Family Trusts – what are your continuing obligations?

Daniel and Lucy set up a family trust ten years ago and transferred their family home to it.  They had been gifting $27,000 each per year to reduce the loan from them to the trust that arose from the transfer of the property to the trust.  After the abolition of gift duty in 2011, they gifted the whole amount remaining in one lump sum.  They presumed they had therefore completed all their responsibilities in relation to the trust and could “rest easy” until they sold the property.

Those like Daniel and Lucy need to be careful that they continue to administer their trust after making a final gift.  There are continuing obligations in relation to trusts to ensure it is clear that the property is owned by a trust and not you personally.  Those include:

• Decision-making – Ensure that all trustees are included in every decision regarding trust property and all major decisions are recorded in writing and signed by all trustees.
• Finances – If the trust has its own income stream, annual accounts need to be prepared and an annual tax return prepared for the trust.  A separate bank account for the trust should be used.
• Trustee meetings – Hold annual meetings of trustees and ensure minutes are taken.

We are able to help with ongoing maintenance of your trust to ensure it is as watertight as possible.