Trust formation, administration and asset protection
Our experienced trust lawyers guide you through every step of creating and managing a trust, ensuring your assets are safeguarded and distributed according to your wishes.
Trust law expertise
- Formation of trusts to best achieve your wishes to ensure it remains fit for purpose
- Transferring assets into trusts (whether at formation or subsequently)
- Ongoing advice for the Settlor or Trustees as to how best to achieve the trusts' objectives
- Annual administration of trusts including review or gifting meetings
- Variations or winding up trust
Trust assessment, design and review
At the assessment, design and review stage, we will offer advice around whether a trust structure is right for your needs. If it is, then we move to establish what that trust structure should be, and, in the case of existing trusts, we review the structure and recommend any improvements including resettlement into new trusts.
As part of the review process, we consider the following:
- Asset protection (risk) assessment and advice as to whether a trust structure can assist in relation to any business or future rest home subsidy
- Asset planning assessment and advice as to whether a trust structure will be of assistance to you
- Review of existing trusts or other asset structures to consider suitability, liaison with tax, banking and financial advisers to ensure the correct structure is used
- Design of recommended structure to meet the ongoing needs of clients
- Resettlement into a new trust if required
- Trust implementation
Asset transfers
An important part of the trust process is the transfer of assets. We assist clients to move assets from a company or personal ownership structure into the trust.
It is important to document and account these transfers correctly, including how they are funded.
We deal with:
- Transfer of assets such as property, shares, cash and investments into the trust
- Recording subsequent loans
- Gifting and forgiveness of debt advice and implementation
Ongoing advice for trusts
It is important that trusts are managed correctly. We give advice to trustees and beneficiaries regarding the management and governance of trusts and dealing with trust assets, including advising when there is a change in personal circumstance or change to the law.
Annual administration of trusts
Annual management of a trust is important to assist the trustees to meet their annual obligations.
These obligations include meeting on a regular basis to consider all beneficiaries and keeping clear and accurate records of the trust’s assets and the trustees decisions.
Trust variations and wind up
It is important to ensure that any trust structure continues to meet the objectives of the original trust at the time the trust was formed.
We can assist the trustees and settlors to make specific changes required throughout the life of the trust to ensure continuity and, when the time is right, to properly wind up the trust.
Related resources and articles
Frequently Asked Questions
Do I still need a trust in New Zealand?
For many New Zealanders, trusts remain a valuable tool for asset protection, succession planning, and managing family wealth, but they do require active management. We can review your trust and advise whether it continues to serve your needs.
What are the reasons to set up a family trust?
There are several common reasons New Zealanders set up a family trust:
- Asset protection from creditors. If you are in business, a director, or self-employed, a trust can help protect personal assets (such as the family home) from claims by business creditors, provided the trust was established before any debts were incurred.
- Succession planning. A trust allows you to manage how assets are passed to the next generation, including providing for children or grandchildren over time rather than in a lump sum.
- Protecting assets for blended families. A trust can help ensure that assets go to your intended beneficiaries, particularly where there are children from previous relationships.
- Residential care subsidy eligibility. Assets properly settled into a trust may not be counted in the Ministry of Social Development’s (MSD) means assessment for the Residential Care Subsidy, though the rules around this are strict and have become more complex over time.
- Managing family wealth. A trust provides a structure for holding and managing assets collectively, including investment property, shares, and family businesses.
- Protecting assets from relationship property claims. While not absolute, a properly established trust may offer a degree of protection if a relationship ends, particularly if set up well in advance of the relationship.
Not everyone needs a trust, and they carry ongoing obligations. We recommend getting legal advice on whether a trust is the right tool for your specific situation.
Who actually needs a trust?
A trust is most commonly beneficial for people who:
- Own or operate a business, or are a director of a company
- Are involved in a joint venture or partnership
- Provide professional services on their own account (e.g. contractors, consultants, tradespeople)
- Have substantial assets they want to protect or manage across generations
- Want to control how and when wealth is distributed to family members
- Have a blended family and want to ensure specific beneficiaries are provided for
- Are planning for the possibility of needing residential care later in life
If your circumstances are straightforward, you have modest assets, and your goals can be met by a well-drafted Will, a trust may not be necessary. We can assess your situation and advise whether the benefits of a trust outweigh the costs and obligations involved.
Are trusts expensive and difficult to maintain?
Not necessarily, but trusts do need looking after. Once a trust is set up, the trustees have ongoing responsibilities to keep it working properly and make sure it is legally sound. For example:
- Under the Trusts Act 2019, trustees must keep core trust documents, including the trust deed and any variations, records of trust assets and liabilities, financial statements, and records of decisions made in exercising their powers and discretions.
- Trustees should meet regularly, at least annually, and whenever a significant matter arises, to review the trust’s affairs and turn their minds to any discretions available to them.
- Trustees must also consider, at reasonable intervals, whether to disclose basic trust information to beneficiaries.
- Depending on the complexity of the trust and the assets it holds, trustees may also need an accountant to prepare financial statements and meet tax filing obligations
If a professional trustee company is involved, they will almost always take care of these things as part of managing the trust, following their own usual processes. So be prepared to pay an annual fee, much like an insurance premium.
How much this all costs really depends on how complicated the trust is. A simple trust with modest assets, run by family members rather than a professional trustee, can usually be kept up quite affordably. Larger or more complex trusts naturally take more time and cost more to manage. The most important thing is that these steps are actually followed through. A trust that isn’t looked after properly is much less likely to hold up if it’s ever challenged.
Should I wind up my trust?
It depends on whether your trust is still achieving its original purpose and whether the ongoing costs and obligations are justified. You may want to consider winding up your trust if:
- The original reason for setting it up is no longer relevant (for example, estate duty was abolished in 1992, and tax advantages have largely disappeared)
- The trust holds minimal assets and the annual administration costs outweigh the benefit
- The compliance obligations under the Trusts Act 2019 (trustee duties, disclosure, record-keeping) feel disproportionate to what the trust holds
- Your personal circumstances have changed and the trust is no longer fit for purpose
On the other hand, if your trust still serves a genuine asset protection, succession planning, or wealth management function, it is likely worth maintaining, provided it is properly administered.
Winding up a trust involves distributing or transferring the trust’s assets and formally vesting the trust. There may be tax, legal, or practical implications, so we recommend getting advice before taking this step.
What happens if my trust deed is out of date?
An outdated trust deed can create several problems:
- It may not reflect your current wishes or family circumstances (e.g. new relationships, additional children or grandchildren, changes in assets).
- It may contain provisions that are inconsistent with the Trusts Act 2019, particularly around trustee duties, disclosure, and decision-making processes.
- It may not provide adequate powers for trustees to deal with modern financial arrangements or asset types.
- It may have been drafted under assumptions that are no longer legally sound (e.g. relying on structures that have since been weakened by case law).
An outdated deed does not necessarily mean your trust is invalid, but it may mean it is not operating as effectively as it could, or that trustees are unknowingly in breach of their obligations.
In some cases, a deed can be varied (amended) to bring it up to date. In other cases, a full resettlement into a new trust with a modern deed is more appropriate. We can review your existing deed and advise on the best course of action.
Contact our experienced trusts lawyers today for personalised advice on trust formation, administration, and asset protection.
