With the growth of multiple relationships and blended families many couples are having to consider ways to ringfence assets and protect inheritances. One option is to establish parallel trusts – so you each have your own trust for your share of the assets.
Who pays for your funeral?
Most Wills have a clause directing the executors to pay funeral expenses as well as other usual estate liabilities. Often there is also a clause saying whether you want burial or cremation. Are these directions binding?
Many trusts may require registration with the United States’ IRS under the FATCA regime
The US Foreign Account Tax Compliance Act (FATCA) has been in force in New Zealand since June 2014. FATCA is a complex piece of legislation established to prevent tax evasion by requiring foreign financial institutions to register and report to the IRS in relation to any accounts held on behalf of US citizens.
All New Zealand entities considered to be ‘foreign financial institutions’ under the FATCA regime should have been registered on the IRS website by 31 December 2014. Continue reading
Following the abolition of gift duty on 1 October, we publish a special edition of Fineprint here.
You may be considering whether to complete your gifting programme in one fell swoop – or perhaps not.
Everyone has their own reasons for establishing a trust, and your own individual situation will be unique to you and your family. Completing your gifting programme in its entirety may not be the best step for you.
Do get in touch with us so we can talk about the best path forward for you and your particular circumstances.
We publish the latest edition of Trust eSpeaking here.
In this edition:
- Let’s give it all way – It’s not that straightforward
With the abolition of gift duty from 1 October 2011 the first thought for most people who have a family trust would be “Let’s give it all away”
- Rest home care – Don’t expect government hand-outs
After gift duty comes to an end from 1 October, one thing will still be clear: you can’t give everything away to a trust and then expect to rely on state assistance because you don’t own any assets…
- Trustee Liability – As vendor under an Agreement for Sale & Purchase Trustees are the legal owners of trust property and are personally liable for warranties given under an Agreement for Sale & Purchase. Trustees should be very careful about giving warranties
- Trusts and tax – The Supreme Court has spoken Using a trust – or any other structure such as a company – to reduce your income is
not straightforward. If you push the boundaries too hard you may end up having to pay a lot more. The latest Supreme Court decision provides a useful warning
The Supreme Court has just released its judgment in the ‘Penny Hooper’ case. This case involved two doctors that worked in their own private practices. They then formed companies for which their family trusts were shareholders. Rather than the doctors receiving the full income they generated – they were paid a salary. The IRD said the salary was significantly below market value (i.e. one doctor went from $650,000 income one year to a salary of around $100,000).
The Supreme Court has said that having a salary set at a low rate to avoid paying tax is tax avoidance. However, if the salary is at a low rate for a legitimate reason (e.g. saving income for the purchase of a capital item) then this is not tax avoidance.
A more detailed summary of the decision follows and you can read the full decision here.
The latest EJ update is available here.
In this issue:
- Trust review
- A commercial property opportunity in Te Awamutu
- New debt recovery service
- Update on gift duty changes
- Stay informed with email alerts from the Edmonds Judd website
If you wish to discuss anything in the EJ update please don’t hesitate to contact us.
Edmonds Judd will be closed for the holiday period from 12:00 pm on Thursday, 23rd December 2010. The office will reopen on Monday 10th January 2011 with a skeleton staff between the hours of 9:00am and 3:00pm. A full complement of staff will be available from 8.30am Wednesday, 19th January 2011.
Have a merry and safe holiday!
This EJ Update includes information about:
- The ‘Legal Warrant of Fitness’ a new and simple survey that ensures that your personal and business affairs are up-to-date
- Changes to witnessing of enduring power of attorney documents
- The Government’s proposal to do away with gift duty
- Changes to the definition of ‘beneficiary income’