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Speaker 5: Ah. I just had to wait for the band break there.
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Speaker 5: the Weekend Collective. If you missed the chat we have
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Speaker 5: But right now we're going this is smart money. We
Speaker 5: are going to have a chat about trusts. In fact,
Speaker 5: a couple of weeks over the last week or two,
Speaker 5: we've had some people calling asking questions about trust and
Speaker 5: we're you're a week too early or your two weeks
Speaker 5: too early, because we have a trusts expert in the
Speaker 5: studio and she is, well, she's why she'd let her
Speaker 5: introduce herself. Actually she's been on the show before. But
Speaker 5: we want your care before I introduce you, sir. We
Speaker 5: want your calls if you've got any questions about trust
Speaker 5: because a lot of people think that trusts are only
Speaker 5: for the very wealthy. Of course, the expression that comes
Speaker 5: to mind is a trust fund baby? Why does that
Speaker 5: baby have a trust fund? But what was it set
Speaker 5: up for? And the assumption is that it's useless for
Speaker 5: the everyday person, And maybe it does seem that way
Speaker 5: to you. But when might you want to trust, whether
Speaker 5: you've been in a former relationship, do you need to
Speaker 5: set up a trust for your kids? But there are
Speaker 5: many reasons that people may want to start a trust,
Speaker 5: which is why our guest is here to explain that
Speaker 5: for us, and she's a trust expert. And as I said,
Speaker 5: in her name is Janet Zukoa. Janet, how are you going.
Speaker 6: I'm well, thank you, thank you for having me on
Speaker 6: the show.
Speaker 5: You're welcome, thanks for coming in. Now, actually tell us
Speaker 5: a little bit about I mean, you've been on the
Speaker 5: show just just once before. How did you get into
Speaker 5: trusts and what's your background in terms of and you've
Speaker 5: written a couple of books actually, which I've got a
Speaker 5: copy of here. But anyway, how did you get into it?
Speaker 6: Well, I've got a commerce degree majoring in accounting, and
Speaker 6: I've got a law degree, and I have a very
Speaker 6: high interest in tax and trusts and economics.
Speaker 5: Yep. When did that develop? Was that something? You were
Speaker 5: always interested in the financial side of things and legal
Speaker 5: structures and accounting.
Speaker 6: Early early I can remember raiding my father's factory of
Speaker 6: a puzzle pieces that were rejected for an export order
Speaker 6: and getting out there in the markets and standing on
Speaker 6: literally an apple box and trying to sell them when
Speaker 6: I was really little. So I was always interested in
Speaker 6: always interested.
Speaker 5: So when did and when did you get into the
Speaker 5: trust side of things?
Speaker 6: I think really My interest developed in trust when I
Speaker 6: started to become keen on tax because in a tax
Speaker 6: structure you will often find a trust or two.
Speaker 5: Yeah, I noticed your company is New Zealand Family Trust
Speaker 5: Services Limited, So I guessing family trusts are You're guessing.
Speaker 6: Absolutely, So when New Zealand's trust are your choice because
Speaker 6: that is all we do, is trusts, and as a
Speaker 6: result of that, our fees are not outlandish, and our
Speaker 6: processes are good, and we're available.
Speaker 5: How easy is it to set up a trust? Because
Speaker 5: obviously there's the simple sort of crew way. I mean,
Speaker 5: there's always the DIY, but that would be fraught, I
Speaker 5: would guess. But are there some basics to setting up
Speaker 5: a trust that mean it shouldn't be as scary for
Speaker 5: people as they might imagine, like, oh, that sounds like
Speaker 5: a big deal.
Speaker 6: It shouldn't be scary, but people should be aware of
Speaker 6: what they're doing when they when they're setting up a trust,
Speaker 6: entering into a trust relationship. So if you're settling a
Speaker 6: trust and you're putting assets into it, you are divesting
Speaker 6: yourself of those assets of direct control as an individual,
Speaker 6: as an owner, and you're putting that control into the
Speaker 6: trustees hands, who of course, should be acting for the
Speaker 6: best benefit of the the beneficiaries.
Speaker 5: What are the limits of when it comes to trusts,
Speaker 5: Like somebody says, I've got that. I mean here, just
Speaker 5: a very crude example would be someone who's got a
Speaker 5: lot of money, they don't want any future relationships, sort
Speaker 5: of get in their hands on it and they want
Speaker 5: to set up a trust and they go, I've got
Speaker 5: all my money and a trust. Well, it's technically not
Speaker 5: your money any longer.
Speaker 6: It's certainly not so. Once you set up the trust
Speaker 6: and move the assets into the trust, then, as I said,
Speaker 6: you divested your personal ownership and you put it in
Speaker 6: the hands of the trustees. But that's not necessarily going
Speaker 6: to be bulletproof against personal relationships. Yeah, And we did
Speaker 6: have a question the last time I was here from
Speaker 6: a gentleman who was thinking about setting up a trust
Speaker 6: but was in a relationship. And I said at the
Speaker 6: time you certainly needed to take legal advice and that
Speaker 6: with regards to trust. If you're going to enter into
Speaker 6: personal relationship and you want to keep your assets separate,
Speaker 6: then it's important to come plain at the very beginning.
Speaker 6: And yes, certainly have trust, but you also need a
Speaker 6: property relationship agreement. Yeah, both of them. I like my
Speaker 6: clients to have them in conjunction with each.
Speaker 5: Other actually, because I mean, the best time to have
Speaker 5: a trust is before you think you need it. And
Speaker 5: that's the problem is that you don't think you need
Speaker 5: it until you need it, and by then sometimes it's
Speaker 5: too late. Is that that one of the sort of problems.
