Simplifying trust matters

history legal

The situation

Our clients were downsizing their family home. With the Trusts Act 2019 coming into force in January 2021, our clients questioned whether a trust was still right for them, given the requirements of the new law.

Their family trust had been set up for asset protection while the clients had been working in their own business. Now, with the clients retired and their children all grown up, did the reasons to keep the trust outweigh the annual administration and accounting costs?

What they needed

Our clients needed a clearer understanding of why they set up the trust to begin with, whether those risks still existed, and whether winding up the trust would impact any of their plans.

How we helped

Our role began with a review of the family documentation, looking at the deed, how any debts had been documented, and what gifts had been given or debts forgiven. We reviewed the historical actions of the trustees to ensure they were compliant with trust law.

From there, we set out the pros and cons of keeping the trust, explaining ongoing costs, the possible issues with eligibility for residential care subsidies, challenges to their estates and relationship property issues for their children.

With the main reason for the family trust – possible liability during their working years – gone, the clients decided that winding up the trust would simplify their affairs. We discussed this with their accountant to make sure that we weren’t unintentionally creating a tax issue for the clients, then transferred their family home out of the trust as a distribution to the beneficiaries and wound up the trust. We also drafted new wills and enduring powers of attorney to make sure all areas of their estate planning were covered off.

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