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TOWER Trust Legacy Trust summary sheet

Tuesday 13th of June 2000

What is a Legacy Trust?

A Legacy Trust allows you to leave a legacy in your lifetime rather than in your Will. It is a unique concept that allows you to create a legacy for a person or charity.

What are the benefits of a Legacy Trust?
  • Being able to enjoy the pleasure of giving and seeing your gift acknowledged.
  • If the legacy was payable on death then there is no delay waiting for any estate to be wound up.
  • A gift does not rely on a Will so it won't be delayed in payment later or contested.
  • A Legacy Trust properly established should not be counted for any future asset testing purposes.
  • As the legacy is not held in the applicant's name there is no longer any need to pay tax on that income.

What are the types of Legacy Trusts?
  • Inheritance Legacy Trust:
  • This type of trust is seen as a way to give someone a wonderful start in life.
  • An Inheritance Legacy Trust is paid out to the beneficiary when the beneficiary reaches the age of 20 and it is up to them how it is used (part or full payment cannot be made before the 20th birthday of the beneficiary).
  • A Personal Legacy Trust may be a better option if some level of discretion is required.
  • When the beneficiary turns 20 the original legacy plus accrued income will be distributed to the beneficiary. If the beneficiary dies before reaching 20 the original legacy plus accrued income will be repaid to the applicant.
  • Personal Legacy Trust
  • This type of trust allows you to give a legacy to any person, which will be paid out on a date or event you specify.
  • A Personal Legacy Trust is paid out to the beneficiary when the date or event specified has occurred (part or full payment cannot be made before the date or event stipulated).
  • When the date or event stipulated occurs the original legacy plus accrued income will be distributed to the beneficiary. If the beneficiary dies before reaching 20 the original legacy plus accrued income will be repaid to the applicant.
  • Charity Legacy Trust
  • This type of trust allows a charity of an individuals choice to receive a legacy, which will be paid out on a certain date stipulated.
  • A Charity Legacy Trust is paid out to the charity when the date is reached (part or full payment cannot be made before the date stipulated).
  • When the date is reached the original legacy plus accrued income will be distributed to the charity. If the charity does not exist at the date stipulated, then the original legacy plus accrued income will be paid at TOWER Trust's discretion to an IRD approved charity carrying out similar charitable purposes at that time.

How will the funds be invested?

All Legacy Trusts will be invested in the TOWER Managed Funds MortgagePlus Fund. The MortgagePlus Fund invests in carefully selected first mortgages and the objective is to provide over the medium term, returns that are superior to bank deposits. Interest after deduction of tax will be added to the investment and compounded quarterly.

What much will a Legacy Trust cost?

To establish a Legacy Trust there is a once-only fee of $50.

The annual management fee shall be 0.2%pa on the accumulated balance of each Legacy Trust.

(TOWER Trust's ongoing costs in maintaining the Legacy Trusts are covered by a portion of the MortgagePlus Fund's standard management fee)

What are the gifting implications?

Your Legacy Trust is established by an individual making a gift to the Trust of the amount of your legacy.

For gifts made to anybody, gift duty rules apply. If a personal gift of more than $12,000 is made in one year a gift statement must be completed and filed with the IRD.

The onus is on the applicant to be aware of whether they have meet any gift duty requirements (TOWER Trust can be of assistance if required).

What is the tax situation with Legacy Trusts

Inheritance and Personal Legacy Trusts

These trusts pay the tax themselves at a rate of 33% (a tax return is prepared for the trust by TOWER Trust at no additional cost).

The income does not need to be added to the tax returns of the applicant or the beneficiary.

Charity Legacy Trust

Provided a charity is approve by the IRD there will be no tax paid by the trust.

How to set up a Legacy Trust?

IT'S SIMPLE - Fill in the TOWER Trust Legacy Trust application form, enclose a cheque, seal, and forward by Freepost.

Sundry Information
  • Regular correspondence (at least quarterly) would be forwarded to applicants showing the current balance of their personal Legacy Trust. No correspondence will be forwarded to the beneficiary unless authorised by the applicant.
  • Joint applications can be made.
  • Only one person or charity can benefit from each trust.
  • If an individual sets up more than one Legacy Trust then a discount on the entry would be considered.
  • Acceptance in writing from TOWER Trust will be made within 72 hours of receipt.
  • All enquiries in relation to the TOWER Trust Legacy Trust should referred to the E-Commerce Call Centre (0800 869 378).

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