May 11, 2025 • 41 mins
A lot of people think trusts are only for the very wealthy, and absolutely useless for the every day person - but today's guest explains that's not the case.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks.
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Mark in other words, hold my hand.
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(00:52):
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Speaker 5 (01:04):
Ah. I just had to wait for the band break there.
So there's a little bit of Frank Sinasha. I think
that's his Duets album. I know I have no idea
who he's singing with there, but great arrangements and everything. Anyway,
Welcome back to the Shay. I'm Tim Beverage. This is
the Weekend Collective. If you missed the chat we have
with Alex flint Or from the Health Hub but also
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(01:25):
on the boy of racist has been announced by Chris
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so you should be safe to search for that anytime.
But right now we're going this is smart money. We
are going to have a chat about trusts. In fact,
a couple of weeks over the last week or two,
(01:46):
we've had some people calling asking questions about trust and
we're you're a week too early or your two weeks
too early, because we have a trusts expert in the
studio and she is, well, she's why she'd let her
introduce herself. Actually she's been on the show before. But
we want your care before I introduce you, sir. We
want your calls if you've got any questions about trust
(02:09):
because a lot of people think that trusts are only
for the very wealthy. Of course, the expression that comes
to mind is a trust fund baby? Why does that
baby have a trust fund? But what was it set
up for? And the assumption is that it's useless for
the everyday person, And maybe it does seem that way
to you. But when might you want to trust, whether
(02:29):
you've been in a former relationship, do you need to
set up a trust for your kids? But there are
many reasons that people may want to start a trust,
which is why our guest is here to explain that
for us, and she's a trust expert. And as I said,
in her name is Janet Zukoa. Janet, how are you going.
Speaker 6 (02:45):
I'm well, thank you, thank you for having me on
the show.
Speaker 5 (02:47):
You're welcome, thanks for coming in. Now, actually tell us
a little bit about I mean, you've been on the
show just just once before. How did you get into
trusts and what's your background in terms of and you've
written a couple of books actually, which I've got a
copy of here. But anyway, how did you get into it?
Speaker 6 (03:04):
Well, I've got a commerce degree majoring in accounting, and
I've got a law degree, and I have a very
high interest in tax and trusts and economics.
Speaker 5 (03:17):
Yep. When did that develop? Was that something? You were
always interested in the financial side of things and legal
structures and accounting.
Speaker 6 (03:23):
Early early I can remember raiding my father's factory of
a puzzle pieces that were rejected for an export order
and getting out there in the markets and standing on
literally an apple box and trying to sell them when
I was really little. So I was always interested in
always interested.
Speaker 5 (03:42):
So when did and when did you get into the
trust side of things?
Speaker 6 (03:46):
I think really My interest developed in trust when I
started to become keen on tax because in a tax
structure you will often find a trust or two.
Speaker 5 (03:57):
Yeah, I noticed your company is New Zealand Family Trust
Services Limited, So I guessing family trusts are You're guessing.
Speaker 6 (04:08):
Absolutely, So when New Zealand's trust are your choice because
that is all we do, is trusts, and as a
result of that, our fees are not outlandish, and our
processes are good, and we're available.
Speaker 5 (04:21):
How easy is it to set up a trust? Because
obviously there's the simple sort of crew way. I mean,
there's always the DIY, but that would be fraught, I
would guess. But are there some basics to setting up
a trust that mean it shouldn't be as scary for
people as they might imagine, like, oh, that sounds like
a big deal.
Speaker 6 (04:39):
It shouldn't be scary, but people should be aware of
what they're doing when they when they're setting up a trust,
entering into a trust relationship. So if you're settling a
trust and you're putting assets into it, you are divesting
yourself of those assets of direct control as an individual,
as an owner, and you're putting that control into the
trustees hands, who of course, should be acting for the
(05:03):
best benefit of the the beneficiaries.
Speaker 5 (05:06):
What are the limits of when it comes to trusts,
Like somebody says, I've got that. I mean here, just
a very crude example would be someone who's got a
lot of money, they don't want any future relationships, sort
of get in their hands on it and they want
to set up a trust and they go, I've got
all my money and a trust. Well, it's technically not
your money any longer.
Speaker 6 (05:27):
It's certainly not so. Once you set up the trust
and move the assets into the trust, then, as I said,
you divested your personal ownership and you put it in
the hands of the trustees. But that's not necessarily going
to be bulletproof against personal relationships. Yeah, And we did
have a question the last time I was here from
a gentleman who was thinking about setting up a trust
(05:47):
but was in a relationship. And I said at the
time you certainly needed to take legal advice and that
with regards to trust. If you're going to enter into
personal relationship and you want to keep your assets separate,
then it's important to come plain at the very beginning.
And yes, certainly have trust, but you also need a
property relationship agreement. Yeah, both of them. I like my
(06:10):
clients to have them in conjunction with each.
Speaker 5 (06:12):
Other actually, because I mean, the best time to have
a trust is before you think you need it. And
that's the problem is that you don't think you need
it until you need it, and by then sometimes it's
too late. Is that that one of the sort of problems.
Speaker 6 (06:27):
So the problem there was recently a case about that.
The problem is the proximity of establishing a trust and
moving assets into the trust and then entering into a
personal relationship. So the claim can always be that you're
trying to I supposed to get out of sharing with
your with your nearest and dearest or off have assets
(06:48):
off so you don't have to share them. Should the
unthinkable happen?
Speaker 5 (06:51):
Because one of the for many people, one of the
concerns they would be if you've been in a relationship
and you've had kids and you want to protect your
income or your assets or your wealth for those chill children.
Is that quite a common scenario where people would go,
you know what, I've come through a divorce. I really
(07:12):
want to look after the kids, and I just don't
want to have the I don't want to threaten their
futures by you know, losing half of it in the
next relationship that falls apart.
Speaker 6 (07:22):
The GST clients, So they lose fifty percent first round,
and then everyone's in title a couple of tryouts, aren't
they managed, so then they have then there lose another
half of the half that they've got and they kind
of end up with, you know, fifteen percent or less.
So the gstc lights we call them. So we do
find that individuals that are that are on their own
(07:44):
and thinking that they may enter into a second, third,
or fourth relationship do put their assets into trust to
try and protect their children's inheritances. But recently, last couple
of weeks, I've had a couple come in and they
are on their second relationship. Yeah, they've done their they've
done their financial settlements with their with their first spouses,
(08:06):
they both got children, and what they want to do
is they wanted to have a trust each which they did,
and each of their trusts had its own assets in
from the payout that they got from their first relationship basically,
and then each trust went and contracted to buy half
(08:26):
a house, a new house that that couple could live in.
Speaker 5 (08:29):
So what that they each had a trust and they
want to buy a house, and so each trust buys
half the house half the house.
Speaker 6 (08:35):
Right, And so what that's going to do is that's
going to if one of them died, that with along
with a property relationship agreement. I might add that they
entered into. What that's going to do is that if
one of them does die, the half of that house
under their estate planning documents will go to their children
and not the other partner's children. That's how they planned that.
Speaker 5 (08:59):
So that doesn't that sounds inconvenient because you'd like to
think that if you have in to the relationship and
your loved one dies, that you can still live there until.
Speaker 6 (09:09):
They can still do that. But that's that's all been
that's all been sorted out under a memoranimal wishes. But
what will happen is that that person's half is really
held for their children, not for the for the alive
spouse's children. That's what I'm saying, they're not natural born children.
Speaker 5 (09:28):
What happens actually just in that, I mean, we could
get bogged down in the weeds on this one. But
if so, for instance, that does happen, somebody passes away,
but you want to move. Does that can you still
protect your ability to use the value of the house
to move somewhere else, but still protect the other half
for the.
Speaker 6 (09:46):
Issue, if you've had a proper trust expert on this
case from the very beginning. And I say that because
there are a lot of people out there that set
up trusts and that they're really it's a it's another
service that they offer and they don't necessarily specialized in trusts.
But if you've had a trust expert on that job,
then they are likely to be working with lawyers and
(10:07):
accountants and all of that is sorted out at the
very beginning. So you need to plan for those eventualities
at the beginning of setting up the trust.
Speaker 5 (10:17):
What's your response when people think that trusts are just
for wealthy people?
Speaker 6 (10:21):
So, well, no longer. Not in New Zealand. I mean
New Zealand is a land of entrepreneurship. I don't know
how many trusts we have because we don't have a
register like we have a register of companies. We don't
actually have a register of trust. But there's been estimated
somewhere between four and six hundred thousand trusts in New Zealand.
So that's a lot of trust per capita what we
got here.
Speaker 5 (10:41):
I thought it might actually behind that funnily enough, but yeah,
that's still.
Speaker 6 (10:44):
Well, well that's what they're saying, and people think that
they are for the uber wealth wealthy, and they also
think that there might be something shunky about them, But
that's very far from the truth. In New Zealand. Genuine
New Zealanders who are seeking asset protection from creditors and
their businesses from new relationship partners. People that want to
(11:07):
set up trust for estate planning purposes or for inheritence purposes.
Those are the people that are setting up the keys
that are setting up trusts in New Zealand.
