About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Tuesday, October 21st, 10:08PM
rss
Latest Headlines

Tying in your will with your family trust

Tower Trust tells you how to avoid some estate planning problems by tying the contents of a will together with a family trust.

Friday, February 16th 2001, 3:50PM

When establishing your family trust you normally end up with the trust owing to you, as the settlor, a loan (often considerable) which is normally forgiven over the years at the allowable rate, which is currently $27,000 per annum. The objective is to reduce the loan owed to you to a nil balance. Generally at this stage the assets previously owned by you are protected by virtue of being owned by your trust.

Unfortunately many people do not reach the position of completely gifting away their loans. The most common reasons being an untimely death or setting up their trust too late in life to give themselves enough time to complete gifting in full. An example would be that a 75-year-old placing $540,000 worth of assets into a trust, would require 20 years of gifting at $27,000 per annum to reach a nil loan balance. Unfortunately not many of us can expect to attain 95 years of age.

Many people have not completed their gifting programme when they die. Upon death the loan owed becomes an asset of their estate and is dealt with in accordance with the terms of the will. If there is not a clause in the will forgiving any loan owed by the trust then there can be unnecessary problems faced by the trustee or trustees of the family trust. The reason being that the executor of the will may have to request that the trustee or trustees of the family trust repay to the estate the outstanding balance of the loan.

Sometimes the family trust will have insufficient cash assets to repay the loan. Imagine the problems faced should the major asset of the family trust be a residential home occupied by family.

Should the beneficiaries under the will be different from the beneficiaries of the family trust and there be no clause in the will forgiving the loan owed by the trust, it is possible that the residential home will have to be sold so that the loan can be repaid.

All of this can be avoided by obtaining professional advice when having your will prepared.

If you have a family trust it is recommended that you do the following in regard to your will: -

  • Name the trustee or trustees of your family trust as the executor or executors of your will. This way the "left hand knows what the right hand is doing".

  • Have a clause in your will forgiving any loan owing to you by your family trust. This relieves the need for your family trust to repay any debt to your estate. Therefore, the assets of your family trust will remain undisturbed.

It is also recommend that you prepare a letter to the trustee or trustees of your family trust expressing your wishes as to when and how you would like the assets of your family trust distributed following your death.

Your will and your letter to the trustee or trustees of your family trust should be considered "as a whole" to ensure that your wishes are met.

« Restrucuturing trusts could have unforseen circumstancesThe Personal Property Securities Act 1999: Ready, Set, File! »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Commission questions to be asked
    “I feel that all risk commission/bonuses payable should be disclosed in dollar terms, and in the event of replacement business...”
    18 hours ago by macca
  • Commission questions to be asked
    “The commissions in Australia on personal risk insurance are around 115% of initial premium- already well below NZ levels....”
    20 hours ago by Mike Naylor
  • Commission questions to be asked
    “Like most things that are considered, the consumer reaction is unlikely to be taken into account. It’s less about fees...”
    1 day ago by Pragmatic
  • FAA review 'starting with a blank slate'
    “It is quite critical that legislators etc have some knowledge of investment theory before they legislate. For example Mr...”
    2 days ago by Brent Sheather
  • Don't discount small caps: Gaynor
    “Brian is quite correct. Also PIE funds is, and remains, a brilliantly successful manager. Massive return from a specialty. If...”
    6 days ago by NormanStacey
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AMP Home Loans 7.24 ▼5.69 6.39 6.65
AMP Home Loans $200k+ 7.14 ▼5.59 6.29 6.55
AMP Home Loans LVR <80% - - ▲5.99 ▼6.19
ANZ 6.74 6.15 ▼6.39 6.49
ANZ Special - ▼5.69 ▼5.75 6.09
ASB Bank 6.75 6.09 6.40 6.65
ASB Bank Special - 5.70 ▼5.75 6.19
BankDirect 6.75 6.09 6.99 6.65
BankDirect Special - 5.70 ▼5.75 6.19
BNZ - Classic - - ▼5.75 6.19
BNZ - GlobalPlus 6.74 ▼5.89 6.39 6.59
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.15 - - -
BNZ - Rapid Repay 6.74 - - -
BNZ - Std, FlyBuys 6.74 ▼5.89 6.39 6.59
BNZ - TotalMoney 6.74 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 6.05 6.20 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 6.45 - - -
Lender Flt 1yr 2yr 3yr
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.65 5.85 5.99 6.19
HBS Special - - - 5.89
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 6.70 6.00 6.50 -
Housing NZ Corp 6.74 5.99 6.39 6.59
HSBC Premier 6.84 5.95 5.95 6.39
HSBC Premier LVR > 80% - 5.75 5.75 5.75
HSBC Special - - - -
ICBC 6.75 5.99 6.39 -
Kiwibank 6.65 5.79 6.39 6.65
Lender Flt 1yr 2yr 3yr
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.55 - - -
Kiwibank LVR > 80% - - 5.89 6.19
Liberty - - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.95 6.15 6.60 -
NZ Home Loans 6.85 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
Resimac 6.59 6.35 6.58 6.77
SBS Bank 6.65 5.85 5.99 6.19
SBS Bank Special - - - 5.89
Lender Flt 1yr 2yr 3yr
Silver Fern 5.95 6.10 6.55 7.05
Sovereign 6.85 6.09 6.40 6.65
Sovereign Special - 5.70 5.75 6.19
The Co-operative Bank 6.70 ▼5.70 ▼5.89 6.19
TSB Bank 6.74 5.95 6.19 6.30
TSB Special - - 5.79 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.59 6.09 6.39 6.65
Westpac - Capped rates - 6.74 6.99 -
Westpac - Offset 6.59 - - -
Westpac Special - - ▼5.75 6.19
Median 6.70 6.00 6.39 6.52

Last updated: 22 October 2014 7:07am

News Quiz

In a study of performance fees by Pathfinder, how many of the 10 equity PIE funds reviewed have to achieve a margin over and above their benchmark before performance fees kick in?

10

9

7

5

2

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by PHP Developer and eyelovedesign.com