GUIDE TO:
TRUST compliance Review

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This template has been reviewed by trust expert Vicki Ammundsen of Vicki Ammundsen Trust Law, who has put together some slides with information about the Trusts Act 2019 - available under Useful Resources, or download here.

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HELP WITH STEPS

Adding a Trustee

  • You must have at least one person. While this person in the system is designated as Trustee, what you are looking for is the person who knows the contact details of the beneficiaries, and may hold the core documents, probably the “Mum and Dad” that set the Trust up. So the person is likely to be the settlor, and most likely a family member.

  • Listing the actual present Trustees is essential, but the persons in this field may be included because of their knowledge. Include their status in the “role” field. The Survey also gathers this information if it is not on your file.

  • Where do you get this information?  Your client may have told you. Your client tax software may hold the Trustees. The Trust Deed, if you have it is another place (at least for the original Trustees). But the client who you are working for will know.

 

Engagement Letter

  • A document is generated when you click the Letter of Engagement – Review button. You can edit the template to suit your firm (such as the fee), or change this specific engagement. See Editing a Document

  • The engagement letter refers to a guide about Trusts. We use the Kemps Weir guide, but you can choose to use another or your own if you prefer.

  • We imagine that this engagement is with the “Mum and Dad” who set up the Trust

Send the client the survey 

  • When this is completed by the client, you'll get a notification.

  • You may choose to pre-answer or edit some of the questions to better suit your client. See Send Client Survey.

 

Core Documents

  • If all the core documents are now on the file, then the answer is YES.  But much more likely is NO  

  • This brings up a drop down of the documents that are likely missing, such as a gap in minutes.

  • Further down the steps, you'll be able to create and edit these document. There is some example wording that you'll need to edit as appropriate. See Editing a Document.

Next Steps

  • The question, are you going to help gather / create the Core documents or is an expert needed?

  • We use some “logic” here, so that what you choose impacts the questions that follow

  • You can also add your own notes to this step by clicking the down arrow (bottom right of step) and adding a comment.

Vesting Date

  • For inter vivos Trusts, you can usually see vesting date in the Deed. For a Trust created by a Will, there may be no clear vesting date.

 

Unusual Requirements

Does this Trust have any unusual requirements?  Most Trusts do not.

Delegation of Powers

It is possible (but unlikely) that someone else besides a person named as a Trustee has some legal responsibilities. For most Trusts the answer is NO.

 

Records

  • Records of the Trust assets and liabilities, income and expenses.  

  • Where accounting reports are prepared, then they will be appropriate.   

  • Where no accounting records have been created, say a family home is the only asset, then you can help the client by listing the assets and liabilities.

  • Accounting records - for as many years as the Trust has been established.

  • Records of Trustee decisions include the minutes of decisions.

  • Expect these to be sporadic.

  • Written contracts - say the sale and purchase agreement for the House owned by the Trust. 

  • Documents of the changes (if any) of Trustees. Essential for compliance with Anti Money Laundering law, as well as the Trusts Act 2019.

  • Memorandum of Wishes - Really important in the new Trusts Act.

  • Investment strategy - if one exists

 

Request for further Trust information

  • Was a request received for further Trust information? If so, the Trustees need to decide what to do.

Rollover

  • When you've concluded the job, you should roll it over. To do this, just click the Rollover and Generate PDF button to the left handside.

  • On rollover, the system will archive this year's work. Then you need to swap the job to the Trust Annual Compliance and Administration template ready for the following year (warning, these are the only templates you should perform a job swap for as they are linked. Job swapping other templates risks loss of data in transition).

  • You can access prior year's in the left-hand menu of the job.

  • When you come back to it next year, simply work down and click "Bring Forward" for each step. Or if you'd like to change the answer, then simply answer the question with the new answer.

 
 

Case Studies - Stories (in the form of abridged cases or potential downsides)

 

Case 1 

  • We have prepared the annual Trust financial statements and tax return for some years. 

