Protecting our assets whether it be from fire, theft or act of nature is extremely important. We take steps to ensure that we reduce the potential for loss in many ways, from simple things like locking doors and windows, having smoke alarms, and a security system, as well as taking out an insurance policy to cover us should we experience a loss.
However not all our assets are physical and can be covered by insurance. Protecting our assets whether they are physical or financial is important to ensure we do experience a loss through misfortune.
This is why setting up a family trust to protect your assets is similar to taking out an asset insurance policy that is set up exactly for your circumstances.
One of the key reasons for setting up a family trust is to be able to protect your estate. When you set up your trust you will either gift your estate to the trust over a number of years or sell the assets to the trust and gift the loan repayments - your lawyers will advise you which of these options will work best for you. The trust deed will outline how the estate assets can be used. The trustees will administer the trust assets, your lawyer may be one of the Trustees which will give you the confidence that the legalities of the trust are being adhered to.
When your assets are owned by your family trust, it helps protect them from future claims from people who may marry into your family - whether it may be a son or daughter-in law, a spouse or defacto partner or in the case of family breakdown.
Another benefit of setting up a family trust is being able to keep your finances confidential. The contents of the trust deed are also confidential and even the beneficiaries may only be privy to the details that relate specifically to them.
A family trust is also beneficial if you are a business owner to assist with protection against professional liability claims, unexpected business debts, and in certain circumstances, there may also be tax advantages.
Discussing your requirements with a lawyer is the first step to setting up a trust. They will be able to give you all the advice you need, and if you decide to proceed they will ensure that your trust deed is robust, legal and outlines all of your wishes.
This article has been provided by Vanessa Hamm of Holland Beckett tauranga lawyers in the Bay of Plenty, New Zealand.
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