[adamsat]

We're in the process of buying a house and some land at the moment.
As the land will be subject to GST and we we plan to be doing some sort of farming on it the bank advised that we speak to an accountant.

He advised that we set up a family trust, buy the property in the name of the trust and rent the house from the trust as a family (the rent to cover the mortgage)

We Then set up a company to farm the land that rents the land from the trust (pays the rest of the mortgage)

Apparently family trust protect your assets from being seized by the government in lieu of long term medical treatment (among other things)

There was also advise about transfering tax liability but I won't go into that here.

Has anyone else gone down this route?

[GeorgeM]

I would suggest that you speak to a NZ solicitor, and not necessarily one who specialises in Family Trusts.

I read in one of the business magazines (sorry, I can't remember which one) recently that whilst Family Trusts can be an effective and useful structure for some people with certain types of assets to protect against certain types of situation they are not suitable for everyone in all cases. The article went on to say that they are being very over-sold by some in the legal/accounting professions who are making a killing from doing so. (Personally I found it hard to believe that either lawyers or accountants would do such a thing, but there you are ;) )

[Avalon]

Only just noticed this so sorry!

Im starting to look at this myself, partly because im doing a financial coaching course, and one of the things we need to sort out is estate planning. Apparently here in NZ, Family Trusts seem as common as wills in the UK.

The idea is that they protect your assets from being snatched - either by the government (as if!) or by the lemming your child is going to one day marry (as in the public trust ad - whoever - as someone whose in laws figured that the only reason I would marry thier son was for his money- I for one would never use that company on principle!!!)

The problem I have with the idea of Trusts at the moment, is that I actually really like seeing my asstets go up in value (currently only really a house). Im not at all comfortable with idea of not actually owning the house. I like being able to add in the house to my net wealth. With a house in the trust, i simply get to live in the house - I dont own it.

This is something I have yet to understand fully - and im working on it. However I would reccomend you read the Martin Hawes Book "Family Trusts". Im waiting for it to come into the library - so ive not read it yet, but its one that has been recommended to be as being very useful.

HTH

[adamsat]

After taking advice, we were in the situation where the accountant was advising we needed one, and the solicitor was advising that there was no real benefit to us (although no major negative points either).

On that basis we have decided against setting one up at the moment. Our solicitor was of a similar opinion to GeorgeM, a lot of people set them up because it seen as the "thing to do" rather than because it's best for their financial situation.

[veronica]

Andy our situation was the same. it was suggested but our solicitor and Pete looked into it and there was no benefit, so we left it. I must admit I don't know much about them as I left it to them to sort out.

[baboonworld]

If you are in the upper tax bracket and the trust is a shareholder in your business - the you only pay 39% instead of 40% tax

therefore it could save you money in the long term

(surely the trust is yours even if your kids are the beneficiaries!)

[adamsat]

trust is a shareholder in your business - the you only pay 39% instead of 40% tax

The Trust being a shareholder in the business, was not an option that was explained to me, do you have any more info?

[baboonworld]

Not really well informed myself - but also been advised that we will need a trust. Something like if the trust owns shares - and the dividend is paid to the trust (not a person) then the tax rate is lower (take a look on www.sorted.org.nz/trusts.html - it explains it a bit i think.

:eek: