Ring-fencing/Consideration of Trust

Ring-fencing/Consideration of Trust

For many years there has been a common trend of having a rental property company. However, recent legislation changes prohibiting the distribution of losses are having repercussions on business structures. It may be worth considering if it is worth remaining subject to the Companies Act. It may be more prudent to consider your family's wealth for future generations. While many people understand the use of trusts to pass wealth through the generations of a family, it is perhaps more practical to put your investment properties in a Trust than a Company. This has the benefit of allowing Trust distributions to change as appropriate rather than being fixed into a set percentage split as per company and partnership arrangements. As with everything in business individual circumstances vary.

Trust Review

With the changes to Trust legislation, it may be worth reviewing what you are paying your Trust advisor for, or more appropriately what you are not paying for. Just the other day we had a client talk about the Trust their legal representative formed for her Mum and Dad. Dad ended up in a home and WINZ requested the Trust documents. There were some accounts and a Trust deed. However, very quickly it became apparent that the trust Deed had never been reviewed for old clauses. Combined with insufficient ongoing minutes and records it was very quickly deemed to be a sham and Mum and the kids are left paying for the residential care.  One of the properties has been sold to finance this and who knows how long Dad will hold on and at what cost. Trusts are a living thing, and they do need to be fed and cleaned. Many Trust Advisors offer different levels of service, ranging from nil through to a full Trusteeship where they stand beside you fully liable for all Trust expenses. We encourage you to talk with your Trust Advisor and work out what you are paying for and what you actually want. If you feel your current Trust Advisor is not up to the task, we are happy to work with you to ensure your family’s wealth is well protected.

Changing Accountant

We’ve had numerous inquiries from disgruntled clients of Lower Hutt Accounting firms that have purchased the client base from a retiring accountant.  After a review, the fees are increased substantially. In most cases, we’ve been able to offer those clients fees that are similar to the original accountants and in some cases, we have been able to reduce them, so if you find yourself in this situation I suggest you give us a call.

HAVE WE GOT YOU THINKING?

Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz

Keep an eye out for March’s article!

TAX DATES TO REMEMBER

• 20 February. 2020 - monthly employers PAYE payment…
• 28 February. 2020 - Bi-monthly GST Return for Dec/Jan 2020…