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  1. #41
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    Quote Originally Posted by percy View Post
    Life unfortunately is never fair.
    My wife's mother is in a nursing home with dementia.She worked as a machinist all her life.No family trust, means her house will have to be sold in the not too distant future, to pay for her care as her investment money is nearly gone.
    We are now "comfortable " [well positioned] and the rainy day funds we have on deposit, which matures in May,are going to pay off the daughter's mortgage.The amount of interest, after tax, we have been receiving we can do without.
    Life is not fair. However that is not a reason not to action over situations which we/government have a measure of influence and can try to make fairer. Also, when the government is trying to encourage people to save for their retirement, they could increase the incentives...

    But then again, with many wealthy people who have their assets in long-established trusts, there have been few avenues for them to recoup long-term residential costs. Hence the increasingly tough trust "look-through" provisions in many areas, ranging from social welfare to matrimonial property (I think). Tougher look-throughs in a wide range of situations would tend to negate many benefits of trusts. It also raises the question as to why should family trusts enable some people to be able to circumvent government tax and social policy anyway? Trust law and retention of benefit from settled assets by the settlor needs to be examined, IMO. NZ has liberal trust laws which allow settlors to retain control over, use and benefit from assets settled on trust.
    Last edited by Bjauck; 27-04-2015 at 07:21 AM.

  2. #42
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    Quote Originally Posted by Bjauck View Post
    Life is not fair. However that is not a reason not to action over situations which we/government have a measure of influence and can try to make fairer. Also, when the government is trying to encourage people to save for their retirement, they could increase the incentives...
    Kiwisaver has some pretty damn good incentives.... I just checked my balance the other day. My personal contributions amount to $13,568.44 and yet my total balance amounts to $40,407. I would call that a very good incentive!

  3. #43
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    Quote Originally Posted by Bjauck View Post
    It also raises the question as to why should family trusts enable some people to be able to circumvent government tax and social policy anyway? Trust law and retention of benefit from settled assets by the settlor needs to be examined, IMO. NZ has liberal trust laws which allow settlors to retain control over, use and benefit from assets settled on trust.
    Why have discretionary family trusts at all. Companies are available to separate risky business ventures from the family home for the entrepreneur. Incorporated Societies would provide protection for people running charitable organisations. Why do we even need this extra layer of complication, especially as it has often been used to negate personal guarantees, receive government benefits when you might not have otherwise been entitled and also reduce tax and ACC premiums.
    Yes all the benefits listed are great if you are receiving them but it makes society as a whole a bit un-fairer for no real benefit.
    Last edited by Aaron; 27-04-2015 at 08:11 AM.

  4. #44
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    Quote Originally Posted by Winston001 View Post
    Very nicely illustrated Roger: my compliments.

    I have spent years pondering the Great Wall of retirement and attended seminars, read books, and saved what I could.

    I have also advised families and dealt with the parents estates when they have died.

    My conclusion is that saving "enough" to provide a truly independent income is impossible for most people. Including myself. In fact I now regret not taking family holidays to Australia, Europe etc as my friends did.

    We can't live life in the future: life is now. As in all things, moderation is the key. Save for retirement but don't let it worry you. Rich relationships with family and friends are the investment which brings rewards over your whole lifetime.
    Allow me to return the compliment, I really like the bit highlighted.
    Some good posts here. Thanks for so many good contributions and its turned into quite an interesting thread.

    I think we can all agree its a very good idea as an absolute minimum to have a debt free home by the time you retire. I also think its a good idea to have at the minimum some other asset that pays a regular income whether that's an investment portfolio, rental property, part of your existing home converted to a flat or some other reliable form of income as its a fairly modest lifestyle just existing on the national Superannuation alone even with a debt free home.

    I'd like to take up the debate about Trusts.

