Westlaw NZ Delivery Summary
Request made on:
Friday, 20 March, 2015 at 22:17 NZDT
Content Type:
Title
Delivery selection:
Number of documents
Westlaw AU
TChe01 Checklist Establishment of a trust
Current Document
1
delivered:
Copyright 2015 Thomson Reuters New Zealand Limited
Forms & Precedents
TChe01 Checklist Establishment of a trust
Precedent Type:
Checklist
Jurisdiction:
New Zealand
Last Reviewed:
August 2012
Document Path:
TChe01 Checklist Establishment of a trust
Trusts - AdministrationTrust Forms
1. Obtain instructions to establish a trust:
(a) Describe to client what a trust is and explain what a trust can do;
(b) Discuss the benefits of the trust and its inter-relationship with Wills or other structures such as a
company.
2. Write to and/or meet with the client. See the memorandum regarding trust formation (Trust11). This can
be sent to clients for their information and can also be used as the agenda/checklist for your meeting with
the client. The memorandum:
(a) sets out the legal structure of trusts generally and in particular key issues of the trust precedents
such as defining the beneficiary class, powers of appointment and removal of trustees; and
(b) introduces the concept of selling an asset into the trust, establishing a debt back, and beginning a
gifting programme.
3. See also the Wills Instructions Checklist (Will01). This is a questionnaire that can be sent to a client to
obtain family and financial details. It can also be used as a reminder checklist for your interview with a client,
whether for a trust or a Will. Consider:
(a) the effect of a trust and the transfer of assets into the trust on the clients existing Will;
(b) a new Will made after the trust has been established can be used to forgive a debt owed by the
trust to the client.
4. Once instructions received to establish the trust, decide which trust precedent to use:
(a) Settlor Excluded Trust (Trust01). Review the commentary on this trust option;
(b) Settlor May Benefit Trust (Trust02). This will typically be used for the majority of family trusts with
an independent trustee. Review the commentary on this trust option.
5. The practitioners completing the trust deed should take time to familiarise themselves with the
commentary relating to the trust document selected. In particular:
(a) the discretionary beneficiaries and how widely or narrowly they need to be selected and defined;
Friday, 20 March, 2015 at 22:17 NZDT
Page 2
Forms & Precedents
(b) consider and resolve with the client whether to retain the ability to appoint or remove discretionary
beneficiaries;
(c) understand the issues associated with the power to vary trusts;
(d) the concept of an ineligible appointee and whether it should be used;
(e) familiarise themselves with the powers to appoint or remove trustees; and
(f) resolve settlors wishes and vesting day issues.
6. When drafting the trust deed, see additional clauses (Additional Clauses for Trust Deeds), for example:
(a) Retirement of trustees;
(b) Variation; and
(c) Removal of trustees.
7. If a discretionary family trust is not required, but merely a specific asset trust with specific directives for
holding (for example a residential property by a nominee) then see declaration of trust and indemnity
(Trust15).
8. The trust deed once drafted can be sent to the clients for review or to be discussed with the clients at a
meeting. The trustee duties guide (Trust12) can be provided to the clients.
9. When instructions are received from the client to proceed and you are attending to execution of the trust
deed, consider the issue of independent legal advice for spouses, independent trustees, or other parties.
10. Clients establishing a trust may wish to consider a memorandum of wishes (Trust21):
(a) a memorandum is not essential;
(b) drafting of the trust deed, in particular clause 19 for Settlor May Benefit Trust, may adequately
cover the settlors broad wishes.
11. Draft initial resolution of trustees (Trust26):
(a) consider the range of issues in this draft resolution, including matters such as opening a bank
account; and
(b) discussing with the clients or the clients accountant obtaining an Inland Revenue number for the
trust (if required).
12. Consider the first actions of the trust. If you are assisting the client to sell an asset into the trust, for
example selling a house, consider the following documents:
(a) Agreement for sale and purchase, either short option (Trust30) or long option (Trust29); and
(b) Recording the debt back (Trust07).
13. Beginning a gifting regime (Trust09).
Friday, 20 March, 2015 at 22:17 NZDT
Page 3
Forms & Precedents
14. Subsequent annual activity (Trust28A). Annual resolution:
(a) consider the range of issues covered in the drafting, including retention of key assets and
insurance; and
(b) issues of income allocation or retention, issues of distribution.
15. Additional clauses for draft resolutions (Trust28), for example:
(a) Purchase of property subject to mortgage; or
(b) Delegation of trustees powers.
16. Queries that arise during the course of operation of a trust are often answered by reminding clients of
their duties as trustees. Do not hesitate to send out further copies of the trustee duties guide (Trust12).
Friday, 20 March, 2015 at 22:17 NZDT
Page 4