Speaker 5 (11:16):
So before we came on, you were talking about there
were just recently you've had people three different people have
set up trust for as an example, because this will
also be food for thought for people who are listening,
what are some of the examples of maybe those three
motivations for a trust.
Speaker 6 (11:33):
So I would have to used different names here, of course.
Speaker 5 (11:40):
Yes, let's just go cut person A, B and C.
Speaker 6 (11:44):
So mister and missus A have just decided that they're
going to start a furniture production company, and so they've
come to me and they've got a home and they've
got a little bit of money, and they want their
house to be owned and the money to be owned
by a trust so that it hives that off and
protects that from company creditors.
Speaker 5 (12:04):
So they're going into business and if the business goes
then they don't want to see everything gone because of that.
Speaker 6 (12:10):
Correct, And nobody goes into business.
Speaker 5 (12:12):
To foil No, but planning.
Speaker 6 (12:15):
Planning, that's sensible, that's sensible for our well. So that
was that was one example. The second example that I
had was what I've just told you. A couple had
come in and wanted to ensure that if anything happened
to them, if they if one of them died, the
estate would be in trust for their for their children,
(12:35):
their maternal born children, not the other partner's children. And
the third I thought was quite admirable. There was there
was a mother that came in and she she wanted
to set up a trust for her child, a child's
a young child, and she'd got some money from her
parents and wanted to make sure that that was almost safe.
(12:57):
And I think that's very sensible.
Speaker 5 (12:59):
So how often in the my crude memory of equal
and trusts is that the law has evolved to the
extent that trusts are not as rock solid as they
used to be used to. I think under the old
English common law, you set up a trust and goodbye,
that money's gone, Whereas now the courts will look through
(13:20):
transactions and go, well, okay, we understand you better trust
set up, but it was set up with this motivation
in hand, and we're not buying it. Basically, Well, they
look through it because it might be to defeat some another.
Speaker 6 (13:33):
Way to defeat a creditors, right, oh yes.
Speaker 5 (13:35):
In other words, well, the example would be that furniture
production company. If they have set that up and six
months later they go bun, how solid is the trust
they set up to protect their family home? Because the
courts might go, well, hang on a minute, this is
simply set up to defeat a response. It's something you
should have provided for for your creditors. Where does that
(13:56):
get murky?
Speaker 6 (13:57):
So there's got to be the right intention of setting
up a trust, and assets can be clawed back out
of a trust if the intention has been proven that
they've been trying to defeat the purposes of creditors or
relationship partners.
Speaker 5 (14:11):
Yeah, does that mean that when you're sending out of trust,
you record the intention or you put.
Speaker 6 (14:15):
Something I do with my clients, I do I'm very
clear or not. I take copious amounts of notes of
why we're doing things and what the what the reasoning is.
Speaker 5 (14:24):
Oh so you do that as a record of the
basis for the transaction, in addition to saying in the
trust deed like a preamble whereas the party wants to
do X, onye and z for this reason, which anyone
can make up an excuse. But you use your notes
as well as a backup.
Speaker 6 (14:41):
And that's the beauty of New Zealand Family Trust Services.
That is all we do, is I've said, just trust work.
So right from the very beginning, when we have a
meeting with a client, we take down detailed notes as
to what we're doing and why we're doing it. We
make sure that the trust deeders fit for purpose for
the circumstances that we're addressing. It's not a quokie cutter
(15:02):
exercise where you just bash everything out and it's like
you can have one and you can have one and
put another one over here. So and we make sure
that the lawyers and the accountants of the client are
well and truly involved so that we're doing the right thing.
That's a fact finding exercise. We want to know what
else is going on in their lives, and that's important
if we're going to be an independent trustee. A lot
(15:23):
of people that were independent trustees, such as accountants and
lawyers have now hang up there hanging up the hat
and that reguard because it is high risk. And since
the Trust Act twenty nineteen have come in, I think
a lot of professionals have decided that they will stick
to their netting rather than just adding another service, and
that they're not really onto all the time.
Speaker 5 (15:45):
So being an independent trustee is is it a bit
like the the evolution of that role? Is it a
little bit like say, company directors are now having to
be very vigilant. Vigilant that's the word, and well trained
and versed in what's going on with the law and
companies because increasingly they're finding themselves in the firing line,
(16:08):
whereas maybe fifty years ago you just took the honorarium
and moved on.
Speaker 6 (16:13):
Yeah, so it used to be before the trust At
twenty nineteen came in, we always had the common law
and you always had to hit certain milestones. And in fact,
I would go as far as to say that the
trust at twenty nineteen has wound a lot of our
common law into into piece of legislation now. But prior
to that, lots lots of accountants and lawyers and friends
(16:36):
would step forward and they would say, we'll be the
independent trustee. And what that meant is that they weren't
going to be a beneficiary of the trust. And that
was as far as it went. They didn't actually do anything.
They just said that they would be the independent trustee,
the third trustee.
Speaker 5 (16:51):
All care but not realizing the responsibility possibly.
Speaker 6 (16:54):
And so as a result of the legislation coming through,
which really does tighten things up, it enshrines the duties
of trustees, it gives beneficiaries rights for clear rights. And
as a consequence of that, a lot of advisors have
got out of the business of being trustees because trust
is a person liable. And then the other question that
(17:15):
I was posed recently was, oh, well, you could just
be a trustee in a company and therefore you limit
your liability just like an ordinary director or shareholder and
a company would. But that's not true if you're a
trustee as a company like New Zealand Family Trust Service
is limited. As a trustee, I now have to where
the responsibilities of not only being a trustee but also
(17:37):
being a director. So it's a double whammy. You've got
to get it right.
Speaker 5 (17:40):
Yeah, actually, for the look, tell you what we will
take quick break now if you've got any questions for
Janet Janetzcoa. She is managing director of New Zealand Family
Trust Services. If you think do I need a trust?
You might even think it's a dumb question. And I
think that when we're dealing with sort of specialized topics
like this, there is no such thing as a dumb question,
(18:01):
because a lot of the time people think, oh gosh,
if only i'd ask that question and taken a simple step,
maybe I wouldn't have had the misery a few years
on of not having made the move on a trust.
Oh sorry, I've just seen a text. Somebody's just us,
should Prince Harry get a trust? I don't even know
what that is, but for some reason it's funny.
Speaker 6 (18:21):
Look what a connosation behind us?
Speaker 5 (18:26):
Anyway, Look, hey, look, we love your cause. Eight hundred
and eighty ten eighty We are getting a few texts
or so. I know some people like to keep things
private on this sort of thing, but you can give
us a call and jump the queue. Janet Zuccoa here,
she's ready to take your cause. If you've got any
questions around trust. We'll be back in just a moment.
It's come out to twenty five past five. News Talk
said B. News Talk said B. Yes, my expert is
Janet Zucca. She's a trust expert. She's the managing director
(18:49):
of New Zealand Family Trust Services Limited, and we're taking
your cause any questions you've got. No question is to
is to be feared, because I think that's a very
complex subject sometimes, so just ask away. Phil good A,
Oh sorry, Sandy good Day.
Speaker 1 (19:07):
Hi.
Speaker 2 (19:08):
So I'm keen to set up a trust, but I
haven't because I kind of keep thinking, you know, like
that they are a bit more see through these days
and all around the intentions and things. So what I
don't understand is, as you said in the furniture example,
they've gone to set up a furniture business, so they
want to put their house in the trust. Clearly their
intention is to protect their house. That's what I don't get, Like,
(19:32):
I mean, what am I meant to tell the lawyer
when they're setting up the trust, like that is totally
my intention is to protect my house. And so therefore
you're saying that you're writing down the intentions and all
that sort of stuff. But like so then if anything
was to happen and you go back and you look
at the intention, I'm like, well that was the intention?
Oh a little bit of a time in the market.
Speaker 5 (19:55):
Or so are you asking in a way that do
you have to be guarded with the instructions you give
to your trustee because of that might form part of
the record. Janet, what's your response to standing, well.
Speaker 2 (20:05):
Are legitimate saying turn it up your trust to particut
your house?
Speaker 7 (20:09):
I'm confused, now, good questions.
Speaker 6 (20:12):
It is indeed legitimate. What we do is we take
lots of notes around what clients tell us, so that
if we ever end up in a situation where the
trust is being challenged, we can point to our meetings
with our clients and what they've actually said.
Speaker 5 (20:27):
Does it mean? But what if the person's coming and said, look,
you know, I've got I've got a business I'm starting up.
Might not fly. I don't want the credit as getting
a whole if you know, I've got some money to
seed money to get the business going, but if it
all goes belly up, I don't want my house to
form part of it. That does sound problematic, isn't it.
Speaker 6 (20:47):
I probably wouldn't be writing all that down, But I
don't think anybody would tell me that. I think they
would say that they're setting up a business with great
intentions of it being very successful. Nobody goes into business
with it being unsuccessful. What you do find occasionally, as
you find overseas, people coming down and they want to
use trusts here for purposes which might not be legitimate.
(21:09):
And as a trust advisor, you've definitely got to have
your eyes and ears open to that.
Speaker 5 (21:14):
What are your obligations on that? If you if somebody
is coming down and they are doing something which you
think this is for purposes which are not are not legitimate,
where how does that go with the ethics of the
whole being a trust an independent trustee.
