May 2025 - McCaw Lewis

Owning and running a business is inherently risky. Even the most diligent businesspeople can come up against unforeseen trials. Future planning is critical, so you are well equipped long before your business faces challenging times. Asset protection isn’t designed exclusively for the corporate giants; it’s a prudent and practical thing that every business owner should consider.

What is a Trust?

Simply put, a trust is a legal arrangement involving three groups of people:

Settlor(s): the individual(s) who provide assets to the trustees to be held on trust.
Trustees: the people who hold the assets for the benefit of the beneficiaries. Trustees administer the assets in accordance with the Trust Deed and the Trusts Act 2019.
Beneficiaries: the individual(s) who receive the benefit of the trust assets.

How does a Trust Protect my Assets?

When you transfer your personal assets into a trust, they are no longer yours but belong to the trustees. As legal ownership has shifted to the trustees, this can protect your assets from business related creditors, insolvency and legal proceedings. Furthermore, trusts can be used as an effective succession planning tool, giving you the ability to seamlessly pass your wealth on to future generations whilst managing the risk of the likes of relationship property claims. This makes trusts an invaluable tool for long-term asset protection and estate planning.

Protecting your family home, investments and other personal assets is vital, especially when you dedicate so much time and effort towards developing your business and building your wealth. Having a trust can help protect not only your lifestyle, but the legacy you’ve worked so hard to create, ensuring that any unforeseen business related challenges don’t threaten your long-term security and retirement plans.

Is a Trust Right for You?

If you are contemplating whether a trust is suitable for you, you’ve already taken an important first step. The answer really depends on your specific circumstances. Ask yourself:

Do I have valuable business or personal assets to protect?
Am I concerned about future liability or personal exposure?
Do I want to pass my business to family or beneficiaries?
Do I want flexibility in managing income and tax planning?

If you answered “yes” to one or more of these, a trust could be worth exploring.

It is important to note that trusts aren’t a one size fits all solution; they require due care and consideration, alongside strategic future planning that is specifically tailored to your individual circumstances.

Our experienced Asset Planning Team understands the complexities involved with business ownership and asset protection and can evaluate your needs to develop a suitable asset protection strategy. We can guide you through every step, from establishment to day-to-day management.

Contact us to discuss your asset protection requirements and we will work with you to create a strategy to ensure your assets remain protected, giving you peace of mind for the future.

What is a Long-Term Maintenance Plan (LTMP)?

A LTMP is a planned maintenance strategy for bodies corporate.

A LTMP allows current owners and future owners to know what works are required to maintain the building asset, common property and commonly owned assets, as well as when the works are required. This in turn allows owners to be able to budget accordingly for these works without any big surprises.

What types of things are covered in a LTMP?

Building washes
Lift replacement
Roof replacement
Repainting of the building
Cladding replacement

Should my BC have a LTMP?

Yes, a body corporate is required by legislation to have a LTMP (section 116 Unit Titles Act 2010 (Act)). There is no ability to opt out of this requirement.

However, the requirement for the length of the LTMP varies depending on the size of the body corporate (BC).

A large BC (10 or more principal units) must have a LTMP that covers a period of at least 30 years from the date of the LTMP or the last review of the LTMP. Unit Title Regulations 2011 section 30A.

A BC that is less than 10 principal units must have a LTMP that covers a period of at least 10 years.

How often should the LTMP be reviewed?

The LTMP must be reviewed every 3 years, however, if the BC becomes aware of any matter than may have a material impact on the LTMP, the LTMP must be reviewed as soon as practicable.

What is a Long-Term Maintenance Fund (LTMF)?

A LTMF is what funds the LTMP.

Does my BC need a LTMF?

Section 117 of the Act dictates that a BC must establish and maintain a LTMF unless the BC, by special resolution (75%), decides not to do so.

Recent changes to the legislation also mean that if the BC has decided not to establish the funds, the BC:

1. Must review the decision annually; and

2. May, by special resolution, decide to establish a fund.

Whether the BC should have a LTMF or not, is going to differ from BC to BC, as each BC has different needs.

For example, if the only common asset of the BC is a shared driveway, then the BC may consider it reasonable not to have a LTMF, and owners can pay for the maintenance of this driveway when it is needed.

However, for a 100-unit apartment complex with a swimming pool, gym and lifts, it is reasonable to have a LTMF.

Are there restrictions around how the LTMF can be used?

Yes, the BC can only use the LTMF for spending in relation to the LTMP; so, the BC cannot dip into this for other general BC expenditure, or unplanned expenditure. This is why reviewing the LTMP as soon as the BC becomes aware of any necessary maintenance is so important.

How much should be in my BC’s LTMF?

This is not black and white, as this is dependent on the needs of the BC.

It may be beneficial for a BC, when preparing a budget for the LTMF, to engage the assistance of specialists/professionals.

Why should unit title owners have to pay towards a LTMF?

Not having a LTMP/LTMF can impact the following:

Re-saleability: purchasers see value in a well-maintained building, and a BC which has money in the kitty to pay for the necessary maintenance. Purchaser’s may be dissuaded from purchasing a unit title property where they know they will have to pay large levies for work that needs to be done in the near future, or they simply may not be able to finance this.
Equitability: ensures that owners are paying for their use of the commonly owned property/commonly owned assets, rather than future owners who have not benefitted from the use of these and must pay for it down the line.
Financial stability: allows owners to adequately budget for maintenance that needs to be done.

If you have any questions about LTMP or LTMF’s, please get in touch with our friendly property team.

Month: May 2025

I’m a Business Owner…Do I need a Trust?

Long term maintenance plans (LTMPs) and the importance of long-term maintenance funds (LTMFs).

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