Reviewing your trust-based estate plan - everyone needs to check their estate plan every now and then
The way you plan your estate and asset protection can make all the difference.
The pillars of reviewing your trust
Click the following links to use DYOdocs to create a free report on the legal documents you need as part of
your trust-based estate and asset protection plan
and why it’s essential to have legal expertise you can trust
Do you feel like varying your trust is too hard, and have you put it in your "too hard basket" alongside learning to knit or finally cleaning out the garage? Well, don't worry, we've got the cheat codes to help you stop procrastinating and finally cross it off your to-do list
At Ross Holmes Virtual Lawyers, we know that legal jargon can be overwhelming and make your eyes glaze over faster than a boring lecture. But, we speak legal fluently and are here to make it easier for you. We specialise in making the complex simple, so you can make informed decisions without feeling like you need a law degree.
Once your trust-based estate and asset protection plan is updated it will be like a shield, giving you confidence that your legacy will be secure, even if your kids decide to become rock stars or start a vegan food truck (no judgment here!).
So, let's make varying your trusts feel less like a root canal and more like a Netflix binge. Give us a call today and let's work together to make sure that your trust-based estate and asset protection plan becomes like a happy ending worth watching. Don't let procrastination keep you from securing your legacy. Let's do this!
The need to update your trust deed to comply with the Trusts Act 2019
There has been a lot of misinformation circulating that:
The Trusts Act 2019 requires trust information to be disclosed to all trust beneficiaries.
Trusts no longer provide any asset protection benefits and should be wound up.
Trusts will be more difficult and costly to administer than before.
That is incorrect:
The impact of the Trusts Act 2019 is detailed here: details of the new Act, its impact, and the need to update your trust deed. The Act codifies, clarifies and improves the law of trusts, including the law concerning the disclosure of information to beneficiaries.
The continuing asset protection benefits of your trust are detailed in our Guide to starting a trust-based estate and protection asset plan or a will-based estate plan. It protects your important assets against risks during your lifetime and ensures that your loved ones inherit your important assets safely in a manner in which others cannot take those assets from them.
One client who sold her home to a trust in 1986 for $180,000, which is now worth $1.18 million was told incorrectly by friends that the Trust gave her no geriatric care means testing protection. The $1 million increase in value is completely safe in the Trust. If the Trust had been wound up only $236,336 would have been protected from geriatric care means-testing.
One couple sold their Trust’s home (which had been fully gifted), and on their lawyer’s advice distributed the $800,000 proceeds of sale to themselves to purchase a retirement village apartment. That incorrect advice has placed $563,664 at risk for geriatric care means testing purposes.
With our running instructions, and our latest minute keeping system, trusts are not more difficult or costly to administer than before. We now offer regular 30-minute trust administration webinars (cost $10.00), annual 30-minute trust administration review meetings with our trust administration officer Kirsty Hourigan at our office or via Zoom if required (cost $175.00 plus GST), and our trust administration officer Kirsty Hourigan is available to assist you as required.
Trust administration costs will only increase if you have a professional independent trustee.
Our Managing Director Ross Holmes who wrote those pages is a trust expert and writes the trust administration chapters of legal publishers Lexis Nexis “Law of Trusts”.
As well as making the changes required by the Trusts Act 2019, if some of your trust-based estate and asset protection plan documents no longer reflect your current wishes, you can update them at the same time.
For further information on the Trusts Act 2019 click the button below:
The documents which you should have in your trust-based estate and asset protection plan
A trust based estate and asset protection plan should consists of:
A trust.
A memorandum of your wishes.
A directory of important contacts.
Other asset protection planning documents including:
Minute book and running Instructions.
A review of your current asset ownership. What should you sell to the trust?
A Deed of sale of assets and loan (and associated documents) selling assets from you to the Trust.
A Deed of Gift from you to the Trust gifting all or part of the loan the Trust owes you as a result of the sale of assets.
A review of your current asset ownership. What should the trust own?
In our opinion it is essential that you enter into a relationship property agreement before you commence a de facto relationship even if you have a trust, or if you are in a de facto relationship and forming a new trust, to protect pre-relationship assets and the trust’s assets.
The provisions which you should have in your varied trust deed
With our own trust deeds, your trust deed is varied. This involves:
A Deed of Variation to change the beneficiaries (if required), change the Protector and/or Subsequent Protector (if required), and replace the Trust deed with a modern flexible Trust deed tailor-made for your circumstances.