Speaker 6 (21:25):
I simply close the meeting. I just say I'm not
your not your girl. I don't think that you're in
the right place, and we couldn't take that business.
Speaker 5 (21:33):
Are you thinking of sending up a trust?
Speaker 2 (21:35):
Sandy, Yes, yeah, I know, I'd love to, but I
guess I always keep thinking about, well, you know, I
feel like they've become weaker and therefore that they wouldn't
actually give me the protection that I'm looking for. But
maybe it is just an extra.
Speaker 8 (21:48):
Layer of you know, like I don't know, but.
Speaker 2 (21:51):
I'd love to. But I get confused around that exact point.
You know, am I meant to say, yes, it is
to put my house, you know, to protect my house,
or am I not meant to I get confused.
Speaker 5 (22:02):
I guess Sandy's worried about how how quick, how readily
trusts get looked through by the courts if there's a dispute.
Speaker 6 (22:09):
So trust to trust can get looked through via the courts,
and they certainly can if they've got a family home
and you've moved into that with your nearest and dearest.
The family home takes a very precious position in regards
to the regards to law and family. Courts can look
through trust. So it's important to ensure that not only
(22:29):
is they trusted up correctly, but it's administered appropriately as well.
Speaker 5 (22:33):
Right. Hey, thanks for you, Corl, thanks for being the
ball roll in their Sandy, Phil, Hello, how on a second.
There we go. Hi.
Speaker 7 (22:40):
Hi, My question is, well, i'd need to believe that
you could only gift so much of the family home
perannum or is that not right?
Speaker 6 (22:51):
Yeah, so I think I think you're going back to
the old gifting regime. So it used to be that
we would move a house, for example, and too a
trust and we would.
Speaker 5 (23:00):
Get twenty seven thousand a year or something given.
Speaker 6 (23:02):
I owe you off the trustees because they've bought the
house off of us in the form of an acknowledgment
of debt, and then we would forgive twenty seven thousand
dollars of that per year. We could actually forgive all
of it all in one go, but anything over twenty
seven thousand one cent over it and you pay duty.
And that's been abolished for many years now, so you
can forgive the debt immediately, and in fact so lots
(23:25):
and lots of people do. And the reason why they
do that is because under the Minister of Social Welfare rules,
which I might say can be incredibly complex. Under those rules,
if you gift more than a certain amount within a
certain period, that gift can be disregarded and then you
(23:46):
can end out notionally with too much wealth and therefore
not get a rest home subsidy. And some people are
never going to get a rest home subsidy and they're
never going to go through get through a gifting program.
Speaker 5 (23:58):
Oh, actually the whole rest home subsidy, because that's been
an issue in our family. It's funny that the user pays.
But I'll tell you what, if you've got one. A
quick way to whittle down your assets is if one
of you has to go into care and you haven't
set that, you even got a trust set up years
and years ago, it's a great way to whittle down wealth.
At the rate of about two or three thousand bucks
a week.
Speaker 7 (24:18):
Yeah, that was my question that I was wondered. I
wondered if I'm in my early sixties and if I
seen it up now, that would stop the home eating.
Speaker 6 (24:30):
That does it?
Speaker 7 (24:31):
Well?
Speaker 6 (24:32):
Not necessarily what you would want to do with an
advisor to sit down and really do some predictions around
some numbers, what your wealth is now, what it would be,
for example, at the age of seventy five or eighty,
take a notional age and how much gifting you could
(24:52):
get through, and then on today's rules, whether you would
get arrested themselves stiff. You've got all of that gifting
and followed all of those rules. Remember we are talking
years in advance. I'm sure you won't be going into well,
that's if you go into a rest time, not all
New Zealand just going to a rest time and your
small potent. But if they went into a rest time,
(25:12):
that could be years and years away and those rules
could all change again.
Speaker 7 (25:17):
Here's a simple question. If you put your one of
your ass It's like I've some flats. Do you put
them under the trust? Do I retain the return off them?
Speaker 4 (25:28):
Or well any makes the money out of it.
Speaker 6 (25:31):
Any assets that are held in trust that produce income
will be will be the property of the trustees. Then
be up to the trustees to exercise their discretion and
make a distribution to you, possibly alone to you.
Speaker 7 (25:50):
Right, Here's another question, as you being the lawyer for
the trust, do I pay trust yearly? Do I pay
the lawyer annually or the trust pays the.
Speaker 5 (26:03):
Yeah, that was going to be one of my quick
Whether the Trustee Actors made it more expensive to have
independent trustees and all.
Speaker 6 (26:08):
That, so, I think probably the Trustee Act has set
the bar as to what is expected of trustees. And
as you can imagine, if an independent trustee who specializes
in the business of being a trustee gets it wrong,
they will have the book thrown at them. So in
some in some ways you've got the players that don't
(26:30):
really don't really know what they're doing or aren't doing
the right job, getting out of business, which makes it
harder to find an independent trustee. But the independent trustees
that are standing, they have to have processes around them,
and they have to insurance policies around them as well.
And I can tell you, having just gone through our
insurance regime, that it becomes more complicated and more expensive
(26:51):
year on year. So that's a long way of saying, yes,
we do charge. We charge six hundred and ninety five
dollars a year for being a professional trustee. And that
does give a client an annual trustee meeting each year
which must be completed. Okay, so that's included in that.
But also if there's other work to be done, for example,
(27:13):
signing documents, taking loans, going to auctions, helping clients with investments,
that is all charged out at an hourly rate. And
so I guess in that way it could get it
could get pricey. But the majority of trusts that we
work for put assets in and leave those assets for
some time. They're not taking money in and out of
a trust all the time, or moving assets in and
(27:35):
out of a trust.
Speaker 5 (27:36):
Gosh, that actually surprised me that that's a lot less
than I thought it would be. So it's good information.
Speaker 6 (27:43):
For us because, as I say, we are New Zealand
as trustee of choice and we do a lot of it.
Speaker 5 (27:48):
So well, that's good news, because yeah, I'm sure that
to many people are quite quite well good news. It's
a good piece of information. Hey, thanks Bell on that
independent trustee thing. Just quickly before got a next call Janet.
This this text here says, hi, guys, I'm an independent trustee,
but I need to resigned you to unforeseen circumstances. How
complex and expensive is it for me to be removed
(28:11):
and replace? That's from Dave.
Speaker 6 (28:13):
Well, it will depend first on the terms of the
trusteed and also on the assets and indeed on what
situation they're facing. So in the order courses of events,
most trusteeds have the ability to resign. As an independent trustee.
You would just simply ask us the trustees, or or
it might be the settler or whoever's holding the power
(28:35):
a point or ship that you want to step down
and point somebody else. So that would be really easy,
and they'd be the easiest way. And any assets that
are held in the trust, their titles have to be
updated to reflect the new trustees' names. If one has
indeed been appointed, most certainly reflect that you've resigned as
an independent trustee. But if you're facing a particular situation,
(29:00):
then you'd want to get advice before you resigned, because
you may well want you're in gemnification crafted in a
certain manner. It might not even be sensible for you
to resign, for instance, don't think that's something unforcenreness has
gone wrong on your watch as an independent trustee. Resigning
is going to get you out of the hot order,
(29:21):
because it probably won't.
Speaker 5 (29:23):
Okay, gosh, we've got the questions rolling and we've got
the calls as well, so I'm going to try and
split the difference so a little bit, but we're going
to take a break. We'll be back in just a moment.
It's twenty one and a half minutes to Sex News Talks.
They'd be yes, welcome back to boy, I tell what
there had a lot of calls, So we're going to
try and get through as much information as we can
with Janet Zukashi's managing director of New Zealand Family Trust Services.
So let's go to Sally. Hello.
Speaker 9 (29:45):
Hello, my husband and I set up for family trust
and I'm wondering why redid it now? So if it's
any advantage to me, I'm a widow and I've got
two children and eight grandchildren, and I just what advantage
is it me having a trust? The houses and the trust.
Speaker 5 (30:07):
So should you? Should it stand the trust to you've
got to trust? Do you keep it? Janet?
Speaker 9 (30:12):
I guess that is what advantage is it to me
to be having the trust?
Speaker 6 (30:18):
Probably when you set out the trust, maybe you were,
maybe you were in business, or maybe it might have
been for some other reason. But the needs, needs and
desires change over time, and so that's a very good question.
If a client's coming in with a trust already and
wants us to be a trustee, I always ask do
we still need do we still need to continue this trust?
(30:40):
In your answer? In your case, possibly there's no benefit
to you anymore, but it may be a benefit to
your children or your grandchildren. For example, if you pass
those assets to them directly rather than from trust to trust,
then and they've got a problem, they've got a credited
problem for example, or a relationship problem, then there there
(31:01):
could go there inheritance. Meanwhile, if the trust is running
and you want to make distributions from it to maybe
the grandchildren to help them with education, for example, and
possibly you could do that out of the trust.
Speaker 9 (31:15):
Okay, haven't done any of that as yet, but even
the person that does my book said, you know it's
a really well, it's there a disadvantage of for me
having that trust.
