Traditionally, us Kiwis are big on trusts. It has previously been estimated that there are around 300,000 to 500,000 trusts in existence around the country.
Over the last few years, we’ve seen a big increase in compliance costs and disclosure obligations for trusts, making managing a trust today much more complicated and costly than it has ever been before. So, are we falling out of love with the family trust?
Trusts can be beneficial for many people and some of the benefits can outweigh the cost and inconvenience.
A trust can give a sound level of asset protection against liability risks; a means of protecting family assets for future generations; and a flexibility for the distribution of capital and income to beneficiaries of the trust.
If these benefits are of no use to you though, it may be time to reconsider your trust.
Winding up your trust carries with it specific obligations and legal requirements and could have tax implications. So, review all the options carefully and make sure you have a good understanding of what it means for you before you take action.
One size certainly does not fit all.
A trust, used and managed properly, can be a valuable tool, so the good old fashioned Kiwi family trust is likely to be here for many more years to come.
Take our WOF test to find out how well your trust is being managed.