NZ Deed of Trust - Multiple Settlors

Deed of Trust - Multiple Settlors NZ

Use this document if you are a couple who want to set up a family trust together.

When people create a trust to protect assets for themselves and their families, this is called a “family trust”.

How Could A Family Trust Help Us?

The objective of having a Family Trust is to transfer all your significant assets from your personal ownership to the Trust’s ownership. In effect, you want to achieve “personal poverty”, while being beneficiaries of the Trust. By doing so, you may succeed in protecting your assets from various threats that might otherwise take them away from you like being sued personally for something that you or your business has done.

Putting your assets into a Trust can also provide incidental tax benefits and may assist you to qualify for subsidies that are subject to asset testing.

All of these matters are specialised and you should get expert advice from your solicitor or accountant on them.

What Does a Trust Need?

Settlors
The couple who set up the Trust are called the Settlors. The Settlors are usually the people who own the assets that are going to be held by the Trust, such as the Settlors’ house and any other investments.

Assets
The Trust must have some assets to exist. When a Trust is set up, it is standard for the Settlors to transfer $10 to it immediately. The aim over time is for the Trust to hold all of the assets that are to be protected.

Trust Deed
The Trust Deed sets out the Settlors’ wishes about how the Trust will be run and who will benefit from the assets held by the Trust.

Trustees
These are the people who administer the Trust. Generally the Settlors will be two of the Trustees. It is also sensible for the Settlors to choose at least one other person or a trustee company to be a Trustee. The Settlors may choose an independent trustee, who is a person or company who isn’t a beneficiary of the Trust.

The Trustees are responsible to make sure the wishes of the Settlors are carried out. The Trustees have responsibilities to make wise decisions, taking into account the interests of the beneficiaries.

Beneficiaries
The people who may benefit from the Trust are called the Beneficiaries. In a Family Trust, the Beneficiaries are often every member of the family, including possible future members such as unborn grandchildren.

Beneficiaries are usually divided into two groups:

- Discretionary beneficiaries
- Final beneficiaries.

Discretionary beneficiaries are people who may benefit from the Trust. It is up to the Trustees to decide whether the discretionary beneficiaries receive anything from the Trust. The Trustees have the control of the Trust’s assets and may decide not to give a particular discretionary beneficiary anything.

Final beneficiaries are the people who are likely to receive whatever assets are left in the Trust when the Trust is wound up. Generally, trusts have a maximum life of 80 years, although many trusts are wound up earlier than that.

Are There Down Sides To Having A Trust?

It is important to get expert advice when setting up and managing your Trust.

If your Trust isn’t set up and run properly then there are real risks, such as a risk that the Trustees may deal with the assets in a way that the Settlors wouldn’t be happy with. There is also a risk that the Trust won’t provide the protection the Settlors are looking for.

Checklist is not available for this document.

Sample is not available for this document.

Name of Trust
• Do I have to use certain words in my Trust's name?
Settlors’ Details
• Who are the Settlors? What do they do?
Trustees' Details
• Who should I appoint as a Trustee?
• My partner and I are the Settlors, can we be the only Trustees?
• How many Trustees should I have?
• What is an independent trustee?
• Is it a good idea to have an independent trustee?
Settlors’ Children
• Who should I choose as the Final Beneficiaries?
• Can I choose more than one Final Beneficiary?
• Can I just choose one Final Beneficiary?
Specific Children
• Who should I choose as the Final Beneficiaries?
• Can I choose more than one Final Beneficiary?
• Can I just choose one Final Beneficiary?
Named People
• Who should I choose as the Final Beneficiaries?
• Can I choose more than one Final Beneficiary?
• Can I just choose one Final Beneficiary?
Named Charities
• Who should I choose as the Final Beneficiaries?
• Can I choose more than one Final Beneficiary?
• Can I just choose one Final Beneficiary?
Additional Beneficiaries
• Is it a good idea to add lots of beneficiaries when I set up my Trust?

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Name of Trust

• Do I have to use certain words in my Trust's name?

  You can call your Trust whatever you want. The name doesn't need to have the word “Family” in it.

  This hint is provided by Cavell Leitch.

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Settlors’ Details

• Who are the Settlors? What do they do?

  If you and your spouse/partner are setting up this Trust to protect your assets, then you should be the Settlors. The Settlors make all the big decisions for the Trust at the start, such as:

  
  
  • who will manage the Trust going forward (the Trustees); and
  
  
  • will benefit from the Trust (the Beneficiaries).
  
  

  This hint is provided by Cavell Leitch.

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Trustees' Details

• Who should I appoint as a Trustee?

  The Settlors usually appoint themselves as Trustees so that they can stay involved in the day-to-day decisions made by the Trust.
  
  If the Settlors are Trustees, we recommend that the Settlors appoint at least one other person or a company to be an independent trustee.

  This hint is provided by Cavell Leitch.

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• My partner and I are the Settlors, can we be the only Trustees?

  It is not a good idea for the Settlors to be the only Trustees.
  
  We recommend that the Settlors also appoint an independent trustee. An independent trustee is a good idea for two reasons:
  
  1. An independent trustee, particularly if that trustee is a professional, can help to make sure the Trust is managed properly and the paperwork is kept in order.
  
  2. The existence of an independent trustee can help to show that a family trust is a valid trust and not a sham.

  This hint is provided by Cavell Leitch.

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• How many Trustees should I have?

  The Settlors need to appoint either two human trustees, or one human and one corporate (company) trustee or one corporate (company) trustee.
  
