Forum Archive Index - November 2001

["Mark Hubbard" <mhubbard@es.co.nz>]

> Oh, I don't know re the Family Trust stuff - its all become very trendy
> but in fact I've found having my own company is far cheaper, easier
> administratively, more flexible and there aren't any silly time limits in
the
> event of death etc. I'm with Mary Holm on that one.
> Still, Martin Hawes managed to make a good living out of it while the fad
> lasted......
> Some people believe anything they're told by "experts" instead of
investigating
> for themselves.


I'll take the time out to wade briefly into this one. Whether you use
company or trust structure, depends solely on what your goals/objectives
are.

The company structure will save you from the 39% personal income tax rate,
although, unless you pay voluntary tax payments in good years, will expose
you wholly to IRD Use of Money Interest (which you are only  liable for
personally from about $95,000 provisional income). Note that you would want
to be using a Loss Attributing Qualifying Company (LAQC) so that in bad
years you can offset your losses against your other income (otherwise the
losses are locked in the company), also the qualifying structure allows you
to distribute capital gains as they are earned (otherwise the only way to
get capital gains out of the company is by liquidating it). But the company
structure will not save your estate from death taxes, or from government
asset testing in the case of long term care, etc. If your objective is to
protect your wealth from the government, and pass your assets down to your
children, then you can only do this via a family trust. Also, trusts are now
invaluable given the repeal of the Matrimonial Property act and the
institution of the new legislation replacing it, again, to ensure that your
children are provided for should you be beyond your first marriage.

Different horses for different courses again. Trusts certainly do have a
very important place - DEPENDING ON YOUR OBJECTIVES.




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