7.1 Trusts%28ppt%29.ppt

7.1 Trusts%28ppt%29.ppt - ACIS 254 Introduction to Trusts...

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ACIS 254 – Introduction to Trusts and Estate Planning Introduction to Trusts Taxation of Trusts Suzy Morrissey Associate, Taxation Services BDO Spicers - Christchurch
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What will we cover? Introduction to Trusts: What is a trust? How is a trust established? What do we use it for? Taxation of Trusts Types of trusts Settlor regime in NZ Distributions from trusts
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What is a trust? From common law (Pettit): A trust is “an equitable obligation, binding a person (who is called a trustee) to deal with property over which he [she] has control (which is called the trust property)…for the benefit of persons (who are called beneficiaries) of whom he [she] may himself [herself] be one, and any of whom may enforce the obligation…”
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Elements of a trust Definition introduced terms which are key elements of a trust, without which a trust does not exist: Trust property Trustee Beneficiaries Obligation
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Elements of a trust Trust property Needs to have some property settled on it Can be nominal amount Further property may be settled on trust during its life Trustee Appointed in trust instrument Duties to properly invest trust funds Can be individual or company
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Elements of a trust Beneficiaries Any person or company or another trust Specific and general beneficiaries People that don’t exist yet i.e. children and grandchildren Often include a charitable entity Obligations Trustee to act in best interests of beneficiaries
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Why use a trust? Separate legal ownership of assets from their beneficial enjoyment: Asset protection Income splitting Trust is not a separate legal entity However, trust recognised as a taxable entity and taxed separately from settlor, trustee and beneficiaries But: set up and maintenance costs and reliance on trustees
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Formation of a trust All elements are required Settlor – person who creates the trust Orally, in conduct or in writing (clear intention) Intention, Subject Matter and Object required If during life time, inter vivos trust If under a will, testamentary trust and settlor is then called the testator NZ operates a settlor regime – this is a key figure (more later…)
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Types of trust Fixed trust Fixed number of beneficiaries and amount of each share determined Discretionary trust The family trust – very common Trustees determine to which beneficiaries distributions are made and how much Can apply to income and capital but check trust deed
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Gift Duty Settlor sells property to a trust, trust owes the purchase price (debt) to the settlor Settlor can: Forgive the debt or
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This note was uploaded on 12/23/2009 for the course BCOM ACIS 254 taught by Professor Alistairhodson during the Spring '09 term at Canterbury.

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7.1 Trusts%28ppt%29.ppt - ACIS 254 Introduction to Trusts...

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