Family trusts are a popular and effective tool for asset protection in New Zealand. They offer a strategic way to safeguard your wealth from potential creditors, legal disputes, and other financial risks, ensuring long-term security for your family.
What is a Family Trust?
A family trust is a legal arrangement where a trustee holds and manages assets on behalf of beneficiaries, who are typically family members. The person establishing the trust, known as the settlor, transfers ownership of their assets to the trust.
Key considerations for family trusts
Protection Against Relationship Property Claims
Family trusts can provide significant protection in the context of relationship property disputes. Under the Property (Relationships) Act 1976, relationship property is typically divided equally upon separation. However, assets held in a properly structured family trust are generally excluded from this division, preserving them for the beneficiaries.
Long-term Estate Planning
Family trusts also facilitate long-term estate planning. They ensure that assets are managed and distributed according to your wishes, often providing for successive generations.
Proper Setup and Administration
To be effective, a family trust must be set up and administered correctly. This includes having a clear trust deed, appointing competent trustees, and ensuring that the trust is actively managed.
Regular Reviews
It’s essential to regularly review the trust to ensure it remains compliant with current laws and continues to meet your family’s needs. Changes in family circumstances, such as marriages, divorces, and births, may necessitate adjustments to the trust.
Family trusts are a robust mechanism for asset protection in New Zealand, offering significant benefits in safeguarding wealth from creditors, relationship property claims, and ensuring effective estate planning. For tailored advice on establishing and managing a family trust, contact our team at Godfreys Law on (03) 6617166. Properly structured and managed, a family trust can provide lasting security and peace of mind for you and your family.
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