    Trust law is long established and I would perhaps somewhat boldly suggest most of our politicians have their family home in a family trust.
    At present my understanding with rest home and in home care costs is they're looking back 10 years for gifting, used to be 5 AND they look through family trust structures in regard to regular income payments from same, I don't think they did this several years ago.

    Now for some pure speculation.

    Will that look back period increase or will they look through the family trust structure completely ?

    I doubt there's the political will for the latter option but I could well be wrong but there's the distinct possibility that they'll look back further in an effort to stem the rising health care costs in this area.
    In my view this underscores the importance of establishing your family trust early and getting the gifting done and dusted, (this process is helped by the recent abolition of gift duty so you can now gift it all in one step provided you're solvent and the Trust is too).

    Will we see the re-introduction of some form of national superannuation surtax ?

    In Australia I believe if an individual earns more than $72,000 they're ineligible for Super.
    I suspect with the baby boomer population tsunami we'll see some sort of similar system here eventually and / or possibly an increase in the eligibility age from 65 ?
    Whether this is in tandem with new look through trust provisions who could possibly know ? but I think it doesn't do your lifestyle any harm by having your assets in a family trust.

    I'd rather not get into a social debate about whether its morally right that some sectors of the population gain an advantage through trusts, (real can of worms that one). I'd prefer to examine how the law works today and suggest some possible extrapolations based on logic and trends.
    Last edited by Beagle; 27-04-2015 at 11:39 AM.

  5. #45
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    Aaron - a trust is easier than a prenup. Other than that, I am coming around to the line of thinking that they ain't worth it. However, the fact banks require a personal guarantee for pretty much everything which means the benefit of a limited liability company is diminished (for secured/band creditors anyway).

    There are now pretty comprehensive look through re working for families do I expect this to be rolled out for all govt benefits.

  6. #46
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    Quote Originally Posted by Harvey Specter View Post
    Aaron - a trust is easier than a prenup. Other than that, I am coming around to the line of thinking that they ain't worth it. However, the fact banks require a personal guarantee for pretty much everything which means the benefit of a limited liability company is diminished (for secured/band creditors anyway).

    There are now pretty comprehensive look through re working for families do I expect this to be rolled out for all govt benefits.
    Wouldn't surprise me either. Worth noting that at present there's a distinct difference between regular weekly / monthly / quarterly income and one off provision of benefits. For example the trust buys a new car and makes that available to the discretionary beneficiary the trustee's choose. Trust feels its appropriate for the health and wellbeing of that elderly beneficiary to have a holiday on some warm beach overseas because N.Z.'s harsh winter plays havoc with joints and arthritis...e.t.c.

  7. #47
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    Quote Originally Posted by Aaron View Post
    Why have discretionary family trusts at all. Companies are available to separate risky business ventures from the family home for the entrepreneur. Incorporated Societies would provide protection for people running charitable organisations. Why do we even need this extra layer of complication, especially as it has often been used to negate personal guarantees, receive government benefits when you might not have otherwise been entitled and also reduce tax and ACC premiums.
    Yes all the benefits listed are great if you are receiving them but it makes society as a whole a bit un-fairer for no real benefit.
    I agree. I think the liberal trust laws have helped protect the assets of a politically influential segment of society. As most MPs have a lot of their wealth in such trusts, I doubt there will be meaningful reform emanating from parliament any time soon.

    I think NZ trust law is liberal, and hence trusts more popular than in other common law countries, because a major consideration in NZ had been to provide a structure to help keep intact large farms. The break-up of large stations is/was seen as being an uneconomic move - at least by certain influential lobby groups. A farm in a long-established trust is (legally) no longer part of the settlor's property and is therefore not affected by the settlor's bankruptcy or death, for example.

    On the other hand an individual's shareholding in a company would be subject to the normal claims on bankruptcy and death. So, a large sheep station held in a company structure, for example, would be more likely to be sub-divided than if it were under a continuing trust.
    Last edited by Bjauck; 27-04-2015 at 12:39 PM.

