The new Trusts Act 2019 will come into effect on 30 January 2021. Much of the Act updates or restates law that exists already, either in statute or in case law. There are, however, a number of changes about which trustees and settlors should be aware.
The Act contains ‘mandatory’ and ‘default’ duties for trustees…
Continue reading “Trusts Act 2019”
What the future may hold for separating couples with a trust
When a marriage, civil union or de facto relationship breaks down, the couple will usually divide their property according to the Property (Relationships) Act 1976 (the PRA). However, these two people often hold property in a trust rather than personally.
The PRA has limited remedies to access property which has been put in a trust, and this can result in unfairness when a couple separates if there are no assets that they own personally.
The Law Commission has undertaken a review of the PRA and proposed that the legislation be changed to make it easier to access trust property when a couple separates.
Continue reading “Accessing the assets of a trust”
Deals with practical issues
The long-awaited Trusts Bill was introduced to Parliament on 1 August 2017. The Bill is largely an update and restatement of the Trustee Act 1956 and the common law. However, it also deals with practical issues that have faced lawyers and trustees for some years. We outline some of the most important parts of the Bill.
‘Express trust’ defined
An ‘express trust’ is defined in the Bill. The definition makes it clear that trust property is separate from a trustee’s personal property, it must be administered in accordance with the trustee’s obligations in the trust deed, and that trustees will be accountable to beneficiaries for their compliance with the duties imposed on them by the trust deed and by law.
Continue reading “Trusts Bill”
Many trusts may require registration with the United States’ IRS under the FATCA regime
The US Foreign Account Tax Compliance Act (FATCA) has been in force in New Zealand since June 2014. FATCA is a complex piece of legislation established to prevent tax evasion by requiring foreign financial institutions to register and report to the IRS in relation to any accounts held on behalf of US citizens.
All New Zealand entities considered to be ‘foreign financial institutions’ under the FATCA regime should have been registered on the IRS website by 31 December 2014. Continue reading “FATCA and New Zealand Trusts”
Today we’ve published the Autumn 2013 edition of Trust eSpeaking; we hope you enjoy reading this, and also find its contents both interesting and useful.
In this issue we have articles on:
- Trust and Avoidance of Rest Home Fees: all quite tricky
- Right to Decide About Funeral and Burial: still some uncertainties
- Law Commission’s Key Proposals for New Trust Legislation
If you’d like to talk further about anything in Trust eSpeaking, please be in touch.
Following the abolition of gift duty on 1 October, we publish a special edition of Fineprint here.
You may be considering whether to complete your gifting programme in one fell swoop – or perhaps not.
Everyone has their own reasons for establishing a trust, and your own individual situation will be unique to you and your family. Completing your gifting programme in its entirety may not be the best step for you.
Do get in touch with us so we can talk about the best path forward for you and your particular circumstances.
We publish the latest edition of Trust eSpeaking here.
In this edition:
- Let’s give it all way – It’s not that straightforward
With the abolition of gift duty from 1 October 2011 the first thought for most people who have a family trust would be “Let’s give it all away”
- Rest home care – Don’t expect government hand-outs
After gift duty comes to an end from 1 October, one thing will still be clear: you can’t give everything away to a trust and then expect to rely on state assistance because you don’t own any assets…
- Trustee Liability – As vendor under an Agreement for Sale & Purchase Trustees are the legal owners of trust property and are personally liable for warranties given under an Agreement for Sale & Purchase. Trustees should be very careful about giving warranties
- Trusts and tax – The Supreme Court has spoken Using a trust – or any other structure such as a company – to reduce your income is
not straightforward. If you push the boundaries too hard you may end up having to pay a lot more. The latest Supreme Court decision provides a useful warning
The Supreme Court has just released its judgment in the ‘Penny Hooper’ case. This case involved two doctors that worked in their own private practices. They then formed companies for which their family trusts were shareholders. Rather than the doctors receiving the full income they generated – they were paid a salary. The IRD said the salary was significantly below market value (i.e. one doctor went from $650,000 income one year to a salary of around $100,000).
The Supreme Court has said that having a salary set at a low rate to avoid paying tax is tax avoidance. However, if the salary is at a low rate for a legitimate reason (e.g. saving income for the purchase of a capital item) then this is not tax avoidance.
A more detailed summary of the decision follows and you can read the full decision here.
Continue reading “The taxing issue of family trusts and companies”
Today we publish the Autumn issue of Trust eSpeaking; we hope you enjoy reading it. If you would like to talk further about any issue about trusts, please don’t hesitate to contact us.
In this March edition, we have articles on:
- Gift Duty Abolition: from 1 October 2011
- Rush to Trust – or Maybe Not? Careful on relationship property issues
- What Might Happen with Future Trusts Legislation?