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  1. #1
    Member Timesurfer's Avatar
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    Default Trusts - still a viable entity?

    It appears the government is tampering with the way trusts are managed. Will this be persuading those of you with trusts to join the hordes dissolving your trusts?

    https://www.stuff.co.nz/business/119...ld-follow-suit
    “Better three hours too soon than a minute too late.”
    ― William Shakespeare

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    Quote Originally Posted by Timesurfer View Post
    It appears the government is tampering with the way trusts are managed. Will this be persuading those of you with trusts to join the hordes dissolving your trusts?

    https://www.stuff.co.nz/business/119...ld-follow-suit

    Absolutely not, as it serves a very useful purpose, especially being self employed

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    Quote Originally Posted by JeffW View Post
    Absolutely not, as it serves a very useful purpose, especially being self employed
    What more would a trust have for a self employed person than if that person were to use a 'limited liability' corporation setup? I can understand in the case of a proprietorship but if a self employed person can setup a company (in a corporate fashion for limited liability), then what more would a trust offer?

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    Quote Originally Posted by SBQ View Post
    What more would a trust have for a self employed person than if that person were to use a 'limited liability' corporation setup? I can understand in the case of a proprietorship but if a self employed person can setup a company (in a corporate fashion for limited liability), then what more would a trust offer?
    I am guessing in the case of negligence etc where the courts can go after the directors assets, then you can at lease keep your house and other assets safe for your children?

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    Member Timesurfer's Avatar
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    Quote Originally Posted by blackcap View Post
    I am guessing in the case of negligence etc where the courts can go after the directors assets, then you can at lease keep your house and other assets safe for your children?
    I believe that is the point raised in the article - there is now very limited protection afforded by a trust
    “Better three hours too soon than a minute too late.”
    ― William Shakespeare

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    Quote Originally Posted by Timesurfer View Post
    I believe that is the point raised in the article - there is now very limited protection afforded by a trust
    I did not read that in the article. I read that new laws would make Trusts more transparent and beneficiaries would have more powers to know what the Trust held for them. Trust busting in IRD examples has been going on for a while etc but in the case of director negligence I think they still hold validity and the new laws do not change that.

    I could be wrong but that is how I see it as it currently stands. I am thinking along the lines of a profession like architecture (as an example) where they design a leaky home for a client. If their assets are held in Trust then the person whose home is leaky cannot get access to those assets by way of recompense. They would still have to go to the architects firm.

    But then I am no expert in Trusts at all. I administer one but that is about it. Happy to be proven wrong.

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    Changes in the trust caused by abuse meaning, just because a person operates under a trust does not give them the right to be negligent. Conversely, a person under a corporate company should not lose their personal assets if the negligence was purely out of accident and was fit under a 'reasonable person test'.

    The real winners in setting up trusts and managing them are the lawyers and accountants.

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    Quote Originally Posted by SBQ View Post
    Changes in the trust caused by abuse meaning, just because a person operates under a trust does not give them the right to be negligent. Conversely, a person under a corporate company should not lose their personal assets if the negligence was purely out of accident and was fit under a 'reasonable person test'.

    The real winners in setting up trusts and managing them are the lawyers and accountants.
    Thanks SBQ, that makes a lot of sense. I will have a word to the person in question and ask them why they have the trust in the first place.

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    I would recommend a book written by Martin Hawes - Family Trusts. Well worth the price tag

    There are so many benefits of having some or all of your assets in a trust.
    My wife and I are planning to have parallel trusts - beneficiaries being ourselves and children.

    The advantages that I see are asset protection, and income generated from the assets could be distributed at the discretion of trustees.

  10. #10
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    Quote Originally Posted by RRR View Post
    I would recommend a book written by Martin Hawes - Family Trusts. Well worth the price tag

    There are so many benefits of having some or all of your assets in a trust.
    My wife and I are planning to have parallel trusts - beneficiaries being ourselves and children.

    The advantages that I see are asset protection, and income generated from the assets could be distributed at the discretion of trustees.
    As the original article says many of the benefits in a trust have been diminished over the years through abuse (as I mentioned before, abuse by those using trusts to cheat people and twist the laws of the scale):

    "Courts got into trust-busting, which meant they no longer offered much protection in property relationship break-ups. Residential rest home care subsidy means-testing was changed to include assets gifted to trusts.

    "Trusts are no longer as strong as they used to be," Stokes said.

    A parallel trust? Sounds like the lawyers are happy with all the mgt / administration fees. Asset protection can still be achieved by operating a LLC / incorporated company if you're self employed. As for the common person, I can't see any benefit that a trust would provide.

  11. #11
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by RRR View Post
    I would recommend a book written by Martin Hawes - Family Trusts. Well worth the price tag

    There are so many benefits of having some or all of your assets in a trust.
    My wife and I are planning to have parallel trusts - beneficiaries being ourselves and children.

    The advantages that I see are asset protection, and income generated from the assets could be distributed at the discretion of trustees.
    Was a good book but now in need of a major update. Not planning on any changes to our Trusts. Beneficiaries will be told what's coming when we are good and ready.
    No butts, hold no mutts, (unless they're the furry variety).

  12. #12
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    Aren't a lot of beneficiaries set up as "discretionary" meaning they may or may not get anything and therefore do not need to know until they do!

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    Quote Originally Posted by Jay View Post
    Aren't a lot of beneficiaries set up as "discretionary" meaning they may or may not get anything and therefore do not need to know until they do!
    Yes they may well be discretionary but if a beneficiary challenges the trust deed in court then the one with the deepest pockets for lawyers fees can win out.
    Google Erceg vs Erceg
    https://www.tgtlegal.com/News/ercegverceg.html

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    Quote Originally Posted by Beagle View Post
    Was a good book but now in need of a major update. Not planning on any changes to our Trusts. Beneficiaries will be told what's coming when we are good and ready.
    Correct with emphasis on the "was". I spoke with Martin about 2 years ago and he said the same thing. It is well outdated. Some of the principles still apply but you cannot rely on it.

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    Quote Originally Posted by SBQ View Post
    As the original article says many of the benefits in a trust have been diminished over the years through abuse (as I mentioned before, abuse by those using trusts to cheat people and twist the laws of the scale):

    "Courts got into trust-busting, which meant they no longer offered much protection in property relationship break-ups. Residential rest home care subsidy means-testing was changed to include assets gifted to trusts.

    "Trusts are no longer as strong as they used to be," Stokes said.

    A parallel trust? Sounds like the lawyers are happy with all the mgt / administration fees. Asset protection can still be achieved by operating a LLC / incorporated company if you're self employed. As for the common person, I can't see any benefit that a trust would provide.
    They are diminished however I do think he is over stating the case somewhat. I do know people who current know what they are doing using trust re Rest home care, general asset protection, relationship property, civil liability protection and multiple international residency and overseas asset protection i.e in the US in particular. Not workable for all but personally very useful!

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