Derek owned a small shop in the suburbs of Wellington.  Earlier this year, he found himself unable to pay creditors and had to close his business.  He ended up being sued by creditors of the business who were able to claim part of the family home that he owned with his wife.  If only he had protected their assets with a Trust, this could have been avoided.

Reasons to set up a Trust include:

• Business failure – as above, unpaid creditors may try to claim your personal assets;
• Getting sued – if you are in the business of giving professional advice or providing professional services, a disgruntled client may claim damages against you for negligence;
• Relationship breakdowns – if you owned assets before entering a relationship and did not protect them they may be subject to the equal sharing presumption under the relationship property laws;
• Wasteful children – assets you worked hard for can be wasted away by frivolous children or subjected to relationship property claims from your children’s partner;
• Rest home costs – your entitlement to subsidies is measured on assets you personally own, which generally does not include assets owned by a trust.

Now is an ideal time to set up a trust now as changes to gift duty mean that the whole value of your property can be “gifted” at once.  Talk to a lawyer about whether a trust would be appropriate for you.