Cochrane Law
Family Trusts

Family Trusts

• What is a Family Trust?

A Family Trust is an independent entity that allows people to hold assets for the benefit of the beneficiaries who are generally themselves and future generations.

• Why should I have a Family Trust?

A Family Trust can be created for a variety of reasons with some of the most common including:

• Protection of the assets such as the family home from a business venture or from high risk
• Protection of assets to ensure the future generations are adequately cared for and looked after. This includes ensuring that adequate support will be available in your future life for rest home/hospital care and you will not have to sell all of your assets to pay for your rest home fees.
• Protection of assets against possible relationship property claims or family protection claims.
• To manage the assets for someone who is unable to do so themselves (either due to incapacity or through age)
• Who is Involved in a Trust?

There are three keys roles incorporated into a Trust.  These are the Settlors, the Trustees and the Beneficiaries. Settlors – The Settlors are the people\persons who transfer the assets into the Trust. Jack and Mary own the property at 1 Palmy Street, Palmerston North.  Jack and Mary transfer this property to their Family Trust.  They are the Settlors of this Trust. Trustees – The Trustees are essentially the Managers of the Trust.  The Trustees main role is to look after the assets transferred to the Trust by the Settlors for the benefit of the Beneficiaries. It is the Trustees that make the decisions regarding the Trust and take any steps of action that is required to ensure that the assets of the Trust are used in the best way for the benefit of the Beneficiaries. For each Trust there must be at least one Trustee.  The Trustees can be anyone who the Settlors appoint and it is common to see that the Settlors appoint themselves as Trustees together with one independent person. Jack and Mary as Settlors of their Family Trust decide that they wish to appoint themselves as Trustees of their Trust.  They have also chosen to appoint Bob, their Solicitor, as their independent Trustee. Beneficiaries – The beneficiaries are the people who will benefit from the Trust.  This can be anyone who the Settlors choose.  The common set up of a Family Trust would be that the beneficiaries would be Jack, Mary, their children, and their grandchildren.

• Can I alter the Trustees in my Trust?

Yes, depending on how the Trust Deed is set up the Settlors (or someone nominated by the Settlor at the outset) has the power to “hire” and “fire” Trustees.

A Trust can be tailored to suit all different needs and aspects of your lives whether your wish is to protect your family home to ensure that your family is protected in the event that your business was to suffer or whether you simply wish to ensure that you have adequate funds available to you in your elderly years.

For a more detailed explanation on how a Trust can work for you, please give us a call and we will be able to tailor a Trust to suit.