[OPINION] Four Steps to Preserve your Family’s Wealth and Legacy
By Patrick Gamble, Chief Executive Officer, Perpetual Guardian Group
However, unlike the progressive income tax system for individuals, trusts will continue to be subject to a flat tax rate. From the first dollar to the last, all trust income will be taxed at 39%, even where the beneficiaries are low- or middle-income and would otherwise be paying much lower tax rates.
With an estimated 500,000 trusts in New Zealand, countless people, whether trustees or beneficiaries or both, are affected. Those providing specialist services to trusts and trustees, including lawyers and accountants, are noting they are fielding enquiries from high-income taxpayers regarding alternative avenues including a shift to Portfolio Investment Entities which remain at a maximum tax rate of 28%, casting doubt on the amount of promised increased revenue from trusts that policymakers cited to justify the changes.
Amid this uncertainty, and the inevitable unintended consequences which always arise from changes of this magnitude, including significant negative effects for the everyday middle- and lower-income Kiwis who have established trusts for legitimate and important reasons, there are still solutions and rules that if applied, can help preserve and grow family wealth for generations to come. Here are four:
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