Family Homes at risk
Family Homes at risk
Thousands of families have transferred their home to a family trust to protect it from potential risks in the future. Most of these families share one thing in common – they all believe their homes are safe, when in fact they are not.
The worst thing about this situation is that the vast majority of these families are blissfully unaware there is anything wrong. That is because they have never been told what was required of them after they signed their trust deeds.
Trust management, or the lack there of to be more precise, will be the number one area where trusts will be challenged in the foreseeable future. Why, because at least 75% of trusts are not being managed as they should.
What does a successful challenge mean? It means the trust isn’t worth the paper it’s written on. This in turn means the establishment costs and gifting period have been wasted. But much worse, it means the family home is not protected, not safe from the very risks the trust was designed to protect it from.
Even a trust that only owns the family home requires annual management. At the very least there should be an annual meeting of trustees to review such areas as insurance and maintenance, with decisions being recorded in writing and signed by all trustees. Trustees should also produce an annual financial statement showing the position of the trust, regardless of the assets owned.
“We are concerned at the number of new trustees that have not been fully informed of their responsibilities once the ink has dried on the trust deed” says Mark Maxwell, Chief Executive for Trust Management Specialists - Integrity Trust Limited.
“That’s why we have designed a simple test to at least give trustees an indication of where their trust management is at”. The ‘Trust Bust Test’ is available online at www.integritytrust.co.nz.
Mark Maxwell is Chief Executive and Co-founder of Integrity Trust Limited (www.integritytrust.co.nz), a company specialising in trust management. Mark has extensive experience in the trust industry after a 17 year career with Public Trust where he held a number of senior roles, including General Manager of Charitable Services and National Manager, Trustee Services Development.