Speaker 6 (31:33):
Well, I don't know your circumstances, but if the trust
is being run well, hm, and if you've got an
if you've got an independent trustee, I suppose maybe that
would cost you more money.
Speaker 5 (31:46):
Have you got family selling.
Speaker 9 (31:49):
Two children, eight grandchildren?
Speaker 6 (31:52):
So those children could no doubt get a benefit from it.
I and you, if indeed you are giving them benefits
or they are going to inherit, then I frequently bring
the children and say, look, mom and dad, they're not
earning income now, and you are going to inherit from
this trust, and it would be nice if you could
(32:13):
contribute to some of these fees and the children are
often amenable to that.
Speaker 5 (32:17):
Okay, hopefully that's a bit helpful, Sally. We're going to
keep moving because we've got a lot to get through
and we won't get through it all, to be honest,
so we'll have to beg Janet to come back and
have another chat with us sometime. But thanks for your call, Sally.
Bill Hello, got to look.
Speaker 8 (32:32):
Up to Janet. Up to the mid nineties, everyone got
free care in retirement homes, etc. An act was passed
stopping that, and eminent lawyers have told me over the
last twenty years that it's a monopoly because the rich
(32:55):
people who have done trusts get free free care and
the poor people who don't own houses get free care.
The people in the are the ones that pay for it,
et cetera, the ones who haven't done trusts. And I
in fact worked for the Minister of Health and Research
(33:15):
in old people's homes some fifteen years ago and in
one large home in Wellington, the manager told me that
only one person paid for their care. Everyone else had
it paid for them etc. By government because they didn't
have they had trusts, or they.
Speaker 5 (33:37):
Didn't have You have you got a question in their bill.
Speaker 8 (33:39):
Yeah, the question is if everyone knows about this, more
people I understand have created trusts in the last twenty
five years because of this particular reason of care homes.
What do you think, Jennet, And do you think that
the government, who shies off because I've spoken to politicians,
(34:00):
should do something about it.
Speaker 5 (34:03):
Yeah, well, they're not going to start paying for it,
would be my guest given the economy. But yeah, any
comment on that.
Speaker 6 (34:09):
Jenneral, New Zealand is in a bit of a flux.
We have to play with what we've got and New
Zealand the government is only taking so much in regards
to the tax take, so I suppose that they cut
their cloth where they can. I don't know whether it's
whether that's an actual fact to say that wealthy people
(34:31):
never pay for any rest home care. I can tell
you that I've got several clients who do actually pay
up to five thousand dollars a week. But I do
take your point, and you certainly wouldn't be setting up
a trust today just to try and get a rest
home subsidy, that's for sure.
Speaker 5 (34:47):
Hey, but thanks for your call. Bill. Let's actually, by
the way, somebody's just quick we'll try and alternate with
texts and calls. Is it better to have a trust
or a company if you have rental property? So that
difficult question to answer.
Speaker 6 (35:00):
So that is really about your personal circumstances. And most
certainly tax would play a bit of a part there
because companies tax rate there is twenty eight percent, and
of course the trustee tax rate come first of first
of April last year, moved to move to thirty nine percent. That's,
of course if the trustees do indeed retain the income.
(35:21):
Because for instance, the trustees may not retain it, they
may distribute it to beneficiaries and then it would be
taxed at the recipient beneficiaries personal tax rates. So so
let me let me give it all. Let me give
you an example. Let's say the trust earns forty thousand,
and we've got maybe Mary, Well, we'll take come, we'll
(35:42):
take James and Mary. James Earns seventy thousand, Mary Earns
one hundred and eighty thousand, they're married. The trust earns
forty thousand, and so what's it going to do. Is
the trust is going to retain that income and pay
thirty nine percent on it, or is it going to allocate,
and if it was going to allocate, it will probably
allocate it to James because he will be on less
tax rate than Mary at thirty nine percent. Or maybe
(36:06):
they allocate it to Barry. Now, let's assume that Barrier
is over the age of sixteen but doesn't earn a
lot of income or maybe no income, and his tax
rates could be as low as ten and a half percent,
So ten and a half percent on the first fifteen
six hundred and then after seventeen and a half cents,
So that could be a really good tax savings. Or
(36:28):
even better still, he's an idea, an idea, even better still,
let let the trustees invest in a pie and only
pay tax at twenty a percent. How's that?
Speaker 5 (36:39):
There you go, there's some so I don't know what
else to add to that. I'm going to take a
quick moment. We'll come back with some more calls. It
is eleven minutes to six news talks. He'd be yes,
eight minutes to six, and we're going to see if
we can squeeze another call or two. So we're trying
to be as concise as possible. The Janet's a co
who's the managing director of New Zealand family trust service
is limited. Matt, Hello, good.
Speaker 10 (37:00):
Any guys, Hey, I won't want to tie in with
a will When I died to leave my last DoD
block to children slash, nephews and nieces that I was
wondering if is there a way to make a roll
in and roll out clause with if they want to
live here they all contribute evenly. If not, they can
roll out and miss out. Is there a way to
(37:22):
sort of work there?
Speaker 6 (37:24):
Well, you could possibly set up a trust via your will,
So the trust comes into existence once you die and
the estate or the asset passes to the trust then
and you could leave instructions under a memorand with wishes
of how you would want that want that asset handled
during during during you know, during during the period that
(37:45):
the trust is going to exist for. So the trustees
at that point could then go to the beneficiaries and say, well,
we're going to do this, or we're going to do that,
or we require a contribution from you for this or
so if.
Speaker 5 (37:56):
You don't contribute, you're out. And can you actually set
up something along that line?
Speaker 6 (38:00):
Well, you can't roll from the from the grave, and
you can't make beneficiaries. Beneficiary sort of pay you, but
you could, of course use your powers of persuasion.
Speaker 5 (38:11):
Can you actually set it up that that in terms
of paying its way? I think is that what you're asking, Matt,
that somehow everyone makes sure that the trust is maintainable
and they're not just sitting there waiting to get their share.
Is that what you're talking about.
Speaker 10 (38:23):
Yeah, well, I've got a last dole block and there's
a lot of room for even tiny houses and stuff.
I'm just thinking, I want my family and the future
whichever place they can come. When times get tough. In
this only one person loveacy, they pay the full cost
someone else wants, then they split it. Then well.
Speaker 6 (38:42):
Okay, yeah, if the if the lifestyle block belongs to
the belongs to the trust, and the trustees need to
make sure that the income is there to meet or
meet all costs, and so in good years when it's
making money, they should be squirreling that money away to
make sure that it's there and the lean years.
Speaker 5 (39:00):
Okay, right, let's see if we've got time we had
I only got about a minute and a half there,
so you have to be quick.
Speaker 4 (39:05):
Okay, Just a couple of questions Jennet, I've got to
my late wife and I set up a family trust,
and we have mended and blended families, and she has
passed the administration of the trust has passed to me,
and on my side of the family, circumstances of changed
(39:28):
and I've got to buy or make a contribution to
buy one party out. This is going to then mean
that some of the bequests on my late wife's side
may be short on funds. Where do bequests stand in trusts?
Speaker 6 (39:49):
Short the quest really falls into a person's estate, not
in regards to trustees affairs. Trustees are there to manage
the trust that probably would follow a Memoran wishes. Memoran
wishes are highly persuasive, but they're not legally binding. So
while I would say in the first instance, has get
some really good.
Speaker 5 (40:08):
Advice, and I think what we're saying is that if
there's money and a trust, a bequest cannot give away
money that's not it's to get so that if there's
a bequest that you can't give away something that belongs
to the trust bequest.
Speaker 6 (40:23):
It's up to the trustees to bestow their discretion for
discretionary trusts and work their way through it, and of
course trustees are going to be careful and that and
that they could range a range of factors are considered
before they start exercising their discretion.
Speaker 5 (40:38):
Yeah, that's what I'm guessing. I'm sorry, we can't haven't
got time to dig into it, people, And I'm guessing
that maybe someone's put something in the trust and then
in the will they've said I'm giving this to such
and such as like, sorry, it's in the trust.
Speaker 6 (40:49):
And there's yeah, there's there's a bit of conflict there.
Speaker 5 (40:52):
Which I would imagine the trust would prevail anyway. But
you know what, we haven't really got time to dig
into that. All we've got time for is to say, Janet,
thank you so much for coming in. Time has flown
and we've been a lot of people texting answer, so
we'll get Janet back again and we can pick up
the conversation. But if you want to check out information
(41:12):
around Janet's company, well not the New Zealand Fan it's
n Zfamily Trusts dot cod or ENZ, so go and
check out the website. And thanks so much for coming.
Speaker 6 (41:23):
In, Janet, thank you for having me, and well.
Speaker 5 (41:25):
Forward to next time. And thanks my producer Tyre Roberts,
have a great Sunday, and we'll catch you soon.
Speaker 1 (41:33):
For more from the Weekend Collective, listen live to News
Talk zed be weekends from three pm, or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talks.
Speaker 2 (00:09):
It be.
Speaker 3 (00:11):
Find me to the moon, Let me play up there
with those stars, let me see what spring is like.
Speaker 4 (00:20):
Ad you bitter and.
Speaker 5 (00:22):
Mark in other words, hold my hand.