Preparing the completely rewritten and reordered modern flexible Trust deed tailor-made for your circumstances. Our Trust deeds were completely rewritten in August 2019 to incorporate trust law developments and the changes required by the Trusts Act 2019.
It will have the following major provisions including the following:
The Settlors’ objectives will be detailed in the Trust deed, as in performing the mandatory duties and default duties, the Trusts Act 2019 requires the Trustees to have regard to the context and objectives of the trust.
Normally Your grandchildren (if any), the Secondary Beneficiaries, and Subsequent Protector (other than your children (if any)) will be named in a separate deed (and not in the Trust deed) to avoid onerous disclosure problems with Banks that have been arising over the last 12 months or so.
Normally a clause extending the maximum life of the trusts to 125 years less 1 day from the start of the trust (with effect from the date of commencement of the Trusts Act on 30 January 2021).
A clause detailing the Trustees Mandatory Duties as detailed in the Act.
A clause detailing the new Trustees' Default Duties as detailed in the Act and amending them as appropriate to the extent permitted by the Act with the changes redlined in the Trust Deed.
A clause detailing the core documents which the Trusts Act requires Trustees to keep, and how long they need to be kept.
Additions and removal of beneficiaries: The Settlors now have that power while they are alive and have their mental faculties, and the Trustees have those powers thereafter. This reduces the ability of beneficiaries to challenge their removal by the Settlors, as the current law is that the Settlors owe no fiduciary duties to adult beneficiaries in normal circumstances.
Under the Trusts Act 2019, there is only a presumption (not a requirement), that beneficiaries are entitled to some basic information. As a result, we now include a clause detailing the entitlement of beneficiaries to information, and expressing the intention of the Settlors, which section 53(c) of the Trusts Act 2019 requires the Trustees to consider. It details the Settlors intention that the Principal Beneficiaries be entitled to all important information, the Other Primary Beneficiaries just copies of the trust deed (until the Principal Beneficiaries die when the Other Primary Beneficiaries are entitled to all important information), and the Secondary Beneficiaries no information. With that clause, the position concerning the entitlement of beneficiaries to trust information is now far clearer than it was before the Trusts Act 2019 was passed. Many of the articles in the news media have been inaccurate.
A clause detailing what is confidential information.
A clause detailing the factors that the Trustees must consider in deciding whether to supply trust information to a Beneficiary.
A discretion to charge beneficiaries for the supply of information.
The dates of birth of Beneficiaries will be included.
Your current Trust Deed will be replaced with our latest one, which will have the above features (as well as being completely up to date).
The Settlors’ objectives will be detailed to reflect your present wishes. By way of example:
You as the Principal Beneficiaries rank number one and have the right to reside in the Trust’s residences and be maintained in the standard to which you are accustomed.
The Other Primary Beneficiaries will be ranked as:
Class B (number two): Your children.
Class C (number three): Your grandchildren who “inherit” the share of their parent, if their parent dies before you.
The Secondary Beneficiaries will receive nothing unless all of your bloodline die.
What type of trust do you need to achieve your objectives?
There are different types of Trust. Click here to find out the type of Trust needed to achieve your objectives.
How to start the review of your trust-based estate and asset protection plan
Your present important wishes can only be recorded in detail in the comfort of your home.
Please record those wishes using our questionnaire. in either pdf format or word format. We can then compare what you need which what you have recorded in your present trust-based estate and asset protection planning documents.
Our questionnaire will be able to be completed online in the near future.
If you cannot answer any questions go to our page on how to complete our estate and asset protection questionnaire.
Please email your completed questionnaire to us: reception@rossholmes.co.nz.
Your trust review options for trusts prepared by others:
In order to be able to vary your trust deed, it needs to have a wide power of variation, and powers to add and remove beneficiaries.
For options for trusts prepared by other lawyers, accountants, and statutory trustee companies please email us your completed questionnaire (so that we can understand your objectives), and a copy of your trust deed(s) and ALL changes to it to rossholmes@rossholmes.co.nz. so that we can determine whether it has a wide power of variation, powers to add and remove beneficiaries, and whether there are any other restrictive provisions in the trust deed which will cause problems. There is a cost of $350.00 per trust including GST for that review, and a quotation
Disclaimer: This article should not be relied upon for legal advice. Always seek professional legal advice before making any decisions regarding your business.