A couple set up a family Trust, as the wife owned her own business.  Their lawyer had told them when they set up the Trust that they should have annual meetings of the Trustees of the Trust to make sure their Trust wasn’t determined to be a ‘sham’ Trust in the event of a challenge from someone suing them personally.  They weren’t sure what sort of things they should discuss at annual meetings, and how this should be recorded.

There is no set wording for an annual resolution for a Trust, nor a set agenda as to what should be discussed, as this will depend on the nature of the Trust, and the assets held.

However, here are some matters that you would generally discuss and confirm at your annual meeting and record in minutes and/or a resolution:

  1. The property or other assets that the Trust holds, and noting anything that has been sold or purchased during the year (noting that this should also be recorded in a resolution at the time of purchase if it is a major asset such as a property);
  2. The insurance the Trust holds for property it owns;
  3. Any guarantees, mortgages or loans that the Trust remains liable for;
  4. Consideration of the needs of the beneficiaries of the Trust and whether the Trust will make any distributions (payments) of Trust assets on that basis;
  5. If the Settlors (those who set up the Trust) are living in the Trust’s property, that they may continue to live in the Property in exchange for paying outgoings in relation to the Property;
  6. Confirm that any transactions proposed by the resolution are in the overall best interests of the beneficiaries;
  7. Approve the Trust’s annual tax return, or confirm that the Trust will not file a tax return if it has been notified to IRD as a non-active Trust.

It is essential that you document all activities of your Trust, as the assets owned by Trusts are no longer your personal assets.  Having, and recording, annual meetings is one way to guard against your Trust being ‘busted’ or being determined by the Courts to be a ‘sham’ Trust in the event of a challenge to the Trust.

 

Claire Tyler

 


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