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Trusts have been around since the middle ages. When English noblemen left to travel to the Crusades they were forced to leave their affairs in the hands of trusted friends since their wives, who were unable to own or deal with property, could not be of assistance.

Over the years they have been used for a variety of purposes. Objectives have ranged from providing for infant beneficiaries to tax minimisation. In New Zealand trusts have recently become more popular due to several factors.
Some of these are:

1. Amendment to Companies legislation rendering Company directors liable for Company debts where a company has been trading insolvently

2. Shift towards user pays type policies within government penalizing people with an excess of assets

3.Tax laws enabling tax payers to distribute income within a trust to beneficiaries thereby splitting the liability for income tax
4. Governments inaction in respect to baby-boomer superannuation issues and the consequent need to plan for one's own retirement.

So what exactly is a family trust?

All that a trust does is transfer the legal ownership (as opposed to the beneficial ownership) of a property to the trustees. It is not an entity in its own right and does not take on a new legal identity. The trust is simply the set of terms upon which legal ownership of the trust assets is transferred.

The Trustees take ownership of the trust assets in terms of the trust deed for the benefit of the beneficiaries
Who are the parties involved with a family trust and what are their roles?

  • The Settlor. The Settlor is the person or persons who set up the family trust by initially transferring property to the Trustees on the terms set out in the trust deed.  Once the deed and its terms of ownership are set in place other property may be transferred to the trustees upon the same terms.


  • The Trustees. These are the legal owners of the property transferred to the trust. They must deal with the property owned by them in trust in accordance with the terms of the trust deed. Failure to do this can result in the trustees being liable to the beneficiaries for any loss which results from that failure.


  • The Beneficiaries. The equitable ownership of the trust assets is vested in the beneficiaries who are the only people entitled to receive a benefit from the trust. All income and capital distributions by the trustees must be for the benefit of the beneficiaries as must be the outcome of all decisions made by the Trustees.

What types of trust are there?

The types of trusts commonly used in New Zealand are single and mirror trusts. Mirror trusts were used prior to the abolition of death duties to avoid the effects of IRD policy which refused to recognise the validity of a trust where the settlor and beneficiary were the same person. That situation does not exist anymore but mirror trusts are still sometimes used.

The most commonly used trust deed is a single trust. While there is no law that requires a professional trustee to be involved in a single trust the recommendation is that one is involved to both ensure that trust decisions are properly made and that the trust is properly administered. The same applies with a mirror trust although it is to be stressed that there is no legal requirement that a professional trustee be involved in either trust.

What is the effect of a trust?

The standard form of trust deed commonly used by practitioners in New Zealand is a flexible deed enabling variation if required and enabling the trustees absolute discretion in terms of their dealing with the trust property.

If, therefore you are the trustee(s) of your family trust you can essentially do everything with your property that you could do before. You will also of course be able to live off the income generated by your trust assets and receive all the benefits from a sale of assets just as you could if the assets were not in the trust.

If your house is in the trust you will still be able to live in it. The effect of the trust is that it amounts to the setting in place of an insurance policy against dissipation of your assets pursuant to adverse economic occurances or government policy.

It does not in any way effect the way you, as trustee can deal with those assets. We believe that people who own property in New Zealand should have three insurance policies; fire and general, mortgage repayment(if applicable), and a trust.

How much will it cost me an how long does it take to set up a family trust?

The costs involved to set up a family trust are currently around $1000 - 1500 plus GST and Land Transfer disbursements. For this amount the following work is achieved:

  • Drafting and execution of the trust deed and opening minutes
  • Putting in place a new will or willsSetting up a gifting programme and obtaining an IRD number for the trust
  • Transferring the property or properties into the trust and attending to registration (any mortgage work required in the process is subject to extra charges)

The transfer of two or more properties is extra to the above but generally each extra property costs around $150 plus GST and Land Transfer disbursements.  If you have a mortgage there may also be a fee charged by the bank where mortgage documents need to be re-drafted. Policy varies from bank to bank. This fee is normally around $150.

A trust can be set up in a matter of a few days. Delays are most commonly experienced where clients need to obtain a valuation of their property to enable the property to be transferred at its current value. Usually an up to date Government Valuation can be safely relied on.

Who should have a trust?

Trusts are a useful estate planning device for everybody. There are good reasons why single people as well as married people ought to settle their assets in a trust. Employed and self employed people alike can obtain benefits from setting up a family trust.  Our view is that almost everybody should have a family trust.

Contact us about setting up a trust

If you would like more information on setting up a trust or to arrange a meeting a no obligation meeting with us (which we can have at your home if you are in Auckland) telephone us. +64 9 366 0111

Or simply fill out our online form

Our Staff

Marie Tolhurst (Devoy)Marie Tolhurst (Devoy)
LLB (Hons) (Auck)

Marie completed her law degree at Auckland University in 1983 and was employed by Kendall Sturm and Strong before starting a family in 1985.
Marie has worked at Citylaw since 1994.
Marie counts among her many pastimes, cross-country running, masters rowing, indoor netball, soccer and gardening.  Marie is also an avid follower of her children’s sporting activities.

Andrea MainwaringAndrea Mainwaring

Andrea has been working for City Law for just over a year but has worked in legal accounting for the past 21 years.
She lives on a lifestyle block with her husband and three small children who keep her busy out of work hours.  She loves to entertain, attend fitness boot camps and spend time with her family and friends.

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