Trusts are used to ensure your assets are managed for the benefit of your heirs, and whilst you are still alive. However, ensuring your trust is compliant and follows rules – which ensures your wishes are carried out – can be a time-consuming and confusing process.
Too many trusts have been created without understanding what it’s for, considering the end result, or have been left without being updated to the compliance rules – rendering them quite useless and often doing the opposite of what was intended for the beneficiaries.
The six types of trusts are;
- Family Trust – asset protection and succession planning structure.
- Parallel Trusts – two trusts, one for each partner – ideal for blended families.
- Single Trust – used by a single person to separate their assets from future relationships.
- NextGen Trusts – created by parents for the benefit of a child throughout their lifetime.
- Business Trust – asset protection, efficient tax planning and business succession.
- Charitable Trusts – a legal structure which acts as your vehicle for philanthropic giving.
Some trusts are now required to provide more information in their annual income tax return. The new rules (which came into force on 30th January 2021) apply to tax returns for the 2021-2022 and later income years. We can help you figure out if your trust needs to provide the information.
If you are required to comply with the additional disclosure requirements, this means completing standard or simplified annual financial reports. These do not need to be supplied to the IRD. The type of reporting required is dependent on the level of income and value of the assets held in the trust – we can help you determine what you need to do to comply with the new rules.
Additionally:
- Trustees are required to keep the core documents (Trust Deed, variations, records of the trust property, written contracts and accounting records).
- Beneficiaries must be told if they are a beneficiary of the trust, and they must be regularly provided with information about the trust without them needing to request it.
- Trustees are obligated to ensure trust compliance.
If you have an existing Trust, then we can organise a review to ensure it is meeting all the rules. Or if you are thinking about establishing a new Trust, we can set one up for you.
What we do best, is the numbers behind keeping the trust compliant. We prepare the trust financial reports and tax returns. Like personal tax returns, trusts need these documents at regular intervals. We will help you get these done on time to avoid late payment penalties.
