The simple explanation
Imagine you want to set aside some money or property for your children, but you don't want them to have full control until they're older. A trust is like a special "box" where you can put assets, with clear rules about who manages them and who benefits from them.
When you create a trust, you are separating the legal ownership of your assets from the people who benefit from them. The trustees become the legal owners, holding and managing the assets for the benefit of others (called beneficiaries).
"Think of a trust as a set of instructions that continue working even when you are not there to supervise."
A New Zealand tradition
New Zealand has one of the highest rates of trust ownership in the world. For generations, Kiwi families have used trusts to:
- Protect the family home or farm from business risks or relationship property claims
- Pass wealth to the next generation while maintaining some control
- Provide for children or grandchildren in a structured way
- Support family members with special needs without affecting their benefits
How it actually works
Creating a trust involves three main steps:
The trust deed is prepared
This legal document sets out the rules: who the trustees are, who can benefit, and what powers the trustees have.
Assets are transferred in
Property, shares, or other assets are legally transferred from your name to the trustees. This is called "settling" assets.
Trustees manage the trust
The trustees follow the rules in the deed, making decisions about the assets for the benefit of the beneficiaries.
Is a trust right for you?
Trusts aren't for everyone. They involve ongoing costs and responsibilities, and the rules have changed significantly with the Trusts Act 2019. Whether a trust makes sense depends on your circumstances, your goals, and your assets.
The good news is you don't need to figure this out alone. A conversation with one of our trust specialists will help you understand whether a trust would genuinely benefit your situation—or whether there's a simpler solution.
Continue reading to learn about the key people involved in a trust, or get in touch to discuss your specific situation.