I am need property advice regarding puitting my property into a Family Trust and the issues related to my current

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Customer: I am need property advice regarding puitting my property into a Family Trust and the issues related to my current mortgage
JA: What steps have you taken so far? Have you prepared or filed any paperwork?
Customer: I havent done anything yet
JA: Where is the property located?
Customer: In Mangere East Auckland
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: I am struggling financially to pay the mortgage so this is an option I am considering
Answered by Chris The Lawyer in 57 mins 9 months ago
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Chris The Lawyer
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Chris The Lawyer
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Chris The Lawyer
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Chris The Lawyer, Expert

Hi My name is ***** ***** I am a New Zealand lawyer based in Wellington with more than 42 years of experience. I am here to help with your questions.

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Chris The Lawyer, Expert

Why do you want a family trust?

Customer
Hi Chris I currently own two properties however due to financial hardship I am considering selling one property and putting the other property into a Family Trust . My mortgage is with BNZ and what would the process be to transfer the mortgage from my name to the Family Trust. I want the Family Trust to include my three adult children and myself as Trustees.
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Chris The Lawyer, Expert

Family trusts do not have real advantages and you do need to consider whether that structure is really useful. It would have its own tax liability and can be inflexible. If you are of the age where you may look to needing rest home care, then WINZ will set aside the transfer into the trust.

If you still want to proceed you will need to set up the trust, and transfer the property. You may be subject to the brightline test if this property was owned less than 10 years. You would need to refinance and the trustees would need to sign the mortgage

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Chris The Lawyer, Expert

The pros of having a family trust

The main advantages of having a family trust is to protect assets for beneficiaries from their creditors, relationship property claims, or if you believe they are unable to manage their financial affairs. They also serve to minimise or prevent claims against your estate. You can be a trustee and a beneficiary of your trust, so a trust may be useful to protect the family home from a risky business venture for example. Trusts can also be used to protect money set aside for special purposes.

At your death, the Courts can overturn or rewrite provisions in your will if they consider family members have been disadvantaged, but they cannot do this to a trust. Essentially, this ensures your estate continues to benefit your named beneficiaries regardless of their individual situations.

The cons of having a family trust

The most significant disadvantage of having a trust is that you lose ownership of the assets you gift to the trust. Even though you can appoint trustees and act as a trustee, the assets have to be used in accordance with the trust deed. If you continue to treat the assets as your own, the trust can be challenged as a sham.

Next there are establishment, accounting and administrative costs to consider. As a legal entity, the trust will have to file an annual tax return if it generates income. The cost of establishing a trust depends on its complexity and the assets it holds. You’ll need to weigh up the benefits of having a trust against the ongoing costs.

Customer
Hi Chris Thank you for your very thorough response I will consider all these points before I make my decision.
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Chris The Lawyer, Expert

Thanks-let me know if you need more help

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