Kia ora koutou katoa,
Trusts are fantastic tools for asset separation and protection — but only when properly maintained!
In March this year, the Supreme Court made a judgement in the Clayton v Clayton case which has the potential to affect many Trusts. In brief, the Court decided the power to appoint and remove beneficiaries combined with other personal powers in a Trust Deed could amount to relationship property since the person who holds these powers is not constrained by any fiduciary duties (a duty to act solely in another party’s interest). The Court found that the value of the powers Mr Clayton held in relation to the Trust was equal to the net value of the Trust assets.
Two clear points emerged from this case:
- For a Trust to be effective there needs to be a clear delineation and transfer of powers from the individual; and,
- It is strongly recommended that a section 21 ‘Contracting out agreement’ (prenuptial agreement) be entered into, which may safeguard against claims made on Trust assets.
Trusts can get complicated but our team have the knowledge and expertise to offer you advice at every stage of your Trust – from setting it up, to making sure your Trust meets your goals as well as compliance standards. With our new TrustGuard service, we will do a comprehensive review of your Trust and provide advice to help make sure your Trust is doing what you want it to do and is complying with best practice.
Perpetual Guardian CEO