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Education and Welfare Issues

In many cases the primary aim for you as Settlor will be to preserve Assets to look after yourself, your spouse and your children. As you become older and your children have their own kids, many of you may develop a keen interest in the wellbeing of your grandchildren. You may wish to ensure that proper housing, excellent health and appropriate education is available to them. 

When your Family Trust is  being set up, your  trust expert should already look ahead, and ensure that a provision for the welfare of grandchildren and possible others is made.  You may even wish to have a say in the schooling and tertiary education of your grandchildren, during your lifetime and after you have passed away.

This should not be viewed as a way in which you would want to rule the lives of your descendents. Rather it allows you put in place Arrangements for educational aims and improvement of the lives of the chosen Beneficiaries in your family. It gives you a lasting input through your Directions and Wishes as to how the Assets or the Income from them is going to be applied to do that.  In most cases the Trustees, who will usually be your children, will have a discretion on how to act and distribute funds, when you have become incapacitated or when you have died. You have the ability to guide your Trustees however, in how they fulfill their duties. You set up the rules in your Deed of Trust and guide them in your Wishes, Letter of intent, DVD recording and direct  them in your last Will.  The Trustees must then put this in practice and make decisions with that knowledge, according to their own discretion.

Charitable Causes

   Many Settlors have a strong desire to provide for  the Welfare of others besides close family members. This can also take place in a Family Trust, but it must be done with great caution. Most Family Trusts are set up and run for close family members of the Settlor of the Trust. Any change from that when a distribution is made which ignores the List of beneficiaries set out in every Deed of Trust will be  assumed to be against the Rules - Ultra Vires - and  possibly cause great grief and personal liability for the Trustees of the Trust. The listed beneficiaries will rightfully complain that their entitlements set out in the Deed are diminished by such distributions. It is therefore of extreme importance that the naming of charitable or religious institutions as Beneficiaries is done in the right way.

 Furthermore it is also of great importance for tax purposes to make distributions to the appointed Beneficiaries. If this is not done then taxation penalties will arise for all the distributions which have taken place in the past. It may seem a kind gesture to make a sum of money available to a Charity by means of a Family trust, but it could turn into a financial nightmare for both trustees and Beneficiaries. It has to be planned well and with expert taxation advice to ensure that it can take place according to the wishes of the Settlor. With knowledge of the above it is therefore essential that your trust expert has a close look at your Deed of Trust in conjunction with the Memorandum of Guidance to the Trustees and your Last Will to ensure there is no obstacle, that could cause a Distribution or Gift to a Charity to fail.

At Sanctuary TrustLaw we are aware of these obstacles, and how to overcome them. We can ensure that others will share in your charitable benevolence as Beneficiaries.


Charitable  Foundations to support local communities

An example of an independent not-for-profit  and place-based charitable foundation that seeks to grow a permanent endowment  of locally-held funds to support local communities is the Auckland Communities Foundation.  This is a trusted vehicle through which individuals, families, businesses, groups of like minded people and the community invest their philanthropic  dollars to build a permanent legacy in the communities they serve.

Please read more at www.aucklandcf.org.nz

Contact us to discuss your family trust requirements.
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