A huge number of New Zealanders set up family trusts, usually with a gifting programme in favour of their trust so as to transfer assets. We have seen estimates as high as 400,000 New Zealanders who have done so. By these means, assets are transferred into their trust, which cares for them during their own lifetime and their surviving spouse or partner thereafter, and then has funds to provide for family members.
Trusts are used for a variety of asset planning purposes. One of their key benefits and a purpose for which they are widely used for is protection against creditors, to ring-fence and protect personal assets if a business or individual is liquidated or declared insolvent and family reasons. Protection of trust assets from a residential care subsidy perspective is the focus of this article.
The manner in which your trust has acquired assets is the crucial question in ensuring protection against creditors from a residential care perspective. While certain recent or otherwise fraudulent disposals made to the prejudice of creditors may be set aside, good faith disposals to your trust may not be affording you the protection you think that they are if your disposal and asset transfer has been structured on a gifting basis.
A structured gifting programme of assets to your trust may result in your assets remaining within your current or future creditors grasp. It’s important to bear in mind that creditors aren’t just your current lenders, you may incur substantial claims, liabilities or debt in the future which may not currently be foreseen...
All of the ASCO Legal team keep up-to-date with their respective practice areas. Click on each specific article to learn more about the team members involved.
Follow us on Facebook now so you're alerted to our updates and articles as we publish them.
The information posted on this website is prepared for a general audience, without investigation into the facts of any particular case. This information is no substitute for legal advice and does not create a lawyer-client relationship; you are advised to consult with a lawyer on any legal issue.