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Usual yearly trustee obligations

When you sold your assets to your Family Trust, a debt came into being. This is a debt, which is owed to you by the Trust. As the Settlors of your Trust you are forgiving that debt on a yearly basis at $27,000.00 per person per year.

On a yearly basis we trust lawyers prepare the necessary Gift Statements and Deeds of Reduction of Debt to support those transactions. We discuss these with our clients and witness those documents when they come in to sign them.

Part of our yearly activity is also to review and assist in the completion of a Minute Book for the Family Trust.

When we review trust matters we ask what transactions have taken place during the past year. It is important to do this when Settlors of a trust have placed monies or other Assets into their Trust.

We must ensure that a Deeds of Acknowledgement of Debt is set up to record this. If this is not done the Settlors will pay 33% gift tax on such movements of assets into your Trust.  On the other hand it is also conceivable that trustees will have to pay 33% income tax if IRD regards the transfer of asset into the trust as income for the trust! That is why this record of the advances or settlement of property is extremely important for all trustees. They can be held liable if it is not done

Likewise they must also record all payments, called distributions, which have taken place to beneficiaries of their Trust. All trustee decisions are set out in Resolutions and recorded in the minute book. These are the activities we assist with and complete in the minute book during the visit to our office.

To make the visit to our office worthwhile we ask the Trustees to prepare and to think of the following points of Review for their trust:

• What assets or monies have you transferred into your trust during the last financial year?
• Have you paid off any loans or made loan repayments of any kind for loans against the property belonging to the trust?
• Have you increased any of the loans relating to those properties during the past year?
• What income trust assets have generated in the past year?
• What expenses have you paid for trust activities either out of your own pocket or out of trust monies?
• What payments have taken place of trust monies during the year to yourself or other beneficiaries?
• Are the properties in the Trust insured?  Are the loan repayments by others than Trustees also covered by insurance?

We ask our trustees to book in with our office for their Review Meeting and to bring along their Trust folder with their last minute book, and financial statements for their trust for the past tax year

Contact us to discuss your family trust requirements.
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