Speaker 3 (00:30):
In other words, maybe kiss me, kill my heartless song
and let me sing forevermore. You are all out along
for all our worship and the doll another words, another words,
(00:52):
please be true? Any other words, I've been in love
with you.
Speaker 5 (01:04):
Ah. I just had to wait for the band break there.
So there's a little bit of Frank Sinasha. I think
that's his Duets album. I know I have no idea
who he's singing with there, but great arrangements and everything. Anyway,
Welcome back to the Shay. I'm Tim Beverage. This is
the Weekend Collective. If you missed the chat we have
with Alex flint Or from the Health Hub but also
Politics Central, where we discussed, among other things, the crackdown
(01:25):
on the boy of racist has been announced by Chris
Bishop and Mark Mitchell, then you can go and check
out our podcast. Just go to News Talk seed b
and look for the Weekend Collective and every hour, once
we've done it, we get it loaded online pretty quickly,
so you should be safe to search for that anytime.
But right now we're going this is smart money. We
are going to have a chat about trusts. In fact,
a couple of weeks over the last week or two,
(01:46):
we've had some people calling asking questions about trust and
we're you're a week too early or your two weeks
too early, because we have a trusts expert in the
studio and she is, well, she's why she'd let her
introduce herself. Actually she's been on the show before. But
we want your care before I introduce you, sir. We
want your calls if you've got any questions about trust
(02:09):
because a lot of people think that trusts are only
for the very wealthy. Of course, the expression that comes
to mind is a trust fund baby? Why does that
baby have a trust fund? But what was it set
up for? And the assumption is that it's useless for
the everyday person, And maybe it does seem that way
to you. But when might you want to trust, whether
(02:29):
you've been in a former relationship, do you need to
set up a trust for your kids? But there are
many reasons that people may want to start a trust,
which is why our guest is here to explain that
for us, and she's a trust expert. And as I said,
in her name is Janet Zukoa. Janet, how are you going.
Speaker 6 (02:45):
I'm well, thank you, thank you for having me on
the show.
Speaker 5 (02:47):
You're welcome, thanks for coming in. Now, actually tell us
a little bit about I mean, you've been on the
show just just once before. How did you get into
trusts and what's your background in terms of and you've
written a couple of books actually, which I've got a
copy of here. But anyway, how did you get into it?
Speaker 6 (03:04):
Well, I've got a commerce degree majoring in accounting, and
I've got a law degree, and I have a very
high interest in tax and trusts and economics.
Speaker 5 (03:17):
Yep. When did that develop? Was that something? You were
always interested in the financial side of things and legal
structures and accounting.
Speaker 6 (03:23):
Early early I can remember raiding my father's factory of
a puzzle pieces that were rejected for an export order
and getting out there in the markets and standing on
literally an apple box and trying to sell them when
I was really little. So I was always interested in
always interested.
Speaker 5 (03:42):
So when did and when did you get into the
trust side of things?
Speaker 6 (03:46):
I think really My interest developed in trust when I
started to become keen on tax because in a tax
structure you will often find a trust or two.
Speaker 5 (03:57):
Yeah, I noticed your company is New Zealand Family Trust
Services Limited, So I guessing family trusts are You're guessing.
Speaker 6 (04:08):
Absolutely, So when New Zealand's trust are your choice because
that is all we do, is trusts, and as a
result of that, our fees are not outlandish, and our
processes are good, and we're available.
Speaker 5 (04:21):
How easy is it to set up a trust? Because
obviously there's the simple sort of crew way. I mean,
there's always the DIY, but that would be fraught, I
would guess. But are there some basics to setting up
a trust that mean it shouldn't be as scary for
people as they might imagine, like, oh, that sounds like
a big deal.
Speaker 6 (04:39):
It shouldn't be scary, but people should be aware of
what they're doing when they when they're setting up a trust,
entering into a trust relationship. So if you're settling a
trust and you're putting assets into it, you are divesting
yourself of those assets of direct control as an individual,
as an owner, and you're putting that control into the
trustees hands, who of course, should be acting for the
(05:03):
best benefit of the the beneficiaries.
Speaker 5 (05:06):
What are the limits of when it comes to trusts,
Like somebody says, I've got that. I mean here, just
a very crude example would be someone who's got a
lot of money, they don't want any future relationships, sort
of get in their hands on it and they want
to set up a trust and they go, I've got
all my money and a trust. Well, it's technically not
your money any longer.
Speaker 6 (05:27):
It's certainly not so. Once you set up the trust
and move the assets into the trust, then, as I said,
you divested your personal ownership and you put it in
the hands of the trustees. But that's not necessarily going
to be bulletproof against personal relationships. Yeah, And we did
have a question the last time I was here from
a gentleman who was thinking about setting up a trust
(05:47):
but was in a relationship. And I said at the
time you certainly needed to take legal advice and that
with regards to trust. If you're going to enter into
personal relationship and you want to keep your assets separate,
then it's important to come plain at the very beginning.
And yes, certainly have trust, but you also need a
property relationship agreement. Yeah, both of them. I like my
(06:10):
clients to have them in conjunction with each.
Speaker 5 (06:12):
Other actually, because I mean, the best time to have
a trust is before you think you need it. And
that's the problem is that you don't think you need
it until you need it, and by then sometimes it's
too late. Is that that one of the sort of problems.
Speaker 6 (06:27):
So the problem there was recently a case about that.
The problem is the proximity of establishing a trust and
moving assets into the trust and then entering into a
personal relationship. So the claim can always be that you're
trying to I supposed to get out of sharing with
your with your nearest and dearest or off have assets
(06:48):
off so you don't have to share them. Should the
unthinkable happen?
Speaker 5 (06:51):
Because one of the for many people, one of the
concerns they would be if you've been in a relationship
and you've had kids and you want to protect your
income or your assets or your wealth for those chill children.
Is that quite a common scenario where people would go,
you know what, I've come through a divorce. I really
(07:12):
want to look after the kids, and I just don't
want to have the I don't want to threaten their
futures by you know, losing half of it in the
next relationship that falls apart.
Speaker 6 (07:22):
The GST clients, So they lose fifty percent first round,
and then everyone's in title a couple of tryouts, aren't
they managed, so then they have then there lose another
half of the half that they've got and they kind
of end up with, you know, fifteen percent or less.
So the gstc lights we call them. So we do
find that individuals that are that are on their own
(07:44):
and thinking that they may enter into a second, third,
or fourth relationship do put their assets into trust to
try and protect their children's inheritances. But recently, last couple
of weeks, I've had a couple come in and they
are on their second relationship. Yeah, they've done their they've
done their financial settlements with their with their first spouses,
(08:06):
they both got children, and what they want to do
is they wanted to have a trust each which they did,
and each of their trusts had its own assets in
from the payout that they got from their first relationship basically,
and then each trust went and contracted to buy half
(08:26):
a house, a new house that that couple could live in.
Speaker 5 (08:29):
So what that they each had a trust and they
want to buy a house, and so each trust buys
half the house half the house.
Speaker 6 (08:35):
Right, And so what that's going to do is that's
going to if one of them died, that with along
with a property relationship agreement. I might add that they
entered into. What that's going to do is that if
one of them does die, the half of that house
under their estate planning documents will go to their children
and not the other partner's children. That's how they planned that.
Speaker 5 (08:59):
So that doesn't that sounds inconvenient because you'd like to
think that if you have in to the relationship and
your loved one dies, that you can still live there until.
Speaker 6 (09:09):
They can still do that. But that's that's all been
that's all been sorted out under a memoranimal wishes. But
what will happen is that that person's half is really
held for their children, not for the for the alive
spouse's children. That's what I'm saying, they're not natural born children.
Speaker 5 (09:28):
What happens actually just in that, I mean, we could
get bogged down in the weeds on this one. But
if so, for instance, that does happen, somebody passes away,
but you want to move. Does that can you still
protect your ability to use the value of the house
to move somewhere else, but still protect the other half
for the.
Speaker 6 (09:46):
Issue, if you've had a proper trust expert on this
case from the very beginning. And I say that because
there are a lot of people out there that set
up trusts and that they're really it's a it's another
service that they offer and they don't necessarily specialized in trusts.
But if you've had a trust expert on that job,
then they are likely to be working with lawyers and
(10:07):
accountants and all of that is sorted out at the
very beginning. So you need to plan for those eventualities
at the beginning of setting up the trust.
Speaker 5 (10:17):
What's your response when people think that trusts are just
for wealthy people?
Speaker 6 (10:21):
So, well, no longer. Not in New Zealand. I mean
New Zealand is a land of entrepreneurship. I don't know
how many trusts we have because we don't have a
register like we have a register of companies. We don't
actually have a register of trust. But there's been estimated
somewhere between four and six hundred thousand trusts in New Zealand.
So that's a lot of trust per capita what we
got here.
Speaker 5 (10:41):
I thought it might actually behind that funnily enough, but yeah,
that's still.
Speaker 6 (10:44):
Well, well that's what they're saying, and people think that
they are for the uber wealth wealthy, and they also
think that there might be something shunky about them, But
that's very far from the truth. In New Zealand. Genuine
New Zealanders who are seeking asset protection from creditors and
their businesses from new relationship partners. People that want to
(11:07):
set up trust for estate planning purposes or for inheritence purposes.
