Protecting Your Loved Ones: The Power of Trusts
Introduction:
Welcome to the first blog in our series on asset protection and estate planning. Today, we'll explore the story of Jim and Gail, a couple who faced unforeseen challenges after winding up their trust. By understanding their situation, we can highlight the importance of maintaining your trust for the benefit of your loved ones.
Example Scenario:
Jim and Gail had established a trust to safeguard their assets and protect their daughter, Prue, from potential claims in the future. However, they found the administrative requirements of the trust to be overwhelming, leading them to wind it up. Instead, they prepared a new will that left all their assets to each other and, ultimately, to Prue.
Consequences:
Unfortunately, their decision had unintended consequences. Prue, who had moved in with her partner Bruce 4years before her parents passed away, inherited their assets, including the family home. Prue and Bruce moved into the home. The home became relationship property, and Bruce was entitled to a 50% share, even though he hadn't contributed to its acquisition. Eventually, Bruce formed a new relationship, forcing Gail to sell the home to settle his share. Had Jim and Gail retained their trust, it would have provided a protective shield for the home and Prue's inheritance. Bruce would have received nothing.
Takeaway:
Jim and Gail's story emphasises the significance of carefully considering the long-term benefits of maintaining your trust. By keeping your assets within a trust, you can ensure enhanced protection against unforeseen circumstances, safeguarding your beneficiaries and their inheritances. Jim and Gail could have simplified their Trust by sellings its investments to them, the Trust lending them the sale price secured by a Deed of Loan, and keeping the home as the Trust’s only asset. In that way the Trust could be made non-active with Inland Revenue, without accounting or tax returns.
Stay tuned for our next blog, where we'll explore another real-life example that highlights the potential risks of not having a trust-based estate and asset protection plan.
Remember, at Ross Holmes Virtual Lawyers Limited, we are committed to providing tailored solutions and expert guidance to help you secure your financial future.
