Family trusts are a popular way to protect and manage your assets, such as the family home, for you and your family, now and in the future. They can have a valuable role to play, but they’re not suitable for everyone. Here are the pros and cons of family trusts to help you decide if it’s worth investigating further.

FIVE GOOD REASONS TO FORM A FAMILY TRUST

1. Protect your assets against claims and creditors in the event of business failure or a lawsuit.
2. Set aside money for special reasons, such as a child or grandchild’s education.
3. Ensure your children, not their partners, keep their inheritances.
4. Protect your children from squandering assets or falling prey to financial scams before they’ve gained sufficient life experience to make sound decisions.
5. They have a life of up to 80 years (or 125 years under the new bill) unless it’s wound up and distributed earlier.

THREE DISADVANTAGES OF SETTING UP A FAMILY TRUST

1. Transferring your personal assets to a trust means you lose complete ownership and it will be the trustees’ responsibility to control them.
2. The time and cost involved in setting up a trust and meeting its annual accounting and administrative requirements.
3. Disgruntled beneficiaries have the power to sue trustees where trustees have acted in breach of trust. While it’s not common, it is happening more often.

WHAT’S NEXT?

Get professional advice from the start. We can answer any questions you have about trusts, being a trustee and administering a trust deed.

Whether you’re thinking of becoming a trustee for your own family trust or someone else’s, it’s important to know your obligations under the current law before accepting the role.

8 things to know before becoming a trustee

1. It’s a legal responsibility with a lot of work involved (most often voluntary) and you could end up being liable for losses made by the trust if you don’t do the job properly.
2. You’re in it for the long haul – some trusts have a set end-point, ie: when a child turns 18, but others can go on for over a century.
3. You must know and understand the trust deed, all associated documentation and the trust’s property, assets and liabilities.
4. You’ve got to stay impartial when managing or distributing trust property to beneficiaries – no favourites!
5. You have to ensure all relevant documentation with regard to the trust’s assets are signed by all trustees, not just the ‘Mum and Dad’ of the trust (check the trust deed, though, in case it says otherwise).
6. When making trust decisions, you have to agree with the other trustees (unless the trust deed says otherwise). So you need to be sure that you can work well with the other trustees before taking on the job.
7. You must actively participate and make all the decisions – no delegating or relying on others to do your job.
8. Paperwork will be your friend – keeping accurate accounts and recording all trustee decisions as requested by beneficiaries will keep you out of deep water.
   

From 28 September 2018, standard New Zealand subscriptions will change to $60 a month, while premium pricing becomes $75 a month. This pricing includes one active Xero Expenses user. You’ll pay $5 a month for each additional user who is active that month, for example, they submit an expense claim. All other plans remain the same.

Payday filing has been available since April 2018. Instead of filing an employer monthly schedule and deduction form (IR348 & IR345) every month, employers will file employment information every payday in line with their normal payroll cycle. From 1 April 2019 payday filing will become mandatory. Payment dates remain the same.

We’ve recently written to all employers to remind them about this, that it’s time to shift and provided them a link to our website with more information.

A nationwide seminar series will be held from September to November for people who work with payroll and we’ll be sending invitations out early next week. Look out for that email and register early as spaces are limited. You’ll be able to register for seminars at this website link shortly.

If you’ve seen the film The Wolf of Wall Street, you’ll be familiar with the concept of money laundering – an illegal process where ‘dirty money’ received from criminal activities is passed through legitimate businesses and made ‘clean.’

In response to a growing number of laundering incidents in New Zealand, the government has made changes to the law, which now affect accountants and small businesses like yours. As of this month (October 2018), we’re required to put new preventative measures in place to help tackle money laundering and financing of terrorism.

What does this mean for you?

We might need to ask you for more information about your business than what we have in the past, especially if it involves large cash transactions ($10,000* or more in one transaction). You may also be asked for additional information about your identity.

If you’re a real estate agent or your business involves sports and race betting or dealing in high value goods, take note – the anti-money laundering legislation will extend to you from next year. To find out what the changes mean for your business, give us a call.

Johnston Associates has decided to provide more regular information via social media channels – namely Facebook and LinkedIn. We will continue to publish our quarterly newsletter, but you will find more regular and timely information through these channels.

So choose your preferred outlet by clicking on one of the buttons below, and don’t forget to follow us!