Do I need a family trust?

A family trust is a legal arrangement under which trustees hold assets for the benefit of the family. It is not the right structure for everyone. The decision turns on what you own, what risks you face, and what you want to happen after you die or lose capacity.

When a trust usually makes sense

A family trust is worth serious consideration if any of the following apply:

• You own real property worth more than $500,000 — the trust separates the asset from your personal balance sheet
• You are self-employed or run a business with personal liability exposure — sole traders, contractors, and company directors who have signed personal guarantees face creditor risk that a trust can reduce
• You are in a profession with negligence exposure — doctors, engineers, financial advisers, and accountants commonly hold the family home in a trust
• You are in a blended family — a trust lets you provide for a current partner while protecting an inheritance for children from a previous relationship
• You are planning more than five years ahead for residential care subsidies — the Ministry of Social Development’s gifting rules treat assets transferred to a trust within five years of an application as available for means testing
• You want to keep specific assets out of the estate — for example a holiday home held for grandchildren

When a trust usually does not make sense

A family trust adds annual cost ($800 to $1,500), compliance overhead, and complexity. It is generally not worthwhile if:

• You are a first home buyer who would lose KiwiSaver HomeStart eligibility by transferring the property
• You rent and have no significant capital assets
• Your total estate is comfortably below $300,000 with no liability exposure
• You are unwilling to keep proper records and run annual trustee meetings

What the Trusts Act 2019 changed

The Trusts Act 2019, in force since 30 January 2021, codified mandatory and default trustee duties, expanded beneficiary information rights, and lifted the maximum perpetuity period to 125 years. Trusts established before 2021 should be reviewed for compliance — see our trust review guide.

How to decide

The honest answer is that the decision is rarely binary. Many Kiwi families benefit from a trust for the family home plus a will for personal effects; others get the same protection from a contracting-out agreement under the Property (Relationships) Act 1976 plus targeted insurance. The right answer depends on the specific assets, the relationships, and the time horizon.

Want help?

If you would like a straight assessment of whether a trust is the right structure for your circumstances, book a free consultation and we will work through it with you.