  Trustees under this Trust Deed need to act unanimously (all together) when making decisions. Don’t appoint too many trustees as the more people involved, the more difficult it can be to make decisions and get documents signed. Two or three trustees is a good number.

  This hint is provided by Cavell Leitch.

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• What is an independent trustee?

  If the Settlors appoint a person or a company to be a Trustee and that person or company is not a beneficiary of the Trust, then that person or company is known as an independent trustee. Some Settlors appoint their lawyer or accountant’s trustee company to be an independent trustee.

  This hint is provided by Cavell Leitch.

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• Is it a good idea to have an independent trustee?

  It is a good idea to appoint an independent trustee for two reasons:
  
  1. An independent trustee, particularly if that trustee is a professional, can help to make sure the Trust is managed properly and the paperwork is kept in order.
  
  2. The existence of an independent trustee can help to show that a family trust is a valid trust and not a sham.
  

  This hint is provided by Cavell Leitch.

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Settlors’ Children

• Who should I choose as the Final Beneficiaries?

  Choose people or charities that you consider are the main beneficiaries of the Trust. The Final Beneficiaries generally receive what is left of the Trust once the Trust is wound up.
  
  Generally, trusts only last for a maximum of 80 years and many trusts are wound up earlier than 80 years if the Trustees decide that is the right thing to do. Of course, there is no guarantee that there will be any property left in the Trust when it is wound up as the Trustees may have already distributed the Trust’s property to the Discretionary Beneficiaries.

  This hint is provided by Cavell Leitch.

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• Can I choose more than one Final Beneficiary?

  Yes, for example, you may not have any children. You might choose your siblings on one of the following question pages and/or choose your favourite charity under on the question page called "Named Charities".

  This hint is provided by Cavell Leitch.

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• Can I just choose one Final Beneficiary?

  Yes, for example, the Settlors may have a child with a particular need. They might just choose that child to be the Final Beneficiary when they click on "Specific Children of the Settlors".

  This hint is provided by Cavell Leitch.

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Specific Children

• Who should I choose as the Final Beneficiaries?

  Choose people or charities that you consider are the main beneficiaries of the Trust. The Final Beneficiaries generally receive what is left of the Trust once the Trust is wound up.
  
  Generally, trusts only last for a maximum of 80 years and many trusts are wound up earlier than 80 years if the Trustees decide that is the right thing to do. Of course, there is no guarantee that there will be any property left in the Trust when it is wound up as the Trustees may have already distributed the Trust’s property to the Discretionary Beneficiaries.
  

  This hint is provided by Cavell Leitch.

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• Can I choose more than one Final Beneficiary?

  Yes, for example, you may not have any children. You might choose your siblings on one of the following question pages and/or choose your favourite charity under on the question page called "Named Charities".

  This hint is provided by Cavell Leitch.

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• Can I just choose one Final Beneficiary?

  Yes, for example, the Settlors may have a child with a particular need. They might just choose that child to be the Final Beneficiary when they click on "Specific Children of the Settlors".

  This hint is provided by Cavell Leitch.

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Named People

• Who should I choose as the Final Beneficiaries?

  Choose people or charities that you consider are the main beneficiaries of the Trust. The Final Beneficiaries generally receive what is left of the Trust once the Trust is wound up.
  
  Generally, trusts only last for a maximum of 80 years and many trusts are wound up earlier than 80 years if the Trustees decide that is the right thing to do. Of course, there is no guarantee that there will be any property left in the Trust when it is wound up as the Trustees may have already distributed the Trust’s property to the Discretionary Beneficiaries.
  

  This hint is provided by Cavell Leitch.

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• Can I choose more than one Final Beneficiary?

  Yes, for example, you may not have any children. You might choose your siblings on one of the following question pages and/or choose your favourite charity under on the question page called "Named Charities".

  This hint is provided by Cavell Leitch.

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  #

• Can I just choose one Final Beneficiary?

  Yes, for example, the Settlors may have a child with a particular need. They might just choose that child to be the Final Beneficiary when they click on "Specific Children of the Settlors".

  This hint is provided by Cavell Leitch.

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Named Charities

• Who should I choose as the Final Beneficiaries?

  Choose people or charities that you consider are the main beneficiaries of the Trust. The Final Beneficiaries generally receive what is left of the Trust once the Trust is wound up.
  
  Generally, trusts only last for a maximum of 80 years and many trusts are wound up earlier than 80 years if the Trustees decide that is the right thing to do. Of course, there is no guarantee that there will be any property left in the Trust when it is wound up as the Trustees may have already distributed the Trust’s property to the Discretionary Beneficiaries.
  

  This hint is provided by Cavell Leitch.

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  #

• Can I choose more than one Final Beneficiary?

  Yes, for example, you may not have any children. You might choose your siblings on one of the following question pages and/or choose your favourite charity under on the question page called "Named Charities".

  This hint is provided by Cavell Leitch.

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• Can I just choose one Final Beneficiary?

  Yes, for example, the Settlors may have a child with a particular need. They might just choose that child to be the Final Beneficiary when they click on "Specific Children of the Settlors".

  This hint is provided by Cavell Leitch.

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Additional Beneficiaries

• Is it a good idea to add lots of beneficiaries when I set up my Trust?

  It really depends on your personal circumstances. If you are a young couple and don't have children yet, then is it a good idea to add some extra beneficiaries, like your siblings or parents, just in case you don't get around to having any children!
  
  If you have already got children and maybe even grandchildren, then it is okay not to add in a lot of extra beneficiaries. Remember, the Settlors can always add in more beneficiaries later on if they need to.

  This hint is provided by Cavell Leitch.

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This document has been prepared by Cavell Leitch