Speaker 6: So the problem there was recently a case about that.
Speaker 6: The problem is the proximity of establishing a trust and
Speaker 6: moving assets into the trust and then entering into a
Speaker 6: personal relationship. So the claim can always be that you're
Speaker 6: trying to I supposed to get out of sharing with
Speaker 6: your with your nearest and dearest or off have assets
Speaker 6: off so you don't have to share them. Should the
Speaker 6: unthinkable happen?
Speaker 5: Because one of the for many people, one of the
Speaker 5: concerns they would be if you've been in a relationship
Speaker 5: and you've had kids and you want to protect your
Speaker 5: income or your assets or your wealth for those chill children.
Speaker 5: Is that quite a common scenario where people would go,
Speaker 5: you know what, I've come through a divorce. I really
Speaker 5: want to look after the kids, and I just don't
Speaker 5: want to have the I don't want to threaten their
Speaker 5: futures by you know, losing half of it in the
Speaker 5: next relationship that falls apart.
Speaker 6: The GST clients, So they lose fifty percent first round,
Speaker 6: and then everyone's in title a couple of tryouts, aren't
Speaker 6: they managed, so then they have then there lose another
Speaker 6: half of the half that they've got and they kind
Speaker 6: of end up with, you know, fifteen percent or less.
Speaker 6: So the gstc lights we call them. So we do
Speaker 6: find that individuals that are that are on their own
Speaker 6: and thinking that they may enter into a second, third,
Speaker 6: or fourth relationship do put their assets into trust to
Speaker 6: try and protect their children's inheritances. But recently, last couple
Speaker 6: of weeks, I've had a couple come in and they
Speaker 6: are on their second relationship. Yeah, they've done their they've
Speaker 6: done their financial settlements with their with their first spouses,
Speaker 6: they both got children, and what they want to do
Speaker 6: is they wanted to have a trust each which they did,
Speaker 6: and each of their trusts had its own assets in
Speaker 6: from the payout that they got from their first relationship basically,
Speaker 6: and then each trust went and contracted to buy half
Speaker 6: a house, a new house that that couple could live in.
Speaker 5: So what that they each had a trust and they
Speaker 5: want to buy a house, and so each trust buys
Speaker 5: half the house half the house.
Speaker 6: Right, And so what that's going to do is that's
Speaker 6: going to if one of them died, that with along
Speaker 6: with a property relationship agreement. I might add that they
Speaker 6: entered into. What that's going to do is that if
Speaker 6: one of them does die, the half of that house
Speaker 6: under their estate planning documents will go to their children
Speaker 6: and not the other partner's children. That's how they planned that.
Speaker 5: So that doesn't that sounds inconvenient because you'd like to
Speaker 5: think that if you have in to the relationship and
Speaker 5: your loved one dies, that you can still live there until.
Speaker 6: They can still do that. But that's that's all been
Speaker 6: that's all been sorted out under a memoranimal wishes. But
Speaker 6: what will happen is that that person's half is really
Speaker 6: held for their children, not for the for the alive
Speaker 6: spouse's children. That's what I'm saying, they're not natural born children.
Speaker 5: What happens actually just in that, I mean, we could
Speaker 5: get bogged down in the weeds on this one. But
Speaker 5: if so, for instance, that does happen, somebody passes away,
Speaker 5: but you want to move. Does that can you still
Speaker 5: protect your ability to use the value of the house
Speaker 5: to move somewhere else, but still protect the other half
Speaker 5: for the.
Speaker 6: Issue, if you've had a proper trust expert on this
Speaker 6: case from the very beginning. And I say that because
Speaker 6: there are a lot of people out there that set
Speaker 6: up trusts and that they're really it's a it's another
Speaker 6: service that they offer and they don't necessarily specialized in trusts.
Speaker 6: But if you've had a trust expert on that job,
Speaker 6: then they are likely to be working with lawyers and
Speaker 6: accountants and all of that is sorted out at the
Speaker 6: very beginning. So you need to plan for those eventualities
Speaker 6: at the beginning of setting up the trust.
Speaker 5: What's your response when people think that trusts are just
Speaker 5: for wealthy people?
Speaker 6: So, well, no longer. Not in New Zealand. I mean
Speaker 6: New Zealand is a land of entrepreneurship. I don't know
Speaker 6: how many trusts we have because we don't have a
Speaker 6: register like we have a register of companies. We don't
Speaker 6: actually have a register of trust. But there's been estimated
Speaker 6: somewhere between four and six hundred thousand trusts in New Zealand.
Speaker 6: So that's a lot of trust per capita what we
Speaker 6: got here.
Speaker 5: I thought it might actually behind that funnily enough, but yeah,
Speaker 5: that's still.
Speaker 6: Well, well that's what they're saying, and people think that
Speaker 6: they are for the uber wealth wealthy, and they also
Speaker 6: think that there might be something shunky about them, But
Speaker 6: that's very far from the truth. In New Zealand. Genuine
Speaker 6: New Zealanders who are seeking asset protection from creditors and
Speaker 6: their businesses from new relationship partners. People that want to
Speaker 6: set up trust for estate planning purposes or for inheritence purposes.
Speaker 6: Those are the people that are setting up the keys
Speaker 6: that are setting up trusts in New Zealand.
Speaker 5: So before we came on, you were talking about there
Speaker 5: were just recently you've had people three different people have
Speaker 5: set up trust for as an example, because this will
Speaker 5: also be food for thought for people who are listening,
Speaker 5: what are some of the examples of maybe those three
Speaker 5: motivations for a trust.
Speaker 6: So I would have to used different names here, of course.
