Cutting Trust Costs Without Losing Protection
One of the most common reasons people wind up their Trust is cost. But before you dismantle years of asset protection, it’s worth asking: *are those costs really necessary?*
In most cases, the answer is no.
1. Independent Trustees Aren’t Required
There’s no legal rule that says your Trust must have an independent trustee, unless there is a clause in the Trust deed that requires this. For “mum-and-dad” Trusts with modest assets, paying annual professional trustee fees often makes little sense.
**Solution:** Remove the independent trustee and manage the Trust yourself. It stays valid, but you save money every year.
2. Home-Only Trusts Can Be Simple
If your Trust owns only your family home:
- You don’t need a separate bank account.
- Outgoings can be paid as if you owned the property personally.
- No annual tax return is needed if the Trust is declared **non-active**.
Day-to-day, it feels no different from personal ownership—except your home is protected.
3. Small Investments? Use a Deed of Loan
Trusts with minor investments can restructure:
- Sell the investments to yourself, and
- We can prepare a **Deed of Loan** for the loan from the Trust to you.
That way, the Trust has no taxable income. You handle the investments personally, while the Trust continues to protect your core assets.
4. The Cost vs. Protection Equation
A Trust may cost a little to maintain. But the protection it provides—against relationship property claims, overseas accident liability, or children inheriting at the wrong time—can save hundreds of thousands of dollars.
It’s a classic case of *penny wise, pound foolish* to wind up a Trust just to avoid small admin costs.
Real-Life Stories
**✅ Success – Rachel**
Rachel removed her independent trustee and simplified her home-only Trust by lending the Trust’s bank deposits to her. Her annual Trust costs dropped significantly, but her protection remained.
**⚠️ Failure – Geoff**
Geoff wound up his Trust to avoid paying independent trustee fees. A year later, he died, leaving his house and other assets to his daughter Jolene in his will. Jolene and her husband Joe moved into the home. 12 months later, Jolene’s marriage broke down, and half of her home was lost to her ex-partner.
The Bottom Line
Before you decide to wind up your Trust, ask: *Is the cost really the issue, or is it just the way the Trust is structured?*
In most cases, a few smart adjustments slash the costs while keeping all the protection.
📖 **Next step:** Contact us to book a **Trust Check** at our offices or via Zoom with Kirsty Hourigan +64 9 4155704. We’ll show you how to simplify your Trust, reduce costs, and keep the shield around your assets.
Disclaimer: This blog is general information only, not legal advice. The decision to wind up a trust has serious implications, including potential loss of asset protection and tax consequences. Please seek professional advice for your situation before taking any action.
