The purpose of a family trust, in general, is to safeguard the ownership of your assets for the sake of your loved ones and their future. Your assets, such as property, stocks, bonds, and shares, amongst others, are going to be safe from creditors if in case you figure in a financial bind. In setting up a trust, you are transferring the ownership of your assets to the trust, which is legally binding. As long as you are alive, however, you can still use these assets accordingly.
The Intricacies of a Family Trust in New Zealand
Accounting North Ltd, a group of chartered accountants providing business and accounting services in Auckland discusses family trust. The company states that family trusts are ‘often a very useful tool’ in the safekeeping of assets and investments.
Listed here are a few questions to ponder so that you can grasp the value of a family trust.
- How can I protect my assets from predators?
- In the event of the dissolution of my marriage, what will become of my assets?
- If my spouse were to pass away, what will happen to my assets?
- Are my children prepared to handle my investments or are they prone to laying them to waste?
- Do taxation benefits exist, and do these benefits apply to me?
What Do You Get From a Family Trust?
A family trust serves as the answer to the aforementioned questions. You may ask: ‘What are the benefits of a family trust?’
- First and foremost, protection against claims and creditors. The failure of a business may result in the loss of a home as collateral; a potential consequence which you would not want.
- Preparation for the future of your loved ones. Your children or grandchildren, even, may benefit from the trust, as t can be used to pay for their education.
- You can be sure that your children, and not their partners, will inherit your assets.
- Similarly, you have the assurance that there will be no unwanted claims on your estate when you pass away. A former partner may contest ownership or inheritance of your estate, but a trust can manage these risks.
There are an estimated 200,000 family trusts in New Zealand. With the valuable benefits that a trust provides, it is no wonder that many people choose to create one.