Will vs Trust: Which Do You Need?
The definitive comparison guide to help you understand the differences between wills and family trusts in New Zealand - and which option is right for you.
💡 The Short Answer
Most people need BOTH a will and a family trust.
They serve different purposes and work together to create a complete estate plan:
- Trust: Protects assets during your lifetime (creditors, relationship property, aged care)
- Will: Distributes personal assets after death and names guardians for children
Quick Comparison at a Glance
| Feature | Will | Family Trust |
|---|---|---|
| When it operates | After you die | During your lifetime |
| Primary purpose | Distribute assets after death | Protect assets during life |
| Setup cost | $450-$850 | $2,500-$5,000 |
| Ongoing costs | None (until probate) | $800-$1,500/year |
| Asset protection | None | Yes (from future creditors) |
| Relationship property protection | No | Yes (after 2 years) |
| Aged care protection | No | Yes (after 5 years) |
| Avoids probate | No (goes through probate) | Yes |
| Privacy | Public (anyone can view) | Private |
| Appoint guardians for children | Yes | No |
| Control inheritance timing | Limited (testamentary trusts) | Full control |
| Complexity | Simple | Requires ongoing administration |
Detailed Comparison
1. Timing: When They Operate
📄 Will
Takes effect: Only after you die
During your lifetime, a will has no effect. Your assets remain in your personal name and are fully exposed to risks like creditors, relationship property claims, and aged care means testing.
Example: If you're sued or your relationship ends while you're alive, your will provides zero protection.
🏛️ Family Trust
Takes effect: Immediately upon setup
Once assets are transferred to the trust, they're protected during your lifetime. The trust continues after your death, avoiding probate delays and providing ongoing family benefit.
Example: If your business fails or you need aged care, assets in trust (gifted 5+ years ago) are protected.
2. Asset Protection
📄 Will
Protection: None
Assets in your personal name are fully exposed to:
- Business creditors
- Professional liability claims
- Relationship property division (50/50 on separation)
- Aged care means testing
- Lawsuits and judgments
Your will can only distribute what's left after all these claims are satisfied.
🏛️ Family Trust
Protection: Comprehensive (if set up correctly)
Assets in trust are protected from:
- Future business creditors (not existing debts)
- Professional liability claims
- Relationship property claims (after 2-year gifting period)
- Aged care means testing (after 5 years)
- Beneficiary creditors (while undistributed)
Critical: Only protects against future liabilities. Can't avoid existing creditors (that's illegal).
3. Probate Process
📄 Will
Must go through probate: Yes
Timeline: 6-12 months typically
Cost: $3,000-$10,000+ (solicitor fees, court costs)
Privacy: Public record - anyone can view your will and asset distribution
Probate is the court process of validating your will and giving your executor authority to distribute assets. During probate:
- Assets are frozen
- Creditors can make claims
- Family can challenge the will
- Everything is public knowledge
🏛️ Family Trust
Probate required: No
Timeline: Immediate transfer to new trustees
Cost: Minimal (trustee succession documents)
Privacy: Completely private
Trust assets don't form part of your estate, so there's no probate process. When a trustee dies or retires:
- Successor trustees take over immediately
- No court involvement
- No asset freeze
- No public disclosure
- Much faster for beneficiaries
4. Control Over Inheritance Timing
📄 Will
Control: Limited
Standard wills typically distribute assets immediately after probate. Children under 20 receive inheritance at age 20.
Testamentary trusts: You can create a trust within your will, but:
- Still goes through probate first
- More expensive to set up
- Less flexible than living trusts
- No asset protection during your lifetime
🏛️ Family Trust
Control: Complete flexibility
Trustees can distribute to beneficiaries:
- When they reach a certain age (e.g., 25 or 30, not 20)
- Upon achieving milestones (university graduation, buying first home)
- In stages (1/3 at 25, 1/3 at 30, 1/3 at 35)
- Only for specific purposes (education, housing deposit)
- Never (if beneficiary has addiction or creditor issues)
This protects immature beneficiaries and ensures money is used wisely.
5. Costs
📄 Will
Upfront: $450-$850
Ongoing: $0 (just update every 3-5 years)
Later (probate): $3,000-$10,000+
Total over 20 years: ~$1,000-$2,000 (will updates) + probate costs later
Wills are cheaper to set up, but probate costs can be substantial. If your estate is valued at $500k+, probate costs may exceed trust annual costs.
🏛️ Family Trust
Upfront: $2,500-$5,000
Ongoing: $800-$1,500/year for proper administration
Probate: $0 (avoided entirely)
Total over 20 years: ~$20,000-$35,000
Trusts have higher ongoing costs but provide active asset protection and avoid probate. For significant assets or liability exposure, the protection value far exceeds the cost.
Note: Trusts Act 2019 requires annual minutes and proper administration - cutting corners invalidates protection.
6. What You Can Do
📄 Will
What it does:
- Distribute assets after death
- Appoint executor to manage estate
- Name guardians for children under 18
- Make specific gifts (jewelry, car, etc.)
- State funeral preferences
- Disinherit people (with limitations - Family Protection Act claims possible)
What it can't do:
- Protect assets during your life
- Avoid probate
- Override relationship property rights
- Distribute jointly-owned property (passes automatically)
- Distribute KiwiSaver (unless nominated to estate)
🏛️ Family Trust
What it does:
- Protect assets from business/professional liabilities
- Protect from relationship property division
- Protect from aged care means testing (5+ years)
- Avoid probate entirely
- Control inheritance timing and conditions
- Maintain privacy
- Enable succession planning
- Protect spendthrift beneficiaries
What it can't do:
- Appoint guardians for children (need a will)
- Avoid existing creditors (illegal)
- Save tax (NZ has no estate tax)
- Distribute personal chattels easily (will is better)
Which Do You Need? Decision Guide
✅ You DEFINITELY Need a Will If:
- You have children under 18 (to appoint guardians)
- You own any assets (even if small)
- You want specific items to go to specific people
- You want to choose who manages your estate
- You're over 18 (everyone should have a will)
Bottom line: Everyone needs a will. No exceptions.
