tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, October 27th, 7:14PM

News

rss
Latest Headlines

The perpetuity problem pertaining to property

Proposed changes to New Zealand’s trust laws have the potential to alter the transfer of property and are long overdue, according to NZ Trustees Services director Jonathon Cron.

Wednesday, June 8th 2011, 6:40AM

The Law Commission has released its third Issues Paper discussing proposed changes to the law of trusts, Perpetuities and the Revocation and Variation of Trusts, and it outlines proposed changes around perpetuities rules and rules that allow trusts to be altered.

While Cron believes any changes will be some time off, he does believe change is required.

"We need to tidy up the whole industry," he said.

"The stuff that we're seeing just leaves you cold. We had clients just in before that have had a trust since 2004 and they don't have any knowledge of what the trust has done, how its been working, why it was set up. They've really been led down the garden path and there's no evidence to support that fact that the trust is actually being run from any point of view, and that's just scratching the surface."

The proposed changes that relate to property are largely within the perpetuities rules, which were established with the intention of ensuring that dead settlors and will makers did not have control over how future generations used their property for too long.

Opponents have argued over the effectiveness of the rule and whether it is overly complex and creates uncertainty.

The Law Commission outlines three options for reform; extend the 80 year perpetuity period, abolish the rule and repeal the Perpetuities Act or replace with a different rule such as one based on the duration of a trust.

Cron explained how the rule effects those looking to safeguard property in a trust at present.

"With the perpetuity rule effectively the trust has to be wound up within that 80 year period. All the assets revert back to the name of the individual beneficiary. If that individual beneficiary now wants to protect that asset they now have to sell it to another trust and commence a gifting programme if one actually exists at that time, or they're now under different rules and regulations because they've owned the asset and they've now got rid of it," he said.

"So it's fairly massive for a lot of people but that's what we're seeing all the time. The majority of mum and dads with a trust right now would not have their children's trust as a beneficiary, they'd have the children themselves."

« News Round Up: June 7KiwiSaver mismatch a 'huge challenge' for advisers »

Special Offers

Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 3.05 2.99 2.99
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.49 2.69 2.79
Median 4.55 2.94 2.99 2.80

Last updated: 23 October 2020 5:00am

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