Speaker 5: Yes, let's just go cut person A, B and C.
Speaker 6: So mister and missus A have just decided that they're
Speaker 6: going to start a furniture production company, and so they've
Speaker 6: come to me and they've got a home and they've
Speaker 6: got a little bit of money, and they want their
Speaker 6: house to be owned and the money to be owned
Speaker 6: by a trust so that it hives that off and
Speaker 6: protects that from company creditors.
Speaker 5: So they're going into business and if the business goes
Speaker 5: then they don't want to see everything gone because of that.
Speaker 6: Correct, And nobody goes into business.
Speaker 5: To foil No, but planning.
Speaker 6: Planning, that's sensible, that's sensible for our well. So that
Speaker 6: was that was one example. The second example that I
Speaker 6: had was what I've just told you. A couple had
Speaker 6: come in and wanted to ensure that if anything happened
Speaker 6: to them, if they if one of them died, the
Speaker 6: estate would be in trust for their for their children,
Speaker 6: their maternal born children, not the other partner's children. And
Speaker 6: the third I thought was quite admirable. There was there
Speaker 6: was a mother that came in and she she wanted
Speaker 6: to set up a trust for her child, a child's
Speaker 6: a young child, and she'd got some money from her
Speaker 6: parents and wanted to make sure that that was almost safe.
Speaker 6: And I think that's very sensible.
Speaker 5: So how often in the my crude memory of equal
Speaker 5: and trusts is that the law has evolved to the
Speaker 5: extent that trusts are not as rock solid as they
Speaker 5: used to be used to. I think under the old
Speaker 5: English common law, you set up a trust and goodbye,
Speaker 5: that money's gone, Whereas now the courts will look through
Speaker 5: transactions and go, well, okay, we understand you better trust
Speaker 5: set up, but it was set up with this motivation
Speaker 5: in hand, and we're not buying it. Basically, Well, they
Speaker 5: look through it because it might be to defeat some another.
Speaker 6: Way to defeat a creditors, right, oh yes.
Speaker 5: In other words, well, the example would be that furniture
Speaker 5: production company. If they have set that up and six
Speaker 5: months later they go bun, how solid is the trust
Speaker 5: they set up to protect their family home? Because the
Speaker 5: courts might go, well, hang on a minute, this is
Speaker 5: simply set up to defeat a response. It's something you
Speaker 5: should have provided for for your creditors. Where does that
Speaker 5: get murky?
Speaker 6: So there's got to be the right intention of setting
Speaker 6: up a trust, and assets can be clawed back out
Speaker 6: of a trust if the intention has been proven that
Speaker 6: they've been trying to defeat the purposes of creditors or
Speaker 6: relationship partners.
Speaker 5: Yeah, does that mean that when you're sending out of trust,
Speaker 5: you record the intention or you put.
Speaker 6: Something I do with my clients, I do I'm very
Speaker 6: clear or not. I take copious amounts of notes of
Speaker 6: why we're doing things and what the what the reasoning is.
Speaker 5: Oh so you do that as a record of the
Speaker 5: basis for the transaction, in addition to saying in the
Speaker 5: trust deed like a preamble whereas the party wants to
Speaker 5: do X, onye and z for this reason, which anyone
Speaker 5: can make up an excuse. But you use your notes
Speaker 5: as well as a backup.
Speaker 6: And that's the beauty of New Zealand Family Trust Services.
Speaker 6: That is all we do, is I've said, just trust work.
Speaker 6: So right from the very beginning, when we have a
Speaker 6: meeting with a client, we take down detailed notes as
Speaker 6: to what we're doing and why we're doing it. We
Speaker 6: make sure that the trust deeders fit for purpose for
Speaker 6: the circumstances that we're addressing. It's not a quokie cutter
Speaker 6: exercise where you just bash everything out and it's like
Speaker 6: you can have one and you can have one and
Speaker 6: put another one over here. So and we make sure
Speaker 6: that the lawyers and the accountants of the client are
Speaker 6: well and truly involved so that we're doing the right thing.
Speaker 6: That's a fact finding exercise. We want to know what
Speaker 6: else is going on in their lives, and that's important
Speaker 6: if we're going to be an independent trustee. A lot
Speaker 6: of people that were independent trustees, such as accountants and
Speaker 6: lawyers have now hang up there hanging up the hat
Speaker 6: and that reguard because it is high risk. And since
Speaker 6: the Trust Act twenty nineteen have come in, I think
Speaker 6: a lot of professionals have decided that they will stick
Speaker 6: to their netting rather than just adding another service, and
Speaker 6: that they're not really onto all the time.
Speaker 5: So being an independent trustee is is it a bit
Speaker 5: like the the evolution of that role? Is it a
Speaker 5: little bit like say, company directors are now having to
Speaker 5: be very vigilant. Vigilant that's the word, and well trained
Speaker 5: and versed in what's going on with the law and
Speaker 5: companies because increasingly they're finding themselves in the firing line,
Speaker 5: whereas maybe fifty years ago you just took the honorarium
Speaker 5: and moved on.
Speaker 6: Yeah, so it used to be before the trust At
Speaker 6: twenty nineteen came in, we always had the common law
Speaker 6: and you always had to hit certain milestones. And in fact,
Speaker 6: I would go as far as to say that the
Speaker 6: trust at twenty nineteen has wound a lot of our
Speaker 6: common law into into piece of legislation now. But prior
Speaker 6: to that, lots lots of accountants and lawyers and friends
Speaker 6: would step forward and they would say, we'll be the
Speaker 6: independent trustee. And what that meant is that they weren't
Speaker 6: going to be a beneficiary of the trust. And that
Speaker 6: was as far as it went. They didn't actually do anything.