✅ You DEFINITELY Need a Family Trust If You:
- Own a business or have professional liability exposure
- Are a doctor, lawyer, accountant, or other professional
- Own property worth $500k+
- Want to protect assets from potential relationship property claims
- Are planning for aged care 5+ years ahead
- Have significant assets and want to control inheritance timing
- Want to minimize probate delays and costs
🤔 You MIGHT Need a Family Trust If You:
- Own your first home (value $500k-$1M, no business risk)
- Have moderate assets but no liability exposure
- Are in a stable long-term relationship with no separation concerns
- Don't plan to need aged care for 10+ years
In these cases, weigh the costs ($800-$1,500/year) against the potential benefits. A trust is "nice to have" but not essential.
❌ You Probably DON'T Need a Family Trust If:
- You're under 30 with minimal assets
- You're a first-home buyer and want HomeStart grants
- You can't afford ongoing administration costs
- You have no liability exposure or asset protection concerns
- Your total assets are under $200k
A will and EPAs are sufficient. Consider a trust later when your situation changes.
Common Scenarios: What You Actually Need
Scenario 1: Young Couple, First Home, No Kids
Situation: Both age 30, just bought first home ($650k, $500k mortgage), employed, no business.
Recommendation:
- ✅ Mirror wills (from $850 for couple)
- ✅ EPAs for both partners
- ❌ Family trust NOT needed yet (minimal liability, want first home grants)
Why: Asset value is low after mortgage. No liability exposure. First home buyer grants are valuable. Review trust need in 5-10 years when mortgage is paid down or if starting business.
Scenario 2: Family with Kids, Mortgage-Free Home
Situation: Couple, 2 kids (ages 5 and 8), own home worth $1.2M (no mortgage), employed.
Recommendation:
- ✅ Wills appointing guardians and trustees for children's inheritance
- ✅ EPAs for both partners
- ✅ Family trust - YES (significant equity to protect)
Why: $1.2M equity is exposed to relationship property, future creditors, and aged care. Guardian appointment requires will. Trust protects major asset while kids grow up.
Scenario 3: Business Owner
Situation: Sole director/shareholder, retail business, owns commercial property + family home.
Recommendation:
- ✅ Will (for business succession and personal items)
- ✅ EPAs (for business continuity if incapacitated)
- ✅ Family trust - ESSENTIAL (business liability protection)
Why: Business creates liability exposure. Without trust, business creditors can take family home. Trust separates business risk from family assets. Business succession also needs planning.
Scenario 4: Professional (Doctor/Lawyer/Accountant)
Situation: Medical specialist, age 45, family home + rental property, professional liability insurance.
Recommendation:
- ✅ Will and EPAs
- ✅ Family trust - HIGHLY RECOMMENDED
Why: Professional liability insurance has limits. Malpractice claims can exceed coverage. Trust protects family assets from professional risks. Even with insurance, trust provides additional security layer.
Scenario 5: Retirees Planning for Aged Care
Situation: Couple, both 68, mortgage-free home ($900k), savings $300k, considering rest home in 10+ years.
Recommendation:
- ✅ Wills and EPAs
- ✅ Family trust - YES, if setting up NOW
Why: Residential care subsidy requires asset test. Assets in trust 5+ years before care are exempt. At 68, they have 10+ year buffer. Setup trust now, transfer home, wait 5 years. If they wait until needing care, too late.
Warning: If care needed within 5 years, assets will be assessed anyway. Trust has no retroactive protection.
Scenario 6: Blended Family
Situation: Both partners have kids from previous relationships, own home together, want to provide for all children but protect biological kids.
Recommendation:
- ✅ Wills with clear provisions for each biological child
- ✅ Contracting out agreement (prenup) to clarify relationship property
- ✅ Family trust - HIGHLY RECOMMENDED (separate assets for biological children)
Why: Blended families create complex inheritance issues. Trust can hold each partner's separate property. Wills direct personal assets. Contracting out agreement clarifies what happens if relationship ends. Combination provides maximum clarity and protection.
Common Myths Debunked
❌ Myth: "I don't need a will if I have a trust"
Reality: You still need a will, even with a trust. The will:
- Appoints guardians for minor children (trusts can't do this)
- Distributes personal items and assets not in trust
- Acts as backup for any assets accidentally left out of trust
- Provides clarity for executors
❌ Myth: "Trusts save tax in New Zealand"
Reality: NZ has no estate tax, inheritance tax, or capital gains tax. Trusts don't save tax for most people. Their value is asset protection, not tax minimization.
❌ Myth: "Once assets are in trust, I can't use them"
Reality: As a beneficiary and/or trustee, you can still use trust assets (live in the house, drive the car, access funds). The difference is legal ownership, not practical use.
❌ Myth: "I can just put my kids on the house title instead of a trust"
Reality: Bad idea. You lose control, trigger relationship property issues for your kids, create gift duty issues, and expose the house to your kids' creditors. Trust provides protection without these problems.
❌ Myth: "Trusts are only for wealthy people"
Reality: If you own a home worth $500k+ or run any business, a trust is worthwhile regardless of total wealth. Asset protection benefits apply at any asset level.
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Get Personalized Recommendation →Transparent Pricing
Will Only
From $450
Individual will
Couple Package
From $850
Mirror wills + EPAs for both
Family Trust
From $2,500
Setup + first year admin
Complete Package
From $3,500
Trust + wills + EPAs for couple