  • We have in our paper files a copy of the Trust Deed.  

  • When we switched to digital files, we did not scan the Deed in.

 

Solution: 

  • Set the client up in AroAssistant  

  • Find the paper copy and scan it in.

  • Send email to client explaining our proposed proactive steps to help them comply with Trusts Act and complete missing information. 

  • Provide a guide to Trusts Act 2019 and some reasons to continue or wind up Trust . 

  • Advise client of expected costs.

 

 

Case 2

  • Our client lives offshore is selling a NZ commercial rental after some years of ownership.  

  • The client asks us to provide the AML details to the land agent from our files.

 

Solution:  

  • From our files, find the Trust Deed and all changes of Trustees since inception and scan to the land agent. 

  • If we do not have a full trail, contact the present solicitor to see if they can furnish, or trace back to previous solicitors, some of whom may no longer be practicing. 

  • Take the opportunity to complete the Trust Initial Compliance Review workpaper, and send a request for more information where the file is deficient.

  • Provide a guide to Trusts Act 2019  

  • Advise client of expected costs.

 

 

Case 3

  • We have prepared minutes each year for the Trust, which we have sent to the Trustees at time of sending them the annual accounts.  

  • In our letter we request they sign and file the minutes in the minute book. During a conversation with the client, they tell us they cannot find any minutes.

 

Solution: 

  • Complete the Trust Compliance Review workpaper. 

  • Advise the client that it is essential that minutes of decisions are made, signed and retained.

  • Provide a guide to Trusts Act 2019

  • Where no trail of past minutes can be found, follow the Gap in past minutes procedure.  

  • Advise client of expected costs.

 

 

Case 4

  • We are aware the that a family Trust owns the family home, where the family live. 

  • The family pay the rates, insurance, any repairs and service the mortgage.  

  • The Trust does not have a Bank account nor an IRD number. 

  • No Trust administration is or has been performed since inception. 

  • The family solicitor is a co-Trustee. He has contacted the clients and recommended the Trust be now wound up due to the “onerous” administration.

 

Solution:   

  • Complete the Trust Compliance Review workpaper. 

  • Check if the reason the Trust was established still exists.

  • Consider if there a fresh reasons today to either establish or wind up the Trust. 

  • See the document some reasons to have or wind up a Trust. 

  • Clarify exactly what is meant by “onerous” administration, and if you could do some of that at a fair price. 

  • Possibly the solicitor just wants to retire as a Trustee, and if so, suggest the family take advice on a replacement, either from that solicitor, or an expert.  

  • Consider how you could bring the Trust into compliance. 

  • Make sure the document trail establishment through to present Trustees is in place.

  • Get an IRD number as this will be needed if the Trust is wound up, or in a future sale.

  • Provide a guide to Trusts Act 2019 

  • Advise client of expected costs. 

  • For annual compliance, modify the Annual minutes for Trust owning only passive assets, such as the family home

 

Case 5

  • We have just finished the annual tax work for the client and their Trust. 

  • The couple are the Trustees.

  • The income has as in past years been distributed to beneficiaries on the basis of tax efficiency as calculated by you.

  • You ask the client if and how they are going to provide the Trust Basic information. 

  • You note if there are advances to beneficiaries of more than $25,000 and if it is at, at least interest the prescribed rate of interest.

 

Solution:  

  • Provide a guide to Trusts Act 2019 and highlight the disclosure of information to beneficiaries. 

  • Receive instructions from the client to assist them to document what they should do as Trustees.

  • Advise client of expected costs. 

  • Provide a template Minute and letter to beneficiaries advising Trust information, and, once the Trustees have decided, receive a copy of the Minute and the letters (if any) to beneficiaries.

  • Whatever they decide, get the contact details of the beneficiaries for the Trust Compliance Review workpaper.

  • You recall the new section HC27 (6) and complete a workpaper to help with compliance.

 

 

VIDEO

 
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Trusts 101 Video (for clients)

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Trusts Act 2019 with Vicki Ammundsen