Paula Lines from The Law Shop explains that this risk can be enough to put some people off having
their own business and that this is where setting up a trust can be useful.
“If a trust owns your family home, and there is no debt back to you, the house is likely to be outside
the reach of creditors or court orders. This is why many business owners choose to have a family
trust, which owns their family home,” Paula says.
Trusts are an increasingly popular way of protecting property and managing assets. How it works is
that you transfer the legal ownership of your assets to the trustees, while continuing to use and
enjoy them as long as the trust deed permits. For example, if your home is in a trust, you no longer
personally own it, but you can live in it if that’s what the trust deed states and the trustees agree.
The person or company who creates the trust is called a settlor, and the people who manage the
trust are the trustees. The settlor can also be a trustee. Beneficiaries are the people who benefit
from the trust, for example, members of your family. There is often more than one trustee, and
there may also be more than one settlor.
It makes sense to also appoint a trustee who is not a family member, and professionals such as
lawyers and accountants can act as independent trustees. Also, a trust doesn’t usually end with the
settlor’s death. It can last for a maximum of 80 years from inception, and this is likely to be extended
in the future.
“Although there is some negativity about using trusts or other structures that are seen as a way to
hide your assets, for many people it is simply a desire to protect their spouse and children, not at all
intended as a means to avoid paying debt,” Paula says.
“To find out if setting up a family trust is right for you, you’ll have to weigh up the advantages and
disadvantages of your options, including the on-going management compliance costs of each. As
your lawyer, we can help you determine exactly what’s required, and make sure it meets your
needs,” she explains.
The team at The Law Shop deals with many personal, family, business and property matters and
transactions and they can expertly advise you on all matters relating to trusts and the law. Contact
them today at www.thelawshop.co.nz if you would like to discuss your circumstances with a no-
nonsense lawyer, and find out if a family trust is a good option for you.