Speaker 6: They just said that they would be the independent trustee,
Speaker 6: the third trustee.
Speaker 5: All care but not realizing the responsibility possibly.
Speaker 6: And so as a result of the legislation coming through,
Speaker 6: which really does tighten things up, it enshrines the duties
Speaker 6: of trustees, it gives beneficiaries rights for clear rights. And
Speaker 6: as a consequence of that, a lot of advisors have
Speaker 6: got out of the business of being trustees because trust
Speaker 6: is a person liable. And then the other question that
Speaker 6: I was posed recently was, oh, well, you could just
Speaker 6: be a trustee in a company and therefore you limit
Speaker 6: your liability just like an ordinary director or shareholder and
Speaker 6: a company would. But that's not true if you're a
Speaker 6: trustee as a company like New Zealand Family Trust Service
Speaker 6: is limited. As a trustee, I now have to where
Speaker 6: the responsibilities of not only being a trustee but also
Speaker 6: being a director. So it's a double whammy. You've got
Speaker 6: to get it right.
Speaker 5: Yeah, actually, for the look, tell you what we will
Speaker 5: take quick break now if you've got any questions for
Speaker 5: Janet Janetzcoa. She is managing director of New Zealand Family
Speaker 5: Trust Services. If you think do I need a trust?
Speaker 5: You might even think it's a dumb question. And I
Speaker 5: think that when we're dealing with sort of specialized topics
Speaker 5: like this, there is no such thing as a dumb question,
Speaker 5: because a lot of the time people think, oh gosh,
Speaker 5: if only i'd ask that question and taken a simple step,
Speaker 5: maybe I wouldn't have had the misery a few years
Speaker 5: on of not having made the move on a trust.
Speaker 5: Oh sorry, I've just seen a text. Somebody's just us,
Speaker 5: should Prince Harry get a trust? I don't even know
Speaker 5: what that is, but for some reason it's funny.
Speaker 6: Look what a connosation behind us?
Speaker 5: Anyway, Look, hey, look, we love your cause. Eight hundred
Speaker 5: and eighty ten eighty We are getting a few texts
Speaker 5: or so. I know some people like to keep things
Speaker 5: private on this sort of thing, but you can give
Speaker 5: us a call and jump the queue. Janet Zuccoa here,
Speaker 5: she's ready to take your cause. If you've got any
Speaker 5: questions around trust. We'll be back in just a moment.
Speaker 5: It's come out to twenty five past five. News Talk
Speaker 5: said B. News Talk said B. Yes, my expert is
Speaker 5: Janet Zucca. She's a trust expert. She's the managing director
Speaker 5: of New Zealand Family Trust Services Limited, and we're taking
Speaker 5: your cause any questions you've got. No question is to
Speaker 5: is to be feared, because I think that's a very
Speaker 5: complex subject sometimes, so just ask away. Phil good A,
Speaker 5: Oh sorry, Sandy good Day.
Speaker 1: Hi.
Speaker 2: So I'm keen to set up a trust, but I
Speaker 2: haven't because I kind of keep thinking, you know, like
Speaker 2: that they are a bit more see through these days
Speaker 2: and all around the intentions and things. So what I
Speaker 2: don't understand is, as you said in the furniture example,
Speaker 2: they've gone to set up a furniture business, so they
Speaker 2: want to put their house in the trust. Clearly their
Speaker 2: intention is to protect their house. That's what I don't get, Like,
Speaker 2: I mean, what am I meant to tell the lawyer
Speaker 2: when they're setting up the trust, like that is totally
Speaker 2: my intention is to protect my house. And so therefore
Speaker 2: you're saying that you're writing down the intentions and all
Speaker 2: that sort of stuff. But like so then if anything
Speaker 2: was to happen and you go back and you look
Speaker 2: at the intention, I'm like, well that was the intention?
Speaker 2: Oh a little bit of a time in the market.
Speaker 5: Or so are you asking in a way that do
Speaker 5: you have to be guarded with the instructions you give
Speaker 5: to your trustee because of that might form part of
Speaker 5: the record. Janet, what's your response to standing, well.
Speaker 2: Are legitimate saying turn it up your trust to particut
Speaker 2: your house?
Speaker 7: I'm confused, now, good questions.
Speaker 6: It is indeed legitimate. What we do is we take
Speaker 6: lots of notes around what clients tell us, so that
Speaker 6: if we ever end up in a situation where the
Speaker 6: trust is being challenged, we can point to our meetings
Speaker 6: with our clients and what they've actually said.
Speaker 5: Does it mean? But what if the person's coming and said, look,
Speaker 5: you know, I've got I've got a business I'm starting up.
Speaker 5: Might not fly. I don't want the credit as getting
Speaker 5: a whole if you know, I've got some money to
Speaker 5: seed money to get the business going, but if it
Speaker 5: all goes belly up, I don't want my house to
Speaker 5: form part of it. That does sound problematic, isn't it.
Speaker 6: I probably wouldn't be writing all that down, But I
Speaker 6: don't think anybody would tell me that. I think they
Speaker 6: would say that they're setting up a business with great
Speaker 6: intentions of it being very successful. Nobody goes into business
Speaker 6: with it being unsuccessful. What you do find occasionally, as
Speaker 6: you find overseas, people coming down and they want to
Speaker 6: use trusts here for purposes which might not be legitimate.
Speaker 6: And as a trust advisor, you've definitely got to have
Speaker 6: your eyes and ears open to that.
