What is a trust, why should I use one and what sort of protection does it give me and my assets?
I asked Janet Xuccoa, who just released her book Family Trusts 101, to answer these questions:
1 – What is a trust ? It’s a sort of a holding vessel, much like a Ship. The Ship’s Captain and 2IC’s are the Trustees, who are charged with looking after the cargo, being the Trust Assets, for the benefit of the Passengers, being the Beneficiaries.
2 – Why should I use a trust? It’s all about asset protection now and in the future, preservation of assets for the next generation and a safeguard against Government means testing.
3- When should I use a trust ? As soon as you have any assets. Ask yourself, do I want to lose my assets to creditors or the Government? If the answer is “No” to those questions, get armed and get a Trust.
4- When should I use a company ? Companies are entirely different creatures from Trusts but just like Trusts, there are many different types of companies. A company does confer on a Director and Shareholder some degree of protection against liability but it is not a cure for all evils.
5- How common is the use of Trusts in NZ? Trusts are well and truly alive in NZ. Unfortunately, if they were ever tested, it is my view that about 80% of them would fail.
6- What does your book cover? everything you want to know about trusts in New Zealand. For example:
•How Trusts came to exist
•What a Trust can do for you
•Steps to take to place your assets into a Trust
•What a gifting programme is
•How Trustees should act
•What a Professional Trustee can and should do for a Trust
•Whether you need a Bank account
•If financial statements should be prepared for the Trust and much more
Watch Janet Xuccoa on the Breakfast show: