Dissecting Family Trusts

According to the New Zealand Law Society, the numbers of family trusts are picking up from the last couple of years. According to the law society “Trusts are becoming an increasingly popular way of protecting property and managing assets.”

Now, when we say trusts, that can cover a whole lot of things but basically, a trust is a legal arrangement between the grantor (creator of the trust), a trustee (one legally assigned to manage the trust) and the beneficiary or beneficiaries (the one who will benefit from the trust).

Family Trust Beneficiaries must only include family members, relatives or in some cases, close friends. Everyone can be a beneficiary if he or she is related to the grantor by marriage, blood or law.

Family Trusts

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The purpose of a family trust is to provide financial security and transfer assets (mostly investment) to beneficiaries. To be subjective, it is a legal arrangement that assures all assets of the grantor benefits his or her beneficiaries with his or her death.

There are different classifications for a family trust. One is the living trust, wherein the grantor is still alive. This is also referred to as the inter vivo trust. When the trust was created in the grantor’s last will, this is what we refer to as testamentary trust. 

A testamentary trust is an irrevocable trust meaning the grantor can’t any longer revoke or cancel it. From that, we go to the revocable trust. It is the opposite of an irrevocable trust, meaning you can cancel or revoke it.

What can be covered?

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Family trusts can cover a lot of assets, mostly financial and property. Let’s say, your father wants to leave his small duplex in Auckland to the eldest child, a trust will take care of that. Let’s say he wants to leave his apartment for rent to the youngest child, a trust will take care of that.

A family trust here in New Zealand is also one way to ensure your family members get financial security or even a business asset when you are gone. For more content, subscribe to our blog.

Your Ultimate Guide to Buying Property in New Zealand

Buying a property in New Zealand looks easy but it is not. Just because you have the money to buy the property you like does not mean it’s a great decision. Well, in some cases there is but it is important to do your research and learn about the property market cycle.

To help you out, here is part 1 of the blog series “Your Ultimate Guide to Buying Property in New Zealand.”

Learn about the Property Cycle

Featured image Your Ultimate Guide to Buying Property in New Zealand Learn about the Property Cycle - Your Ultimate Guide to Buying Property in New Zealand

First and foremost, you need to learn all about the property cycle. The property cycle is a pattern in the real estate market that helps property market professionals and buyers navigate the industry.

Think of it as a schedule wherein the property market is experiencing a particular trend. In one part of the cycle, the property market is affordable meaning buyers are on a roll. There is also a part wherein property prices are high, so investors and sellers make more money.

To put it all in perspective, let us name all stages of the property cycle, there are four by the way.

The Boom

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In this stage, property prices are better, meaning they are higher. But that does not mean that buyers refuse to buy. The boom is also a time where property optimism is back meaning despite the higher prices, buyers still find value in purchasing a house.

The boom greatly benefits sellers and investors alike. They get capital gain from an investment they have been managing for many years.

The Bust

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This is when things slow down, property optimism is low meaning buyers are not that active. Properties then tend to stay in the market longer. That would result in a decline in property price.

The Bottom

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The Bottom always comes after the bust. With property prices low, buyers are keener to engage with more financial flexibility. This is the buyer’s time to go crazy and find the best property that suits their preferences and budgets.

The Recovery

Featured image Your Ultimate Guide to Buying Property in New Zealand The Recovery - Your Ultimate Guide to Buying Property in New Zealand

This is when property prices are improving. The market is positioning itself for another boom.

Now, can you determine what is the best stage for you to make your move in the property market?

Know about the law

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Property agents and firms have legal responsibilities towards buyers that they need to observe at all times. This is for the importance of transparency and financial security. However, there are also laws that as a buyer, you must follow. You should hire a property lawyer to help you with legal processes especially with the purchase process.