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This is the second issues paper in Stage 1 of the Law Commission’s review of the law of trusts.
The second issues paper will cover issues with the use of trusts (especially family trusts) in New Zealand. This paper will look at the purposes for which family trusts are established, including reducing tax obligations, protection of assets from creditors and relationship property claims, and meeting eligibility thresholds for government assistance. The paper examines different legislative and judicial responses to the use of trusts to “look through” or disregard a trust where a trust has been used to frustrate the underlying policies of particular statutes.
The Commission poses options for how the law could address concerns about the use of trusts. The paper seeks comment from as broad an audience as possible on issues such as why trusts are so common in New Zealand, whether limits should be placed on the uses to which trusts are put, whether high levels of settlor control is an issue for concern, how effective existing legislative mechanisms are at addressing the impacts of trusts and whether the law on sham trusts is satisfactory.
Submissions on this paper closed 31 March 2011.
Please note the Paper is only available online
Correction
At paragraph [3.37] (page 26), the third and fourth sentences should read:
In Kidd, the husband’s father established a trust in 1990 and the husband and wife commenced living together in 1998 and married in 2001. The husband was a final and discretionary beneficiary of the trust, and “any spouse” of the husband was a discretionary beneficiary.
