[Super_BQ]

For those that may be interested in forming a trust in NZ. I was surprised to read some interesting information from the lawyer on recent changes to the trust act. Would be grateful if someone can back with links online (I can't seem to find any).

The issue is that previously, trusts were able to provide the individual or group complete asset protection for some future unforseen circumstance. However, this new admendment states that in an event of a divorce or separation, either person can claim 50% of the assets in the trust. Thus, the beneficiaries will lose out.

I suppose in simple terms, a trust is no different than a limited liability company?

BQ

[eternalkiwi]

I would also be interested to hear if this area of law has changed.

As far as I was aware the only trust property that compensation can be claimed for when a couple split is for their (half) share of property that was contributed to the trust during the term of the relationship.

So I would be interested to know if this has been expanded.

Shawn

[Garth]

Hi BQ & Shawn,

Just came across your posts and as I specialise in Trust creation and structures for asset protection I though the following might be useful.

A trust is very different from a limited liability company. The New Zealand trust is a common law creation, to transfer assets for asset protection, which can pay income or capital to a wide range of potential beneficiaries during the 80 year maximum life of the trust and then act as a succession vehicle to eventually transfer the final assets to the final beneficiaries. A company however is a registered entity created by legislation and will generally be used for business trading but is not particularly designed to accumulate wealth.

The trust amendment you refer to is providing legislative recognition of how the New Zealand Family Court has been interpreting common law for several years. The Family Court Judges on a split of a married couple or relationship partners, are not prepared to allow either of these parties to be disadvantaged for their future should their former personally owned assets now be in a trust. However this legal intervention in trusts can only occur when there is a split and where the parties cannot otherwise agree on asset split.

I trust this explanation will assist.

Regards,
Garth

[Super_BQ]

Hi Garth

Yes the changes were based on purely a divorce or separation. Which basically defeats the purpose of a trust if that very trust can not protect the assets in a case of a split up.

Either a LLC or a Trust can accomplish the same goals. Assets in a trust can be transferred to the beneficiaries no different than the shares of a LLC can be willed to the next of kin. A trust can also earn income no different than a LLC that opeates like a business.

I still fail to see how the 2 are VERY different in their goals as both can be tailored to do the same.

Either way, the laywers and accountants win as both require maintenance.