Trusts - The Big Picture

For some, the increase in the trust tax rate from 33% to 39% has prompted them to ask the question – should we wind up our trust?

Rather than looking at the purpose of having a trust with a narrow tax lens, it may be of benefit to consider your circumstances more broadly and ask whether it is time to actually alter and even increase the role of your trust.

A trust provides a number of benefits such as asset and relationship property protection, succession and a way to manage complex family relationships. So instead, it may be worth asking:

•    Do you have the right trustees, both now and on your passing.
•    What happens on your death (is your will up to date), should the trustees change if you pass away.
•    Who should benefit under the trust, in what proportions and is that recorded.
•    If you make a distribution to your adult children and their relationship breaks down what happens – are risks mitigated.
•    In what circumstances should the trust be wound up.

A will sets out how your assets should be dealt with in the event you pass away. A trust can survive beyond your death, hence it is important that they continue to function and operate as you intend - and it is better to sort this while you’re here.