Those are the people that are setting up the keys
that are setting up trusts in New Zealand.
Speaker 5 (11:16):
So before we came on, you were talking about there
were just recently you've had people three different people have
set up trust for as an example, because this will
also be food for thought for people who are listening,
what are some of the examples of maybe those three
motivations for a trust.
Speaker 6 (11:33):
So I would have to used different names here, of course.
Speaker 5 (11:40):
Yes, let's just go cut person A, B and C.
Speaker 6 (11:44):
So mister and missus A have just decided that they're
going to start a furniture production company, and so they've
come to me and they've got a home and they've
got a little bit of money, and they want their
house to be owned and the money to be owned
by a trust so that it hives that off and
protects that from company creditors.
Speaker 5 (12:04):
So they're going into business and if the business goes
then they don't want to see everything gone because of that.
Speaker 6 (12:10):
Correct, And nobody goes into business.
Speaker 5 (12:12):
To foil No, but planning.
Speaker 6 (12:15):
Planning, that's sensible, that's sensible for our well. So that
was that was one example. The second example that I
had was what I've just told you. A couple had
come in and wanted to ensure that if anything happened
to them, if they if one of them died, the
estate would be in trust for their for their children,
(12:35):
their maternal born children, not the other partner's children. And
the third I thought was quite admirable. There was there
was a mother that came in and she she wanted
to set up a trust for her child, a child's
a young child, and she'd got some money from her
parents and wanted to make sure that that was almost safe.
(12:57):
And I think that's very sensible.
Speaker 5 (12:59):
So how often in the my crude memory of equal
and trusts is that the law has evolved to the
extent that trusts are not as rock solid as they
used to be used to. I think under the old
English common law, you set up a trust and goodbye,
that money's gone, Whereas now the courts will look through
(13:20):
transactions and go, well, okay, we understand you better trust
set up, but it was set up with this motivation
in hand, and we're not buying it. Basically, Well, they
look through it because it might be to defeat some another.
Speaker 6 (13:33):
Way to defeat a creditors, right, oh yes.
Speaker 5 (13:35):
In other words, well, the example would be that furniture
production company. If they have set that up and six
months later they go bun, how solid is the trust
they set up to protect their family home? Because the
courts might go, well, hang on a minute, this is
simply set up to defeat a response. It's something you
should have provided for for your creditors. Where does that
(13:56):
get murky?
Speaker 6 (13:57):
So there's got to be the right intention of setting
up a trust, and assets can be clawed back out
of a trust if the intention has been proven that
they've been trying to defeat the purposes of creditors or
relationship partners.
Speaker 5 (14:11):
Yeah, does that mean that when you're sending out of trust,
you record the intention or you put.
Speaker 6 (14:15):
Something I do with my clients, I do I'm very
clear or not. I take copious amounts of notes of
why we're doing things and what the what the reasoning is.
Speaker 5 (14:24):
Oh so you do that as a record of the
basis for the transaction, in addition to saying in the
trust deed like a preamble whereas the party wants to
do X, onye and z for this reason, which anyone
can make up an excuse. But you use your notes
as well as a backup.
Speaker 6 (14:41):
And that's the beauty of New Zealand Family Trust Services.
That is all we do, is I've said, just trust work.
So right from the very beginning, when we have a
meeting with a client, we take down detailed notes as
to what we're doing and why we're doing it. We
make sure that the trust deeders fit for purpose for
the circumstances that we're addressing. It's not a quokie cutter
(15:02):
exercise where you just bash everything out and it's like
you can have one and you can have one and
put another one over here. So and we make sure
that the lawyers and the accountants of the client are
well and truly involved so that we're doing the right thing.
That's a fact finding exercise. We want to know what
else is going on in their lives, and that's important
if we're going to be an independent trustee. A lot
(15:23):
of people that were independent trustees, such as accountants and
lawyers have now hang up there hanging up the hat
and that reguard because it is high risk. And since
the Trust Act twenty nineteen have come in, I think
a lot of professionals have decided that they will stick
to their netting rather than just adding another service, and
that they're not really onto all the time.
Speaker 5 (15:45):
So being an independent trustee is is it a bit
like the the evolution of that role? Is it a
little bit like say, company directors are now having to
be very vigilant. Vigilant that's the word, and well trained
and versed in what's going on with the law and
companies because increasingly they're finding themselves in the firing line,
(16:08):
whereas maybe fifty years ago you just took the honorarium
and moved on.
Speaker 6 (16:13):
Yeah, so it used to be before the trust At
twenty nineteen came in, we always had the common law
and you always had to hit certain milestones. And in fact,
I would go as far as to say that the
trust at twenty nineteen has wound a lot of our
common law into into piece of legislation now. But prior
to that, lots lots of accountants and lawyers and friends
(16:36):
would step forward and they would say, we'll be the
independent trustee. And what that meant is that they weren't
going to be a beneficiary of the trust. And that
was as far as it went. They didn't actually do anything.
They just said that they would be the independent trustee,
the third trustee.
Speaker 5 (16:51):
All care but not realizing the responsibility possibly.
Speaker 6 (16:54):
And so as a result of the legislation coming through,
which really does tighten things up, it enshrines the duties
of trustees, it gives beneficiaries rights for clear rights. And
as a consequence of that, a lot of advisors have
got out of the business of being trustees because trust
is a person liable. And then the other question that
(17:15):
I was posed recently was, oh, well, you could just
be a trustee in a company and therefore you limit
your liability just like an ordinary director or shareholder and
a company would. But that's not true if you're a
trustee as a company like New Zealand Family Trust Service
is limited. As a trustee, I now have to where
the responsibilities of not only being a trustee but also
(17:37):
being a director. So it's a double whammy. You've got
to get it right.
Speaker 5 (17:40):
Yeah, actually, for the look, tell you what we will
take quick break now if you've got any questions for
Janet Janetzcoa. She is managing director of New Zealand Family
Trust Services. If you think do I need a trust?
You might even think it's a dumb question. And I
think that when we're dealing with sort of specialized topics
like this, there is no such thing as a dumb question,
(18:01):
because a lot of the time people think, oh gosh,
if only i'd ask that question and taken a simple step,
maybe I wouldn't have had the misery a few years
on of not having made the move on a trust.
Oh sorry, I've just seen a text. Somebody's just us,
should Prince Harry get a trust? I don't even know
what that is, but for some reason it's funny.
Speaker 6 (18:21):
Look what a connosation behind us?
Speaker 5 (18:26):
Anyway, Look, hey, look, we love your cause. Eight hundred
and eighty ten eighty We are getting a few texts
or so. I know some people like to keep things
private on this sort of thing, but you can give
us a call and jump the queue. Janet Zuccoa here,
she's ready to take your cause. If you've got any
questions around trust. We'll be back in just a moment.
It's come out to twenty five past five. News Talk
said B. News Talk said B. Yes, my expert is
Janet Zucca. She's a trust expert. She's the managing director
(18:49):
of New Zealand Family Trust Services Limited, and we're taking
your cause any questions you've got. No question is to
is to be feared, because I think that's a very
complex subject sometimes, so just ask away. Phil good A,
Oh sorry, Sandy good Day.
Speaker 1 (19:07):
Hi.
Speaker 2 (19:08):
So I'm keen to set up a trust, but I
haven't because I kind of keep thinking, you know, like
that they are a bit more see through these days
and all around the intentions and things. So what I
don't understand is, as you said in the furniture example,
they've gone to set up a furniture business, so they
want to put their house in the trust. Clearly their
intention is to protect their house. That's what I don't get, Like,
(19:32):
I mean, what am I meant to tell the lawyer
when they're setting up the trust, like that is totally
my intention is to protect my house. And so therefore
you're saying that you're writing down the intentions and all
that sort of stuff. But like so then if anything
was to happen and you go back and you look
at the intention, I'm like, well that was the intention?
Oh a little bit of a time in the market.
Speaker 5 (19:55):
Or so are you asking in a way that do
you have to be guarded with the instructions you give
to your trustee because of that might form part of
the record. Janet, what's your response to standing, well.
Speaker 2 (20:05):
Are legitimate saying turn it up your trust to particut
your house?
Speaker 7 (20:09):
I'm confused, now, good questions.
Speaker 6 (20:12):
It is indeed legitimate. What we do is we take
lots of notes around what clients tell us, so that
if we ever end up in a situation where the
trust is being challenged, we can point to our meetings
with our clients and what they've actually said.
Speaker 5 (20:27):
Does it mean? But what if the person's coming and said, look,
you know, I've got I've got a business I'm starting up.
Might not fly. I don't want the credit as getting
a whole if you know, I've got some money to
seed money to get the business going, but if it
all goes belly up, I don't want my house to
form part of it. That does sound problematic, isn't it.
Speaker 6 (20:47):
I probably wouldn't be writing all that down, But I
don't think anybody would tell me that. I think they
would say that they're setting up a business with great
intentions of it being very successful. Nobody goes into business
with it being unsuccessful. What you do find occasionally, as
you find overseas, people coming down and they want to
use trusts here for purposes which might not be legitimate.
