Mark & Judy

Mark and Judy had set their trust up on the advice of their lawyer when they purchased their house ten years ago. Mark was a school teacher and Judy a midwife. Their children were now in their late twenties and their first grandchild was on its way. Mark and Judy had almost paid their mortgage off on their home, and had both been paying into KiwiSaver for some years. They had no other assets.
When they set the trust up, Mark and Judy weren’t exactly sure why they were setting it up, but as their lawyer had said it was a good idea and they had heard some of their friends talk about trusts, they went along with it. If they were honest, it made no real difference to them – their lawyer was their trustee, but they never heard from him, they never had trustee meetings and as the trust didn’t have any income coming in they didn’t have to file tax returns or see an accountant.
Last December, Mark and Judy were having their annual Christmas catch up with their friends from university days and the conversation turned to trusts. Mark and Judy’s friend, James, started telling the group how his lawyer was also a trustee of his trust and that they had annual meetings, all trustee decisions were recorded in resolutions, and that it was really important for him to have a trust because of his business activities. Mark and Judy went home and talked about the fact that they never saw their lawyer, in fact he was probably close to retirement, and then what would they do for a trustee? James’ lawyer sounded like she knew a lot more about trusts than Mark and Judy’s, so they decided to make a time to go and see her.
When Mark and Judy went to see James’ lawyer, they were surprised to discover that there probably was no real good reason for having a trust any more – they had no business risk, the trust wasn’t going to mean that they qualified for the residential care subsidy if one of them went into a home, and their assets really weren’t that significant in the scheme of things. They were keen to protect their assets from their children’s partners, but they learnt that with a well-crafted will, they could still achieve the same result. Mark and Judy decided to wind up the trust and simplify their affairs on the advice of James’ lawyer.
Trusts are invaluable asset protection mechanisms, but not everyone needs one. If you have a trust and you are unsure as to why you have it, please make a time and come to see me and we can go through the reasons why a trust may or may not be right for you.

Issue 107 March 2020