Professional Trustee & Estate Planning Services

Gilligan Rowe & Associates

Professional Trustee & Estate Planning Services

professional trustee

Our Professional Trustee and Estate Planning Services Division helps you deal with running your trusts and sorting out your estate.

We like to say that ‘life is a game of two halves’, and asset and estate planning is like this. 

Initially in the first half of the game of life, you need to ensure your structures are created and this is completed by our Asset Planning Division. But then in the second half of the game, you need to ensure your structures are run correctly and your estate is planned as you would like it. 

First half of the game 

Establishing the family trust

One of the most common private and business ownership structures in New Zealand is a discretionary family trust.

The advantages of trusts are broad and flow across asset protection, estate planning and taxation benefits. At GRA we are dedicated to forming and managing family trusts to help you gain these advantages.

Under trust structures, you will frequently see:

  • The family home being held by a family trust
  • Shares in private companies held in a separate trust
  • The use of GRA's independent professional trustee
  • Term life insurances transferred to the trustees of the family trust to hold on behalf of the beneficiaries
  • New Wills completed under which the family trust is the recipient of an individual’s assets
  • A memorandum of wishes (MOW), where our clients describe to the trustees what they wish to have happen after their death.

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Creating an estate plan

Two things are certain in life – death and taxes. At GRA we can help you deal with both of these issues.

Estate Planning (Excerpt from Trusts and Tax Webinar, October 2022)

When you set up a trust, you will need to create an estate plan. This means specifically that you will need to make a new Will. This is because your old one will become largely redundant.

One matter that you will need to deal with in your new Will is the power of appointorship.

When you create a trust, you are likely to hold the power of appointment. This power will give you the right to hire and fire trustees. If you enjoy this power, you need not fear losing control of your assets to a third party. Moreover, you can change the trustee easily using such power if you change professional firms.

When you die, you need to nominate in your Will whom the power of appointment will move to. Remember, whoever is going to take your place as an appointor of the trust will enjoy the right to hire and fire trustees and will thus have a high degree of control over the assets of the trust. For this reason, you need to carefully choose who will hold this important position when you die.

We recommend that you do not leave your lawyers and accountants in charge of your trust fund by giving them the power of appointorship. Over the years, we have seen many examples of accountants and lawyers acting slowly when managing the affairs of the clients they have control over, which can lead to overcharging. When this occurs, frequently beneficiaries can do nothing about the matter because they lack the necessary legal control. We have a term for this sort of behaviour. It’s called “gravy training” and we don’t like seeing it.

A way to avoiding gravy training behaviour is to ensure the control vests in people you trust. Often these are the final beneficiaries of the trust, being your children. Your final beneficiaries can still instruct lawyers and accountants, but they will have the ultimate control if you carry out our recommendation. Consequently, if those professionals are not performing and are intent on getting on the gravy train, your final beneficiaries will have the legal ability to control them and, if necessary, dispense with their services and put in new professionals who will complete their work quickly and efficiently.

Another important document that you will need to put into place when you set up a trust is called a memorandum of wishes. This document is an informal letter to the trustees that remain in control of the affairs of the trust after you die.

At GRA we make several recommendations in respect of a memorandum of wishes. One particular suggestion we have relates to specifying the age and maturity your children must be before they become entitled to the assets of the trust. You will make this choice and give this direction in your memorandum of wishes. A 21-year-old with $1m+ inheritance is not, in our view, ideal. Most 21-year-old children become spoiled with an early inheritance and squander it, later to regret not being more frugal. For this reason, careful thought has to be given to this important matter.

We in fact recommend 30 as the specified age for distribution to occur, leaving your children until then to mature and grow a respect for the value of capital and wealth. Whilst this is a personal matter, generally our view is later (30+) is better for inheritances to flow through, as part of someone's financial education is growing up poor. When this occurs, the lesson of the value of a dollar is understood and appreciated.

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Second half of the game 

Running the trust and getting a professional trustee

When you create your trust, you have an option of having an independent person or entity act as your professional trustee. A professional trustee is a person or company that should help you run the trust correctly. That means they need to have the education, skill and experience to understand trust matters and be willing to guide you and help you make decisions in relation to your trust. They are not a beneficiary of your trust and so are independent. This gives them the ability to stand back and view the trust affairs in a professional manner.

Whilst it is not necessary to have an independent professional trustee to have a valid trust, we strongly recommend you do have such a person or entity, as they can add enormous value to the trust. They should be a person of sound character and sufficient maturity so they can take on the task of discharging their trustee duties in order to ensure the trust is not viewed by a court as a sham.

Utilising independent professional trustees in your trust is something that GRA recommend as best practice. In short, the law is moving towards supporting the position that the inclusion of an independent professional trustee makes your trust extremely robust and difficult for a creditor or a spouse to attack as a sham. Recent court cases, including Wilson v OA, show the judiciary supports the position that having a lawyer or accountant in your trust as your independent professional trustee makes your trust very strong. But a word of warning. Those independent professional trustees must do their job properly.

At the time of writing, GRA are the independent professional trustee of over 1200 trusts in New Zealand and provide daily routine support to trust clients by helping them:

  • document transactions in minutes;
  • make investment decisions;
  • hold AGMs;
  • jointly hold assets on trust for the beneficiaries; and
  • set up estate plans, including drafting Wills and memoranda of wishes.

Professional trustee fees

With the benefit of the security of a professional trustee comes the cost of its professional services. Typically we charge a fixed fee annually for our membership of $550 + GST every January, and on top of this on a time and cost basis at a rate of $250 + GST for other work.

Buying a new property, for example, might cost $250-$350 + GST. In return, you get strong record keeping, governance, and your trust is safe.

Click below to request more information about our Professional Trustee Service.

Summary – your game plan

Setting up trusts and running them is a very personal thing that needs tailoring and advice as to the asset protection, estate planning and taxation ramifications. Governance and succession after death of who controls and runs the trust also need careful attention. To ensure you have your game plan in place and up to scratch, you should contact us. We have helped many people with all aspects of this process and we invite you to get in touch for assistance with setting up and running your structures.

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The whole course was great. Super informative. - David M - June 2017

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