(21:09):
And as a trust advisor, you've definitely got to have
your eyes and ears open to that.
Speaker 5 (21:14):
What are your obligations on that? If you if somebody
is coming down and they are doing something which you
think this is for purposes which are not are not legitimate,
where how does that go with the ethics of the
whole being a trust an independent trustee.
Speaker 6 (21:25):
I simply close the meeting. I just say I'm not
your not your girl. I don't think that you're in
the right place, and we couldn't take that business.
Speaker 5 (21:33):
Are you thinking of sending up a trust?
Speaker 2 (21:35):
Sandy, Yes, yeah, I know, I'd love to, but I
guess I always keep thinking about, well, you know, I
feel like they've become weaker and therefore that they wouldn't
actually give me the protection that I'm looking for. But
maybe it is just an extra.
Speaker 8 (21:48):
Layer of you know, like I don't know, but.
Speaker 2 (21:51):
I'd love to. But I get confused around that exact point.
You know, am I meant to say, yes, it is
to put my house, you know, to protect my house,
or am I not meant to I get confused.
Speaker 5 (22:02):
I guess Sandy's worried about how how quick, how readily
trusts get looked through by the courts if there's a dispute.
Speaker 6 (22:09):
So trust to trust can get looked through via the courts,
and they certainly can if they've got a family home
and you've moved into that with your nearest and dearest.
The family home takes a very precious position in regards
to the regards to law and family. Courts can look
through trust. So it's important to ensure that not only
(22:29):
is they trusted up correctly, but it's administered appropriately as well.
Speaker 5 (22:33):
Right. Hey, thanks for you, Corl, thanks for being the
ball roll in their Sandy, Phil, Hello, how on a second.
There we go. Hi.
Speaker 7 (22:40):
Hi, My question is, well, i'd need to believe that
you could only gift so much of the family home
perannum or is that not right?
Speaker 6 (22:51):
Yeah, so I think I think you're going back to
the old gifting regime. So it used to be that
we would move a house, for example, and too a
trust and we would.
Speaker 5 (23:00):
Get twenty seven thousand a year or something given.
Speaker 6 (23:02):
I owe you off the trustees because they've bought the
house off of us in the form of an acknowledgment
of debt, and then we would forgive twenty seven thousand
dollars of that per year. We could actually forgive all
of it all in one go, but anything over twenty
seven thousand one cent over it and you pay duty.
And that's been abolished for many years now, so you
can forgive the debt immediately, and in fact so lots
(23:25):
and lots of people do. And the reason why they
do that is because under the Minister of Social Welfare rules,
which I might say can be incredibly complex. Under those rules,
if you gift more than a certain amount within a
certain period, that gift can be disregarded and then you
(23:46):
can end out notionally with too much wealth and therefore
not get a rest home subsidy. And some people are
never going to get a rest home subsidy and they're
never going to go through get through a gifting program.
Speaker 5 (23:58):
Oh, actually the whole rest home subsidy, because that's been
an issue in our family. It's funny that the user pays.
But I'll tell you what, if you've got one. A
quick way to whittle down your assets is if one
of you has to go into care and you haven't
set that, you even got a trust set up years
and years ago, it's a great way to whittle down wealth.
At the rate of about two or three thousand bucks
a week.
Speaker 7 (24:18):
Yeah, that was my question that I was wondered. I
wondered if I'm in my early sixties and if I
seen it up now, that would stop the home eating.
Speaker 6 (24:30):
That does it?
Speaker 7 (24:31):
Well?
Speaker 6 (24:32):
Not necessarily what you would want to do with an
advisor to sit down and really do some predictions around
some numbers, what your wealth is now, what it would be,
for example, at the age of seventy five or eighty,
take a notional age and how much gifting you could
(24:52):
get through, and then on today's rules, whether you would
get arrested themselves stiff. You've got all of that gifting
and followed all of those rules. Remember we are talking
years in advance. I'm sure you won't be going into well,
that's if you go into a rest time, not all
New Zealand just going to a rest time and your
small potent. But if they went into a rest time,
(25:12):
that could be years and years away and those rules
could all change again.
Speaker 7 (25:17):
Here's a simple question. If you put your one of
your ass It's like I've some flats. Do you put
them under the trust? Do I retain the return off them?
Speaker 4 (25:28):
Or well any makes the money out of it.
Speaker 6 (25:31):
Any assets that are held in trust that produce income
will be will be the property of the trustees. Then
be up to the trustees to exercise their discretion and
make a distribution to you, possibly alone to you.
Speaker 7 (25:50):
Right, Here's another question, as you being the lawyer for
the trust, do I pay trust yearly? Do I pay
the lawyer annually or the trust pays the.
Speaker 5 (26:03):
Yeah, that was going to be one of my quick
Whether the Trustee Actors made it more expensive to have
independent trustees and all.
Speaker 6 (26:08):
That, so, I think probably the Trustee Act has set
the bar as to what is expected of trustees. And
as you can imagine, if an independent trustee who specializes
in the business of being a trustee gets it wrong,
they will have the book thrown at them. So in
some in some ways you've got the players that don't
(26:30):
really don't really know what they're doing or aren't doing
the right job, getting out of business, which makes it
harder to find an independent trustee. But the independent trustees
that are standing, they have to have processes around them,
and they have to insurance policies around them as well.
And I can tell you, having just gone through our
insurance regime, that it becomes more complicated and more expensive
(26:51):
year on year. So that's a long way of saying, yes,
we do charge. We charge six hundred and ninety five
dollars a year for being a professional trustee. And that
does give a client an annual trustee meeting each year
which must be completed. Okay, so that's included in that.
But also if there's other work to be done, for example,
(27:13):
signing documents, taking loans, going to auctions, helping clients with investments,
that is all charged out at an hourly rate. And
so I guess in that way it could get it
could get pricey. But the majority of trusts that we
work for put assets in and leave those assets for
some time. They're not taking money in and out of
a trust all the time, or moving assets in and
(27:35):
out of a trust.
Speaker 5 (27:36):
Gosh, that actually surprised me that that's a lot less
than I thought it would be. So it's good information.
Speaker 6 (27:43):
For us because, as I say, we are New Zealand
as trustee of choice and we do a lot of it.
Speaker 5 (27:48):
So well, that's good news, because yeah, I'm sure that
to many people are quite quite well good news. It's
a good piece of information. Hey, thanks Bell on that
independent trustee thing. Just quickly before got a next call Janet.
This this text here says, hi, guys, I'm an independent trustee,
but I need to resigned you to unforeseen circumstances. How
complex and expensive is it for me to be removed
(28:11):
and replace? That's from Dave.
Speaker 6 (28:13):
Well, it will depend first on the terms of the
trusteed and also on the assets and indeed on what
situation they're facing. So in the order courses of events,
most trusteeds have the ability to resign. As an independent trustee.
You would just simply ask us the trustees, or or
it might be the settler or whoever's holding the power
(28:35):
a point or ship that you want to step down
and point somebody else. So that would be really easy,
and they'd be the easiest way. And any assets that
are held in the trust, their titles have to be
updated to reflect the new trustees' names. If one has
indeed been appointed, most certainly reflect that you've resigned as
an independent trustee. But if you're facing a particular situation,
(29:00):
then you'd want to get advice before you resigned, because
you may well want you're in gemnification crafted in a
certain manner. It might not even be sensible for you
to resign, for instance, don't think that's something unforcenreness has
gone wrong on your watch as an independent trustee. Resigning
is going to get you out of the hot order,
(29:21):
because it probably won't.
Speaker 5 (29:23):
Okay, gosh, we've got the questions rolling and we've got
the calls as well, so I'm going to try and
split the difference so a little bit, but we're going
to take a break. We'll be back in just a moment.
It's twenty one and a half minutes to Sex News Talks.
They'd be yes, welcome back to boy, I tell what
there had a lot of calls, So we're going to
try and get through as much information as we can
with Janet Zukashi's managing director of New Zealand Family Trust Services.
So let's go to Sally. Hello.
Speaker 9 (29:45):
Hello, my husband and I set up for family trust
and I'm wondering why redid it now? So if it's
any advantage to me, I'm a widow and I've got
two children and eight grandchildren, and I just what advantage
is it me having a trust? The houses and the trust.
Speaker 5 (30:07):
So should you? Should it stand the trust to you've
got to trust? Do you keep it? Janet?
Speaker 9 (30:12):
I guess that is what advantage is it to me
to be having the trust?
Speaker 6 (30:18):
Probably when you set out the trust, maybe you were,
maybe you were in business, or maybe it might have
been for some other reason. But the needs, needs and
desires change over time, and so that's a very good question.
If a client's coming in with a trust already and
wants us to be a trustee, I always ask do
we still need do we still need to continue this trust?
(30:40):
In your answer? In your case, possibly there's no benefit
to you anymore, but it may be a benefit to
your children or your grandchildren. For example, if you pass
those assets to them directly rather than from trust to trust,
then and they've got a problem, they've got a credited
problem for example, or a relationship problem, then there there
(31:01):
could go there inheritance. Meanwhile, if the trust is running
and you want to make distributions from it to maybe
the grandchildren to help them with education, for example, and
possibly you could do that out of the trust.
