Trusts 2017-05-19T12:17:27+00:00

Trusts

Our team can assist you with advice in the following areas:

Our trust lawyers are able to advise you when it may be appropriate for you to consider the use of a trust structure to provide you with your desired outcomes.

Trusts come in many forms and need to be individually drafted to your particular circumstances.

In addition to trusts set up for individuals, we are experienced in providing advice for group models including charitable trusts, clubs and incorporated societies.

The specific areas in which our trust lawyers will assist you are as follows:

You can learn more about the team members who can assist you by visiting the Personal Planning & Business Solutions Team or by contacting us directly.

Trusts

A trust is created when a person (the settlor) transfers property to trustees for those trustees to hold on behalf of a wider group of people (the beneficiaries). Trustees are obliged to use property they hold for the purposes specified by the settlor in the Trust Deed. The Trust Deed sets out the rules and regulations of the trust and records who the beneficiaries are.

A trust usually has two or more trustees, often including the settlor. We recommend that an independent trustee be appointed, for example, someone outside of the family like a lawyer or accountant who knows how a trust operates and is free from any family dynamics when making a decision.

Some of the benefits of having a family trust are as follows:

  • Potential protection from creditors
  • Potential protection from failed relationships for both you and your family
  • Possible tax advantages
  • Reduction in estate administration costs
  • Reduced vulnerability to asset testing in some cases

Family Trusts are currently very popular. It is important to obtain legal advice before proceeding with forming a Family Trust to ensure it is appropriate for your circumstances.

Family Trusts (PDF)
Trustee Duties (PDF)
Gifting (PDF)

Trading Trusts

A Trading Trust is a trust established for the purpose of owning and operating a business.

A Trading Trust generally has corporate trustees, the directors of which manage the trust and operate the business. The beneficiaries are those who benefit from the income of the trust. Profits can be allocated to beneficiaries in any proportion. As a consequence, the total amount of tax paid on profit can be less than that payable if the business was operated by a sole trader, partnership or company.

When purchasing an established business or starting a new venture, it is prudent to obtain legal and accounting advice to ensure your business is structured in the most effective manner to protect your interests.

Charitable Trusts and Non-Profit Organisations

Where property is to be used for one or more of the following purposes, it may be possible to incorporate a Charitable Trust to hold the property.

  • Relief of poverty
  • Advancement of religion
  • Advancement of education
  • Other purpose of benefit to the community (for example, environmental matters, establishment of a public hall, providing training to unemployed people, assistance for refugees)

A Charitable Trust is operated by a board of trustees. If a Charitable Trust meets the Inland Revenue Department’s requirements for donee status and is registered with the Charities Commission, the trust may also receive certain tax benefits.

The trustees must act in accordance with the Trust Deed, the document that sets out the rules for operating the trust.

If a Charitable Trust isn’t appropriate, a society formed under the Incorporated Societies Act 1908 can be a suitable vehicle for a group of people operating with a common interest or goal, such as a sports club or cultural group.

One advantage of forming an incorporated society is that the society operates as a separate legal entity. This means the members of the society will usually obtain protection from personal liability for the debts and obligations of the society. In addition, a society may receive tax exemptions if it is registered as a charity.

An incorporated society must operate in line with its written rules. The Act sets out a number of minimum requirements that must be met in the society’s rules. It is important when incorporating the society to ensure its rules are drafted in a manner that will achieve the intention of the members without giving individual members too much or too little power in dealing with the society’s property.

We can advise whether a charitable trust, incorporated society or some other entity is suitable for your purposes. In addition, we can incorporate the society or establish the Charitable Trust for you. We will tailor its rules or trust deed to meet the needs of your organisation and work with the Charities Commission on your behalf. We can also advise you regarding the ongoing management of the organisation.