In a trust, one person (“trustee”) holds assets on behalf of another person (“beneficiary”). Generally speaking, beliefs have unique special rules established by a written document (“trust deed”) and are frequently used for asset protection and tax planning. Soon, this article will explain how an estate planning lawyer can wind up a family trust and why it is essential for them.
When a trust “vests” or naturally ends its life, it must be terminated or “wound up.” However, there are several situations in which the trustee and beneficiaries may decide to end their relationship and work to remove the Trust early, including the following:
- Trust is no longer required, or its function has been achieved;
- The trustee doesn’t possess any assets anymore;
- Beneficiaries are of legal age to manage their property;
- The Trust’s operating expenses are too high; or
- A court mandates that the Trust be dissolved.
What are the typical procedures for ending a trust?
Planning and paperwork are required to wind up a trust. The trustee must generally take the following actions:
- Adhering to the process outlined in the trust deed;
- Obtaining the formal approval of the necessary parties;
- Identifying every asset held by the Trust;
- Releasing the Trust’s obligations;
- Creating and confirming the Trust’s financial records; and
- Making the beneficiaries aware of the decisions made by the trustee and recording them.
Documents required for winding up a trust
- The IRD number of the Trust (s).
- Your IRD figures.
- If you don’t have them, copies of both sides of your driver’s license and your most recent passports.
- Copies of the most recent rate demands for all properties owned by the Trust (s) and any mortgages recorded against those properties.
- No matter if it’s your house, a beach house, a rental home, a farm, or a business property.
- Whether any of the properties are subject to GST registration by the Trust.
- In the case of beachfront homes and residential rental properties, the date of purchase (if it was within the last five years).
If the property is a residence that is not your primary residence:
- The new bright-line test may result in capital gains tax due if the Trust has owned it for less than ten years: Visit this page for more details.
- According to the bright-line rules, capital gains tax will be due on the sale of the property if sold within ten years of being returned to you.
- If the property is a rental and you have claimed depreciation, you should consult your accountant to determine whether tax is due on recovered depreciation and, if so, how much.
- If the Trust has any term deposits, changing them into your name might not be possible until the end of the term, or you might lose interest in doing so.
- Whether there are any term deposits held by the Trust (s) and, if so when each one matures, term deposits are typically held by the Trust (s) until they mature.
Cost for an Estate Planning Lawyer to wind up a family trust
Costs are as follows for an estate planning lawyer to wind up a family trust
It costs $362.25 per property to sell the Trust’s assets under the agreement for sale and purchase. Rental properties should be sold at market value to reduce capital gains taxes due if they are eventually sold within five years.
The fee for transferring the Trust’s property electronically is $775.00 for the first property and $350.00 for each additional property (so long as the names on the titles are identical). The cost of the subsequent transfer is $775.00 if even one of the names is slightly different.
Conclusion
Your lender will impose a consent fee if there is a mortgage. You may also demand a discharge of the existing mortgage, a new mortgage, and guarantees. You must pay additional fees for these documents (if required).
Deed reversing gifting to you and settling the assets of the Trust: $515.00 for each Trust (if more than one).
Additionally, it would be best if you had a will-based estate plan because your current will leave the Trust in charge of your estates (s).
