What is a Trust?

Although there are different types of trusts with various purposes, they all have the same fundamental structure.  A trust is a legally binding arrangement when a person (the settlor) transfers legal ownership of assets to certain chosen persons (trustees) to be held on trust for the benefit of persons named by the settlor (the beneficiaries).

What a trust can do:

A correctly structured Trust can secure your assets for future generations – in exactly the manner you wish to preserve those assets.

For instance, inherited funds are separate property until they are used within a relationship. At that point, they become relationship property and your child could potentially lose half of them through a separation. At the time of your death, your child may be going through some business or creditor issues. If that were the case, your assets could go to satisfy creditors rather than to support your child or grandchildren.

Protect separate property

Trusts are often used when individuals have separate property they do not wish to intermingle with their relationship property. If the separate property is placed in a Trust, they no longer own it and it can then be kept separate from relationship property. This is particularly important for those people who have just left a relationship or have property they wish to protect prior to forming a new relationship.

Reduce risk of asset loss through business failure

New Zealand is a country of small businesses and unfortunately some of them do not trade successfully. Placing your assets in a Trust may help protect your family in the event of a business failure.

Reduce risk of loss of assets through legal action

As a country we seem to be becoming more litigious in nature. If your business is one that could expose you to a legal action through advice or actions, you may wish to protect your family by placing your assets into a Trust.