Speaker 9 (31:15):
Okay, haven't done any of that as yet, but even
the person that does my book said, you know it's
a really well, it's there a disadvantage of for me
having that trust.
Speaker 6 (31:33):
Well, I don't know your circumstances, but if the trust
is being run well, hm, and if you've got an
if you've got an independent trustee, I suppose maybe that
would cost you more money.
Speaker 5 (31:46):
Have you got family selling.
Speaker 9 (31:49):
Two children, eight grandchildren?
Speaker 6 (31:52):
So those children could no doubt get a benefit from it.
I and you, if indeed you are giving them benefits
or they are going to inherit, then I frequently bring
the children and say, look, mom and dad, they're not
earning income now, and you are going to inherit from
this trust, and it would be nice if you could
(32:13):
contribute to some of these fees and the children are
often amenable to that.
Speaker 5 (32:17):
Okay, hopefully that's a bit helpful, Sally. We're going to
keep moving because we've got a lot to get through
and we won't get through it all, to be honest,
so we'll have to beg Janet to come back and
have another chat with us sometime. But thanks for your call, Sally.
Bill Hello, got to look.
Speaker 8 (32:32):
Up to Janet. Up to the mid nineties, everyone got
free care in retirement homes, etc. An act was passed
stopping that, and eminent lawyers have told me over the
last twenty years that it's a monopoly because the rich
(32:55):
people who have done trusts get free free care and
the poor people who don't own houses get free care.
The people in the are the ones that pay for it,
et cetera, the ones who haven't done trusts. And I
in fact worked for the Minister of Health and Research
(33:15):
in old people's homes some fifteen years ago and in
one large home in Wellington, the manager told me that
only one person paid for their care. Everyone else had
it paid for them etc. By government because they didn't
have they had trusts, or they.
Speaker 5 (33:37):
Didn't have You have you got a question in their bill.
Speaker 8 (33:39):
Yeah, the question is if everyone knows about this, more
people I understand have created trusts in the last twenty
five years because of this particular reason of care homes.
What do you think, Jennet, And do you think that
the government, who shies off because I've spoken to politicians,
(34:00):
should do something about it.
Speaker 5 (34:03):
Yeah, well, they're not going to start paying for it,
would be my guest given the economy. But yeah, any
comment on that.
Speaker 6 (34:09):
Jenneral, New Zealand is in a bit of a flux.
We have to play with what we've got and New
Zealand the government is only taking so much in regards
to the tax take, so I suppose that they cut
their cloth where they can. I don't know whether it's
whether that's an actual fact to say that wealthy people
(34:31):
never pay for any rest home care. I can tell
you that I've got several clients who do actually pay
up to five thousand dollars a week. But I do
take your point, and you certainly wouldn't be setting up
a trust today just to try and get a rest
home subsidy, that's for sure.
Speaker 5 (34:47):
Hey, but thanks for your call. Bill. Let's actually, by
the way, somebody's just quick we'll try and alternate with
texts and calls. Is it better to have a trust
or a company if you have rental property? So that
difficult question to answer.
Speaker 6 (35:00):
So that is really about your personal circumstances. And most
certainly tax would play a bit of a part there
because companies tax rate there is twenty eight percent, and
of course the trustee tax rate come first of first
of April last year, moved to move to thirty nine percent. That's,
of course if the trustees do indeed retain the income.
(35:21):
Because for instance, the trustees may not retain it, they
may distribute it to beneficiaries and then it would be
taxed at the recipient beneficiaries personal tax rates. So so
let me let me give it all. Let me give
you an example. Let's say the trust earns forty thousand,
and we've got maybe Mary, Well, we'll take come, we'll
(35:42):
take James and Mary. James Earns seventy thousand, Mary Earns
one hundred and eighty thousand, they're married. The trust earns
forty thousand, and so what's it going to do. Is
the trust is going to retain that income and pay
thirty nine percent on it, or is it going to allocate,
and if it was going to allocate, it will probably
allocate it to James because he will be on less
tax rate than Mary at thirty nine percent. Or maybe
(36:06):
they allocate it to Barry. Now, let's assume that Barrier
is over the age of sixteen but doesn't earn a
lot of income or maybe no income, and his tax
rates could be as low as ten and a half percent,
So ten and a half percent on the first fifteen
six hundred and then after seventeen and a half cents,
So that could be a really good tax savings. Or
(36:28):
even better still, he's an idea, an idea, even better still,
let let the trustees invest in a pie and only
pay tax at twenty a percent. How's that?
Speaker 5 (36:39):
There you go, there's some so I don't know what
else to add to that. I'm going to take a
quick moment. We'll come back with some more calls. It
is eleven minutes to six news talks. He'd be yes,
eight minutes to six, and we're going to see if
we can squeeze another call or two. So we're trying
to be as concise as possible. The Janet's a co
who's the managing director of New Zealand family trust service
is limited. Matt, Hello, good.
Speaker 10 (37:00):
Any guys, Hey, I won't want to tie in with
a will When I died to leave my last DoD
block to children slash, nephews and nieces that I was
wondering if is there a way to make a roll
in and roll out clause with if they want to
live here they all contribute evenly. If not, they can
roll out and miss out. Is there a way to
(37:22):
sort of work there?
Speaker 6 (37:24):
Well, you could possibly set up a trust via your will,
So the trust comes into existence once you die and
the estate or the asset passes to the trust then
and you could leave instructions under a memorand with wishes
of how you would want that want that asset handled
during during during you know, during during the period that
(37:45):
the trust is going to exist for. So the trustees
at that point could then go to the beneficiaries and say, well,
we're going to do this, or we're going to do that,
or we require a contribution from you for this or
so if.
Speaker 5 (37:56):
You don't contribute, you're out. And can you actually set
up something along that line?
Speaker 6 (38:00):
Well, you can't roll from the from the grave, and
you can't make beneficiaries. Beneficiary sort of pay you, but
you could, of course use your powers of persuasion.
Speaker 5 (38:11):
Can you actually set it up that that in terms
of paying its way? I think is that what you're asking, Matt,
that somehow everyone makes sure that the trust is maintainable
and they're not just sitting there waiting to get their share.
Is that what you're talking about.
Speaker 10 (38:23):
Yeah, well, I've got a last dole block and there's
a lot of room for even tiny houses and stuff.
I'm just thinking, I want my family and the future
whichever place they can come. When times get tough. In
this only one person loveacy, they pay the full cost
someone else wants, then they split it. Then well.
Speaker 6 (38:42):
Okay, yeah, if the if the lifestyle block belongs to
the belongs to the trust, and the trustees need to
make sure that the income is there to meet or
meet all costs, and so in good years when it's
making money, they should be squirreling that money away to
make sure that it's there and the lean years.
Speaker 5 (39:00):
Okay, right, let's see if we've got time we had
I only got about a minute and a half there,
so you have to be quick.
Speaker 4 (39:05):
Okay, Just a couple of questions Jennet, I've got to
my late wife and I set up a family trust,
and we have mended and blended families, and she has
passed the administration of the trust has passed to me,
and on my side of the family, circumstances of changed
(39:28):
and I've got to buy or make a contribution to
buy one party out. This is going to then mean
that some of the bequests on my late wife's side
may be short on funds. Where do bequests stand in trusts?
Speaker 6 (39:49):
Short the quest really falls into a person's estate, not
in regards to trustees affairs. Trustees are there to manage
the trust that probably would follow a Memoran wishes. Memoran
wishes are highly persuasive, but they're not legally binding. So
while I would say in the first instance, has get
some really good.
Speaker 5 (40:08):
Advice, and I think what we're saying is that if
there's money and a trust, a bequest cannot give away
money that's not it's to get so that if there's
a bequest that you can't give away something that belongs
to the trust bequest.
Speaker 6 (40:23):
It's up to the trustees to bestow their discretion for
discretionary trusts and work their way through it, and of
course trustees are going to be careful and that and
that they could range a range of factors are considered
before they start exercising their discretion.
Speaker 5 (40:38):
Yeah, that's what I'm guessing. I'm sorry, we can't haven't
got time to dig into it, people, And I'm guessing
that maybe someone's put something in the trust and then
in the will they've said I'm giving this to such
and such as like, sorry, it's in the trust.
Speaker 6 (40:49):
And there's yeah, there's there's a bit of conflict there.
Speaker 5 (40:52):
Which I would imagine the trust would prevail anyway. But
you know what, we haven't really got time to dig
into that. All we've got time for is to say, Janet,
thank you so much for coming in. Time has flown
and we've been a lot of people texting answer, so
we'll get Janet back again and we can pick up
the conversation. But if you want to check out information
(41:12):
around Janet's company, well not the New Zealand Fan it's
n Zfamily Trusts dot cod or ENZ, so go and
check out the website. And thanks so much for coming.
Speaker 6 (41:23):
In, Janet, thank you for having me, and well.
Speaker 5 (41:25):
Forward to next time. And thanks my producer Tyre Roberts,
have a great Sunday, and we'll catch you soon.
Speaker 1 (41:33):
For more from the Weekend Collective, listen live to News
Talk zed be weekends from three pm, or follow the
podcast on iHeartRadio.
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