Speaker 5: What are your obligations on that? If you if somebody
Speaker 5: is coming down and they are doing something which you
Speaker 5: think this is for purposes which are not are not legitimate,
Speaker 5: where how does that go with the ethics of the
Speaker 5: whole being a trust an independent trustee.
Speaker 6: I simply close the meeting. I just say I'm not
Speaker 6: your not your girl. I don't think that you're in
Speaker 6: the right place, and we couldn't take that business.
Speaker 5: Are you thinking of sending up a trust?
Speaker 2: Sandy, Yes, yeah, I know, I'd love to, but I
Speaker 2: guess I always keep thinking about, well, you know, I
Speaker 2: feel like they've become weaker and therefore that they wouldn't
Speaker 2: actually give me the protection that I'm looking for. But
Speaker 2: maybe it is just an extra.
Speaker 8: Layer of you know, like I don't know, but.
Speaker 2: I'd love to. But I get confused around that exact point.
Speaker 2: You know, am I meant to say, yes, it is
Speaker 2: to put my house, you know, to protect my house,
Speaker 2: or am I not meant to I get confused.
Speaker 5: I guess Sandy's worried about how how quick, how readily
Speaker 5: trusts get looked through by the courts if there's a dispute.
Speaker 6: So trust to trust can get looked through via the courts,
Speaker 6: and they certainly can if they've got a family home
Speaker 6: and you've moved into that with your nearest and dearest.
Speaker 6: The family home takes a very precious position in regards
Speaker 6: to the regards to law and family. Courts can look
Speaker 6: through trust. So it's important to ensure that not only
Speaker 6: is they trusted up correctly, but it's administered appropriately as well.
Speaker 5: Right. Hey, thanks for you, Corl, thanks for being the
Speaker 5: ball roll in their Sandy, Phil, Hello, how on a second.
Speaker 5: There we go. Hi.
Speaker 7: Hi, My question is, well, i'd need to believe that
Speaker 7: you could only gift so much of the family home
Speaker 7: perannum or is that not right?
Speaker 6: Yeah, so I think I think you're going back to
Speaker 6: the old gifting regime. So it used to be that
Speaker 6: we would move a house, for example, and too a
Speaker 6: trust and we would.
Speaker 5: Get twenty seven thousand a year or something given.
Speaker 6: I owe you off the trustees because they've bought the
Speaker 6: house off of us in the form of an acknowledgment
Speaker 6: of debt, and then we would forgive twenty seven thousand
Speaker 6: dollars of that per year. We could actually forgive all
Speaker 6: of it all in one go, but anything over twenty
Speaker 6: seven thousand one cent over it and you pay duty.
Speaker 6: And that's been abolished for many years now, so you
Speaker 6: can forgive the debt immediately, and in fact so lots
Speaker 6: and lots of people do. And the reason why they
Speaker 6: do that is because under the Minister of Social Welfare rules,
Speaker 6: which I might say can be incredibly complex. Under those rules,
Speaker 6: if you gift more than a certain amount within a
Speaker 6: certain period, that gift can be disregarded and then you
Speaker 6: can end out notionally with too much wealth and therefore
Speaker 6: not get a rest home subsidy. And some people are
Speaker 6: never going to get a rest home subsidy and they're
Speaker 6: never going to go through get through a gifting program.
Speaker 5: Oh, actually the whole rest home subsidy, because that's been
Speaker 5: an issue in our family. It's funny that the user pays.
Speaker 5: But I'll tell you what, if you've got one. A
Speaker 5: quick way to whittle down your assets is if one
Speaker 5: of you has to go into care and you haven't
Speaker 5: set that, you even got a trust set up years
Speaker 5: and years ago, it's a great way to whittle down wealth.
Speaker 5: At the rate of about two or three thousand bucks
Speaker 5: a week.
Speaker 7: Yeah, that was my question that I was wondered. I
Speaker 7: wondered if I'm in my early sixties and if I
Speaker 7: seen it up now, that would stop the home eating.
Speaker 6: That does it?
Speaker 7: Well?
Speaker 6: Not necessarily what you would want to do with an
Speaker 6: advisor to sit down and really do some predictions around
Speaker 6: some numbers, what your wealth is now, what it would be,
Speaker 6: for example, at the age of seventy five or eighty,
Speaker 6: take a notional age and how much gifting you could
Speaker 6: get through, and then on today's rules, whether you would
Speaker 6: get arrested themselves stiff. You've got all of that gifting
Speaker 6: and followed all of those rules. Remember we are talking
Speaker 6: years in advance. I'm sure you won't be going into well,
Speaker 6: that's if you go into a rest time, not all
Speaker 6: New Zealand just going to a rest time and your
Speaker 6: small potent. But if they went into a rest time,
Speaker 6: that could be years and years away and those rules
Speaker 6: could all change again.
Speaker 7: Here's a simple question. If you put your one of
Speaker 7: your ass It's like I've some flats. Do you put
Speaker 7: them under the trust? Do I retain the return off them?
Speaker 4: Or well any makes the money out of it.
Speaker 6: Any assets that are held in trust that produce income
Speaker 6: will be will be the property of the trustees. Then
Speaker 6: be up to the trustees to exercise their discretion and
Speaker 6: make a distribution to you, possibly alone to you.
Speaker 7: Right, Here's another question, as you being the lawyer for
Speaker 7: the trust, do I pay trust yearly? Do I pay
Speaker 7: the lawyer annually or the trust pays the.
Speaker 5: Yeah, that was going to be one of my quick
Speaker 5: Whether the Trustee Actors made it more expensive to have
Speaker 5: independent trustees and all.
