increase font size
Would-be trustees must carefully weigh the risks versus rewards of accepting a role on a trust.
New Zealand has about 500,000 trusts, meaning many people – especially in farming where asset preservation is a key issue – are trustees either personally or as directors of trustee companies.
Often a trust is suggested as a way of protecting assets from creditor claims, reducing income tax obligations or gaining access to rest home subsidies.
However, the effectiveness of a trust in those circumstances is lessened when documentation has not been correctly prepared and decisions of the trustees have not been properly documented and supported. Recent court decisions highlight this point.
Trustees needed to be aware that statutes including the Resource Management Act, Goods and Services Tax Act and the Health and Safety in Employment Act impose potential liabilities. Even when indemnified from the assets of the trust, the trustee could face a personal liability if there were insufficient assets to meet the liability.
In fact, the health and safety aspect is one example where liabilities were often forgotten, particularly when a trust is only acting in the capacity of landlord in relation to farmland that it owns. The trustees need to ensure that sufficient steps have been taken to mitigate the risks that might arise on the land and that the tenant is also taking appropriate steps to mitigate those risks via a health and safety management plan.
The duties a trustee has in relation to the beneficiaries of a trust are also expected to increase as a result of the Law Commission’s review of trusts and the recommendations it has made for reform.
Many professional firms are reconsidering whether they want to continue offering trustee services to their clients.
People who remain as trustees must understand the activities the trust is going to undertake, what risks and liabilities they may face as trustees, and take steps to mitigate those risks by taking professional advice.
• Tony Marshall is tax advisory principal, Crowe Horwarth, Dunedin.
Continuing converging of livestock values in respect of Herd Scheme Value (HS) and National Standard Cost (NSC) for dairy cattle presents farmers with an opportunity to review their livestock valuation methods and optimise their operations for tax efficiency, a tax specialist says.
The recent release of the national average market values (NAMV) for livestock presents an opportunity for dairy farmers to reassess the valuation method they are using for their livestock.
It is important for potential trustees to weigh up the risks compared to the rewards when considering whether or not to accept a role on a trust, says Tony Marshall, tax advisory principal, Crowe Horwarth's Dunedin office.
The introduction of a Capital Gains Tax (CGT) could have a negative impact on farm values, especially in the dairy sector, says Tony Marshall, tax principal with Crowe Horwath's Dunedin office.
THOUGH MANY farms are in trusts, Palmerston North Crown prosecutor Ben Vanderkolk believes this creates problems in succession planning.
This year won't be an easy one for the red meat sector, says Meat Industry Association chief executive Sirma Karapeeva.
Farmlands says that improved half-year results show that the co-op’s tight focus on supporting New Zealand’s farmers and growers is working.
Horticulture New Zealand (HortNZ) says that discovery of a male Oriental fruit fly on Auckland’s North Shore is a cause for concern for growers.
Fonterra says its earnings for the 2025 financial year are anticipated to be in the upper half of its previously forecast earnings range of 40-60 cents per share.
Beef + Lamb New Zealand (B+LNZ) is having another crack at increasing the fees of its chair and board members.
Livestock management tech company Nedap has launched Nedap New Zealand.
OPINION: Ruth Richardson, architect of the 1991 ‘Mother of all Budgets’ and the economic reforms dubbed ‘Ruthanasia’, added her two…
OPINION: Why do vegans and others opposed to eating meat try to convince others that a plant based diet is…
