As a parent, you want the best for your children. When they have children of their own, that extends to your grandchildren.
Protecting their financial interests is one way in which you can help them face the uncertainties the future may hold.
A family trust, with carefully considered trustees, can protect the interests of your children and grandchildren in the long run.
Under a discretionary family trust, trustees can choose when they provide for beneficiaries, during the trust’s lifespan.
For instance, if the trustees think a child or grandchild is too immature, a spendthrift, or in a relationship that puts their inheritance at risk of a property claim, the trustees may decide not to distribute from that trust at that point in time.
However, the situation is a little different when it comes to the trust’s vesting date - that is, when the trust ends. At that point, those parties listed as final beneficiaries are entitled to receive a distribution of the assets which remain in the trust.
In New Zealand, the vesting date of a discretionary family trust is typically set 80 years from the date the trust is settled, although a trust deed will often permit the trustees to reduce this period by unanimous agreement.
The structure of a discretionary family trust can provide more flexibility and protection than property held under a Will for children and grandchildren and is well worth considering.
Seeking sound legal advice and choosing trustees wisely can give you and your family peace of mind that the interests of your loved ones are protected today and tomorrow.
As part of its Library Law Series, Lyon O’Neale Arnold is holding a free legal seminar on Family Trusts at 5.30pm, August 8th, at Tauranga Library. To register phone 07 577 7177 or email firstname.lastname@example.org.
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