Speaker 6: That, so, I think probably the Trustee Act has set
Speaker 6: the bar as to what is expected of trustees. And
Speaker 6: as you can imagine, if an independent trustee who specializes
Speaker 6: in the business of being a trustee gets it wrong,
Speaker 6: they will have the book thrown at them. So in
Speaker 6: some in some ways you've got the players that don't
Speaker 6: really don't really know what they're doing or aren't doing
Speaker 6: the right job, getting out of business, which makes it
Speaker 6: harder to find an independent trustee. But the independent trustees
Speaker 6: that are standing, they have to have processes around them,
Speaker 6: and they have to insurance policies around them as well.
Speaker 6: And I can tell you, having just gone through our
Speaker 6: insurance regime, that it becomes more complicated and more expensive
Speaker 6: year on year. So that's a long way of saying, yes,
Speaker 6: we do charge. We charge six hundred and ninety five
Speaker 6: dollars a year for being a professional trustee. And that
Speaker 6: does give a client an annual trustee meeting each year
Speaker 6: which must be completed. Okay, so that's included in that.
Speaker 6: But also if there's other work to be done, for example,
Speaker 6: signing documents, taking loans, going to auctions, helping clients with investments,
Speaker 6: that is all charged out at an hourly rate. And
Speaker 6: so I guess in that way it could get it
Speaker 6: could get pricey. But the majority of trusts that we
Speaker 6: work for put assets in and leave those assets for
Speaker 6: some time. They're not taking money in and out of
Speaker 6: a trust all the time, or moving assets in and
Speaker 6: out of a trust.
Speaker 5: Gosh, that actually surprised me that that's a lot less
Speaker 5: than I thought it would be. So it's good information.
Speaker 6: For us because, as I say, we are New Zealand
Speaker 6: as trustee of choice and we do a lot of it.
Speaker 5: So well, that's good news, because yeah, I'm sure that
Speaker 5: to many people are quite quite well good news. It's
Speaker 5: a good piece of information. Hey, thanks Bell on that
Speaker 5: independent trustee thing. Just quickly before got a next call Janet.
Speaker 5: This this text here says, hi, guys, I'm an independent trustee,
Speaker 5: but I need to resigned you to unforeseen circumstances. How
Speaker 5: complex and expensive is it for me to be removed
Speaker 5: and replace? That's from Dave.
Speaker 6: Well, it will depend first on the terms of the
Speaker 6: trusteed and also on the assets and indeed on what
Speaker 6: situation they're facing. So in the order courses of events,
Speaker 6: most trusteeds have the ability to resign. As an independent trustee.
Speaker 6: You would just simply ask us the trustees, or or
Speaker 6: it might be the settler or whoever's holding the power
Speaker 6: a point or ship that you want to step down
Speaker 6: and point somebody else. So that would be really easy,
Speaker 6: and they'd be the easiest way. And any assets that
Speaker 6: are held in the trust, their titles have to be
Speaker 6: updated to reflect the new trustees' names. If one has
Speaker 6: indeed been appointed, most certainly reflect that you've resigned as
Speaker 6: an independent trustee. But if you're facing a particular situation,
Speaker 6: then you'd want to get advice before you resigned, because
Speaker 6: you may well want you're in gemnification crafted in a
Speaker 6: certain manner. It might not even be sensible for you
Speaker 6: to resign, for instance, don't think that's something unforcenreness has
Speaker 6: gone wrong on your watch as an independent trustee. Resigning
Speaker 6: is going to get you out of the hot order,
Speaker 6: because it probably won't.
Speaker 5: Okay, gosh, we've got the questions rolling and we've got
Speaker 5: the calls as well, so I'm going to try and
Speaker 5: split the difference so a little bit, but we're going
Speaker 5: to take a break. We'll be back in just a moment.
Speaker 5: It's twenty one and a half minutes to Sex News Talks.
Speaker 5: They'd be yes, welcome back to boy, I tell what
Speaker 5: there had a lot of calls, So we're going to
Speaker 5: try and get through as much information as we can
Speaker 5: with Janet Zukashi's managing director of New Zealand Family Trust Services.
Speaker 5: So let's go to Sally. Hello.
Speaker 9: Hello, my husband and I set up for family trust
Speaker 9: and I'm wondering why redid it now? So if it's
Speaker 9: any advantage to me, I'm a widow and I've got
Speaker 9: two children and eight grandchildren, and I just what advantage
Speaker 9: is it me having a trust? The houses and the trust.
Speaker 5: So should you? Should it stand the trust to you've
Speaker 5: got to trust? Do you keep it? Janet?
Speaker 9: I guess that is what advantage is it to me
Speaker 9: to be having the trust?
Speaker 6: Probably when you set out the trust, maybe you were,
Speaker 6: maybe you were in business, or maybe it might have
Speaker 6: been for some other reason. But the needs, needs and
Speaker 6: desires change over time, and so that's a very good question.
Speaker 6: If a client's coming in with a trust already and
Speaker 6: wants us to be a trustee, I always ask do
Speaker 6: we still need do we still need to continue this trust?
Speaker 6: In your answer? In your case, possibly there's no benefit
Speaker 6: to you anymore, but it may be a benefit to
Speaker 6: your children or your grandchildren. For example, if you pass
Speaker 6: those assets to them directly rather than from trust to trust,
Speaker 6: then and they've got a problem, they've got a credited
Speaker 6: problem for example, or a relationship problem, then there there
Speaker 6: could go there inheritance. Meanwhile, if the trust is running
Speaker 6: and you want to make distributions from it to maybe
Speaker 6: the grandchildren to help them with education, for example, and
Speaker 6: possibly you could do that out of the trust.