  8. #48
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    Quote Originally Posted by Roger View Post
    ...
    Trust law is long established and I would perhaps somewhat boldly suggest most of our politicians have their family home in a family trust.
    At present my understanding with rest home and in home care costs is they're looking back 10 years for gifting, used to be 5 AND they look through family trust structures in regard to regular income payments from same, I don't think they did this several years ago....
    Many trusts are set up when people are in their middle-age. When they reach the age when they are likely (on average) to need nursing or rest home care they will be 75 plus. It could easily be some 25 years after they may have put their assets into a trust. For all intents and purposes they have been the de facto owners of the assets in the intervening period, but de jure not the legal owners. IMO If the settlor is applying for a government benefit and has settled assets at any time on a trust in which he/she is a beneficiary and/or a trustee, the look back should have no limit.

    The widespread use of trusts as shelters for assets has tied the government's hands as far as reintroducing death duties or inheritance tax, as so many of those people who would otherwise have large estates, have put their assets in trusts. The only option may be to introduce an effective superannuation means test/surcharge. As long as it also takes into account any benefit derived from trust assets and/or income.
    Last edited by Bjauck; 27-04-2015 at 01:00 PM.

  9. #49
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    Quote Originally Posted by Roger View Post
    Allow me to return the compliment, I really like the bit highlighted.
    Some good posts here. Thanks for so many good contributions and its turned into quite an interesting thread.

    I think we can all agree its a very good idea as an absolute minimum to have a debt free home by the time you retire. I also think its a good idea to have at the minimum some other asset that pays a regular income whether that's an investment portfolio, rental property, part of your existing home converted to a flat or some other reliable form of income as its a fairly modest lifestyle just existing on the national Superannuation alone even with a debt free home.

    I'd like to take up the debate about Trusts.

    Trust law is long established and I would perhaps somewhat boldly suggest most of our politicians have their family home in a family trust.
    At present my understanding with rest home and in home care costs is they're looking back 10 years for gifting, used to be 5 AND they look through family trust structures in regard to regular income payments from same, I don't think they did this several years ago.

    Now for some pure speculation.

    Will that look back period increase or will they look through the family trust structure completely ?

    I doubt there's the political will for the latter option but I could well be wrong but there's the distinct possibility that they'll look back further in an effort to stem the rising health care costs in this area.
    In my view this underscores the importance of establishing your family trust early and getting the gifting done and dusted, (this process is helped by the recent abolition of gift duty so you can now gift it all in one step provided you're solvent and the Trust is too).

    Will we see the re-introduction of some form of national superannuation surtax ?

    In Australia I believe if an individual earns more than $72,000 they're ineligible for Super.
    I suspect with the baby boomer population tsunami we'll see some sort of similar system here eventually and / or possibly an increase in the eligibility age from 65 ?
    Whether this is in tandem with new look through trust provisions who could possibly know ? but I think it doesn't do your lifestyle any harm by having your assets in a family trust.

    I'd rather not get into a social debate about whether its morally right that some sectors of the population gain an advantage through trusts, (real can of worms that one). I'd prefer to examine how the law works today and suggest some possible extrapolations based on logic and trends.
    From what I have heard the gifting has to continue as before in order to be eligible for old folks home care--i believe that the gov. will look at the ''gifting all in one step'' as one payment ,meaning all the rest is considered ungifted. Its a bit of a double standard in terms of who is interpreting and for what.--(correct me if Im wrong)

  10. #50
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    Quote Originally Posted by Roger View Post
    I'd rather not get into a social debate about whether its morally right that some sectors of the population gain an advantage through trusts, (real can of worms that one). I'd prefer to examine how the law works today and suggest some possible extrapolations based on logic and trends.
    Sorry for going off thread. I agree though no point debating what is morally or intellectually right.
    Trusts are bulls**t but you might as well use them if they are an option that will help benefit you. I think it is up to the leaders of the country to change this and I don't think there is any political will to do so.

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