Why a Trustee Company is the Best Option for your Trust
If you get a family trust set up, you can choose who the trustees of that trust will be. In the past, this has usually been the two settlors (often husband and wife) and sometimes an independent personal such as a friend, lawyer or accountant.
The option I prefer is to have a trustee company instead. A trustee company is a standard non-trading company and acts as a trustee of a trust. The directors of the company are the settlors. The shareholders of the company are the settlors and the independent person (if any).
The reason for this is simply that this will save you a lot of time, effort and cost later down the track when you change trustees. For example, when a trust purchases a property, it is the name of each trustee that is listed on the certificate of title (not the name of the trust). When a trustee changes, a lawyer is needed to update the certificate of title with the names of the new trustees and any mortgage documentation may also need to be updated.
If the trust has a trustee company as the sole trustee and a director or shareholder of the trustee company changes, all that needs to be done is a share transfer form and/or a resolution to appoint or resign a director. These changes can be made very easily and at very little cost. Even though the shareholders and directors of the trustee company may change, the trustee company will still remain as the sole trustee of the trust meaning that no change is required to the certificate of title.
So, what is the chance that a trustee would ever need to be changed? The answer is that almost all trusts will need to change trustees at some point. Common examples of when trustee changes are required include:
- Your children take over your trust when you pass away
- You change accountants/lawyers as you're not happy with their service
- You change accountants/lawyers as you relocate out of town or if they close down or sell their business
- You may need to change if you move overseas
- The death of any trustee
- Your marriage or relationship comes to an end
Having a trustee company should only cost you the initial setup cost (we charge $299 incl gst) and the Companies Office annual return filing fee of $45 incl gst each year. No income tax return will be required as the company will get non-active status from the IRD.
Disclaimer: The above article is general in nature and we recommend you seek professional advice tailored to your specific personal situation.