Speaker 9: Okay, haven't done any of that as yet, but even
Speaker 9: the person that does my book said, you know it's
Speaker 9: a really well, it's there a disadvantage of for me
Speaker 9: having that trust.
Speaker 6: Well, I don't know your circumstances, but if the trust
Speaker 6: is being run well, hm, and if you've got an
Speaker 6: if you've got an independent trustee, I suppose maybe that
Speaker 6: would cost you more money.
Speaker 5: Have you got family selling.
Speaker 9: Two children, eight grandchildren?
Speaker 6: So those children could no doubt get a benefit from it.
Speaker 6: I and you, if indeed you are giving them benefits
Speaker 6: or they are going to inherit, then I frequently bring
Speaker 6: the children and say, look, mom and dad, they're not
Speaker 6: earning income now, and you are going to inherit from
Speaker 6: this trust, and it would be nice if you could
Speaker 6: contribute to some of these fees and the children are
Speaker 6: often amenable to that.
Speaker 5: Okay, hopefully that's a bit helpful, Sally. We're going to
Speaker 5: keep moving because we've got a lot to get through
Speaker 5: and we won't get through it all, to be honest,
Speaker 5: so we'll have to beg Janet to come back and
Speaker 5: have another chat with us sometime. But thanks for your call, Sally.
Speaker 5: Bill Hello, got to look.
Speaker 8: Up to Janet. Up to the mid nineties, everyone got
Speaker 8: free care in retirement homes, etc. An act was passed
Speaker 8: stopping that, and eminent lawyers have told me over the
Speaker 8: last twenty years that it's a monopoly because the rich
Speaker 8: people who have done trusts get free free care and
Speaker 8: the poor people who don't own houses get free care.
Speaker 8: The people in the are the ones that pay for it,
Speaker 8: et cetera, the ones who haven't done trusts. And I
Speaker 8: in fact worked for the Minister of Health and Research
Speaker 8: in old people's homes some fifteen years ago and in
Speaker 8: one large home in Wellington, the manager told me that
Speaker 8: only one person paid for their care. Everyone else had
Speaker 8: it paid for them etc. By government because they didn't
Speaker 8: have they had trusts, or they.
Speaker 5: Didn't have You have you got a question in their bill.
Speaker 8: Yeah, the question is if everyone knows about this, more
Speaker 8: people I understand have created trusts in the last twenty
Speaker 8: five years because of this particular reason of care homes.
Speaker 8: What do you think, Jennet, And do you think that
Speaker 8: the government, who shies off because I've spoken to politicians,
Speaker 8: should do something about it.
Speaker 5: Yeah, well, they're not going to start paying for it,
Speaker 5: would be my guest given the economy. But yeah, any
Speaker 5: comment on that.
Speaker 6: Jenneral, New Zealand is in a bit of a flux.
Speaker 6: We have to play with what we've got and New
Speaker 6: Zealand the government is only taking so much in regards
Speaker 6: to the tax take, so I suppose that they cut
Speaker 6: their cloth where they can. I don't know whether it's
Speaker 6: whether that's an actual fact to say that wealthy people
Speaker 6: never pay for any rest home care. I can tell
Speaker 6: you that I've got several clients who do actually pay
Speaker 6: up to five thousand dollars a week. But I do
Speaker 6: take your point, and you certainly wouldn't be setting up
Speaker 6: a trust today just to try and get a rest
Speaker 6: home subsidy, that's for sure.
Speaker 5: Hey, but thanks for your call. Bill. Let's actually, by
Speaker 5: the way, somebody's just quick we'll try and alternate with
Speaker 5: texts and calls. Is it better to have a trust
Speaker 5: or a company if you have rental property? So that
Speaker 5: difficult question to answer.
Speaker 6: So that is really about your personal circumstances. And most
Speaker 6: certainly tax would play a bit of a part there
Speaker 6: because companies tax rate there is twenty eight percent, and
Speaker 6: of course the trustee tax rate come first of first
Speaker 6: of April last year, moved to move to thirty nine percent. That's,
Speaker 6: of course if the trustees do indeed retain the income.
Speaker 6: Because for instance, the trustees may not retain it, they
Speaker 6: may distribute it to beneficiaries and then it would be
Speaker 6: taxed at the recipient beneficiaries personal tax rates. So so
Speaker 6: let me let me give it all. Let me give
Speaker 6: you an example. Let's say the trust earns forty thousand,
Speaker 6: and we've got maybe Mary, Well, we'll take come, we'll
Speaker 6: take James and Mary. James Earns seventy thousand, Mary Earns
Speaker 6: one hundred and eighty thousand, they're married. The trust earns
Speaker 6: forty thousand, and so what's it going to do. Is
Speaker 6: the trust is going to retain that income and pay
Speaker 6: thirty nine percent on it, or is it going to allocate,
Speaker 6: and if it was going to allocate, it will probably
Speaker 6: allocate it to James because he will be on less
Speaker 6: tax rate than Mary at thirty nine percent. Or maybe
Speaker 6: they allocate it to Barry. Now, let's assume that Barrier
Speaker 6: is over the age of sixteen but doesn't earn a
Speaker 6: lot of income or maybe no income, and his tax
Speaker 6: rates could be as low as ten and a half percent,
Speaker 6: So ten and a half percent on the first fifteen
Speaker 6: six hundred and then after seventeen and a half cents,
Speaker 6: So that could be a really good tax savings. Or
Speaker 6: even better still, he's an idea, an idea, even better still,
Speaker 6: let let the trustees invest in a pie and only
Speaker 6: pay tax at twenty a percent. How's that?
