'm told a trust offers assett protection in the event of relationship splits. But I thought pre-nups covered that base.
So can someone please enlighten me. This is a serious question and I am eager to hear your responses.
Julian
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