Speaker 5: There you go, there's some so I don't know what
Speaker 5: else to add to that. I'm going to take a
Speaker 5: quick moment. We'll come back with some more calls. It
Speaker 5: is eleven minutes to six news talks. He'd be yes,
Speaker 5: eight minutes to six, and we're going to see if
Speaker 5: we can squeeze another call or two. So we're trying
Speaker 5: to be as concise as possible. The Janet's a co
Speaker 5: who's the managing director of New Zealand family trust service
Speaker 5: is limited. Matt, Hello, good.
Speaker 10: Any guys, Hey, I won't want to tie in with
Speaker 10: a will When I died to leave my last DoD
Speaker 10: block to children slash, nephews and nieces that I was
Speaker 10: wondering if is there a way to make a roll
Speaker 10: in and roll out clause with if they want to
Speaker 10: live here they all contribute evenly. If not, they can
Speaker 10: roll out and miss out. Is there a way to
Speaker 10: sort of work there?
Speaker 6: Well, you could possibly set up a trust via your will,
Speaker 6: So the trust comes into existence once you die and
Speaker 6: the estate or the asset passes to the trust then
Speaker 6: and you could leave instructions under a memorand with wishes
Speaker 6: of how you would want that want that asset handled
Speaker 6: during during during you know, during during the period that
Speaker 6: the trust is going to exist for. So the trustees
Speaker 6: at that point could then go to the beneficiaries and say, well,
Speaker 6: we're going to do this, or we're going to do that,
Speaker 6: or we require a contribution from you for this or
Speaker 6: so if.
Speaker 5: You don't contribute, you're out. And can you actually set
Speaker 5: up something along that line?
Speaker 6: Well, you can't roll from the from the grave, and
Speaker 6: you can't make beneficiaries. Beneficiary sort of pay you, but
Speaker 6: you could, of course use your powers of persuasion.
Speaker 5: Can you actually set it up that that in terms
Speaker 5: of paying its way? I think is that what you're asking, Matt,
Speaker 5: that somehow everyone makes sure that the trust is maintainable
Speaker 5: and they're not just sitting there waiting to get their share.
Speaker 5: Is that what you're talking about.
Speaker 10: Yeah, well, I've got a last dole block and there's
Speaker 10: a lot of room for even tiny houses and stuff.
Speaker 10: I'm just thinking, I want my family and the future
Speaker 10: whichever place they can come. When times get tough. In
Speaker 10: this only one person loveacy, they pay the full cost
Speaker 10: someone else wants, then they split it. Then well.
Speaker 6: Okay, yeah, if the if the lifestyle block belongs to
Speaker 6: the belongs to the trust, and the trustees need to
Speaker 6: make sure that the income is there to meet or
Speaker 6: meet all costs, and so in good years when it's
Speaker 6: making money, they should be squirreling that money away to
Speaker 6: make sure that it's there and the lean years.
Speaker 5: Okay, right, let's see if we've got time we had
Speaker 5: I only got about a minute and a half there,
Speaker 5: so you have to be quick.
Speaker 4: Okay, Just a couple of questions Jennet, I've got to
Speaker 4: my late wife and I set up a family trust,
Speaker 4: and we have mended and blended families, and she has
Speaker 4: passed the administration of the trust has passed to me,
Speaker 4: and on my side of the family, circumstances of changed
Speaker 4: and I've got to buy or make a contribution to
Speaker 4: buy one party out. This is going to then mean
Speaker 4: that some of the bequests on my late wife's side
Speaker 4: may be short on funds. Where do bequests stand in trusts?
Speaker 6: Short the quest really falls into a person's estate, not
Speaker 6: in regards to trustees affairs. Trustees are there to manage
Speaker 6: the trust that probably would follow a Memoran wishes. Memoran
Speaker 6: wishes are highly persuasive, but they're not legally binding. So
Speaker 6: while I would say in the first instance, has get
Speaker 6: some really good.
Speaker 5: Advice, and I think what we're saying is that if
Speaker 5: there's money and a trust, a bequest cannot give away
Speaker 5: money that's not it's to get so that if there's
Speaker 5: a bequest that you can't give away something that belongs
Speaker 5: to the trust bequest.
Speaker 6: It's up to the trustees to bestow their discretion for
Speaker 6: discretionary trusts and work their way through it, and of
Speaker 6: course trustees are going to be careful and that and
Speaker 6: that they could range a range of factors are considered
Speaker 6: before they start exercising their discretion.
Speaker 5: Yeah, that's what I'm guessing. I'm sorry, we can't haven't
Speaker 5: got time to dig into it, people, And I'm guessing
Speaker 5: that maybe someone's put something in the trust and then
Speaker 5: in the will they've said I'm giving this to such
Speaker 5: and such as like, sorry, it's in the trust.
Speaker 6: And there's yeah, there's there's a bit of conflict there.
Speaker 5: Which I would imagine the trust would prevail anyway. But
Speaker 5: you know what, we haven't really got time to dig
Speaker 5: into that. All we've got time for is to say, Janet,
Speaker 5: thank you so much for coming in. Time has flown
Speaker 5: and we've been a lot of people texting answer, so
Speaker 5: we'll get Janet back again and we can pick up
Speaker 5: the conversation. But if you want to check out information
Speaker 5: around Janet's company, well not the New Zealand Fan it's
Speaker 5: n Zfamily Trusts dot cod or ENZ, so go and
Speaker 5: check out the website. And thanks so much for coming.
Speaker 6: In, Janet, thank you for having me, and well.
Speaker 5: Forward to next time. And thanks my producer Tyre Roberts,
Speaker 5: have a great Sunday, and we'll catch you soon.
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