Michael Morgan
Director
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Estate Planning
Will or trust? Maybe both.
Here's how to decide. The right choice depends on your circumstances, not on what "everyone" does.
The Core Difference
Two tools, different purposes.
A will and a trust do different things at different times. Understanding this is the first step.
A Will
A legal document that directs what happens to your assets after you die. It only takes effect on death. Until then, you control your own assets directly.
Takes effect only after death
Until then, you retain full ownership and control
Goes through probate
A court process to validate and administer the estate
Can be challenged
Under the Family Protection Act and other legislation
Best for
Straightforward estates with no complex protection needs
A Trust
A legal structure that holds assets separately from you. Assets in a trust are managed by trustees for beneficiaries. It operates during your lifetime and after.
Operates during your lifetime
Provides protection and control while you are alive
Assets owned by the trust
Not by you personally, which affects liability
Ongoing administration required
Compliance, record-keeping, and annual costs
Best for
Asset protection, business owners, vulnerable beneficiaries
Even if you have a trust, you still need a will.
Your will covers any assets held personally (not in the trust), names guardians for minor children, and often appoints trustees of your trust. The two documents work together.
Which Suits Your Situation?
A starting point for your conversation.
These scenarios can help you think about which approach might work for you. Every situation is different.
A Will Alone May Be Right If
Your estate is relatively straightforward
Your beneficiaries can manage an inheritance themselves
You are not concerned about asset protection during your lifetime
You want to keep things simple and minimise ongoing costs
You don't have a business or complex investments
A Trust May Be Right If
You want asset protection during your lifetime
You have a business or complex asset structure
You want to provide for a vulnerable beneficiary
You want control over how and when assets are distributed
You are planning for intergenerational wealth transfer
Not sure which is right for you? We can help you understand your options.
Discuss Your SituationAt a Glance
Key differences between a will and a trust.
| Will | Trust | |
|---|---|---|
| When it takes effect | After death only | During lifetime & after |
| Asset ownership | You own assets | Trust owns assets |
| Probate required | Yes | No (for trust assets) |
| Ongoing administration | None until death | Annual requirements |
| Lifetime asset protection | No | Possible (if structured correctly) |
| Can be challenged | Yes (Family Protection Act or Law Reform (Testamentary Promises) Act) | Harder, but possible |
| Complexity & cost | Lower | Higher (setup & ongoing) |
The Context
The landscape has changed.
If you are relying on advice from years ago, it's worth understanding the current situation. What made sense twenty years ago may not be the right answer today.
39%
The 39% Trustee Tax Rate
From April 2024, income retained in trusts is taxed at 39%. This removes most of the historical tax advantages of holding income in a trust. Some people set up trusts primarily for tax reasons. That calculus has changed, but advantages remain in some circumstances.
2019
Trusts Act 2019 Compliance
The Trusts Act 2019 codified trustee duties and introduced disclosure obligations. Trustees must maintain records, respond to beneficiary requests for information, and meet specific standards. Trusts now require active management.
Asset Protection Limitations
Trusts don't automatically protect assets. Protection depends on proper structure, timing of asset transfers, and ongoing compliance. Courts can "look through" trusts in various circumstances.
Rest Home Considerations
Having a trust doesn't automatically protect assets from rest home cost assessments. The Ministry of Social Development can assess trust assets in many circumstances.
If you have an existing trust
A trust set up years ago may no longer be fit for purpose. A review can help you understand whether your trust still serves your needs or whether it should be restructured or wound up.
Learn about trust reviews
Common Questions
Answers we hear regularly.
Do I need both a will and a trust?
If you have a trust, you still need a will. Your will covers any assets held personally (outside the trust), appoints guardians for minor children, and often appoints trustees for your family trust. The two documents work together.
Is a trust more expensive than a will?
Yes. A trust has upfront establishment costs and ongoing administration requirements. Annual accounts, trustee meetings, and compliance obligations add ongoing costs that a simple will does not have. Whether this is worthwhile depends on what the trust achieves for you.
Can I wind up a trust I no longer need?
Yes. If a trust is no longer serving its purpose, it can be wound up. This involves distributing assets to beneficiaries and completing the necessary legal steps. We can advise on whether winding up is appropriate and manage the process.
Will a trust protect my assets from rest home costs?
Not necessarily. The Ministry of Social Development can treat trust assets as your own, and assume the trustees will pay income (if any) to you, in many circumstances. We provide honest advice about what trusts can and cannot achieve.
What if my children are in relationships I'm concerned about?
Both wills and trusts can help protect inheritance from relationship property claims, but they do it differently. A trust can hold assets before and after your death. A will can include provisions that give your executor or trustees discretion about distributions. We can discuss which approach suits your situation.
Explore Your Options
Learn more about each option and how we can help.
Client Observations
What Our Clients Say
"Thanks for making the trust wind up so smooth and painless."
To ensure candour, all feedback was collected anonymously.
Your Team
Meet the team
ready to help
Common Questions About Wills and Trusts
Most farming families use trusts, but trusts were often set up for different reasons than succession. The trust structure may or may not suit your succession goals.
We review your trust deed to understand what flexibility exists, then develop succession options that work within or alongside the trust structure. Sometimes trust restructuring is needed.
It depends on your circumstances. The 39% trustee tax rate has changed the economics, but trusts still serve important purposes beyond tax. Asset protection, intergenerational wealth transfer, and protecting vulnerable beneficiaries remain valid reasons for trusts.
A review will clarify whether your trust still provides sufficient benefit.
The Act requires trustees to maintain records, know the trust terms, and respond to beneficiary information requests. Many existing trusts need to update their processes.
We can assess your trust's compliance and help you address any gaps.
Every three to five years is sensible, or when circumstances change significantly. Major life events (relationship changes, business sales, deaths, new grandchildren) warrant review.
Yes. Winding up involves distributing assets to beneficiaries according to the trust deed or as trustees determine. There are legal and tax implications to consider.
We help you wind up properly.
Under the Trusts Act 2019, you must provide "basic trust information" when requested. This includes the existence of the trust, trustee details, and the beneficiary's status. There are limited exceptions.
Trustees can be personally liable for breach of duty. The Trusts Act 2019 codified duties and made consequences clearer. If you are concerned about your performance as a trustee, getting advice is the responsible step.
Properly structured trusts can provide protection, but it depends on timing and how the trust operates. A trust established after relationship property is at risk, or one that has been treated as a personal asset, may not provide the protection you expect.
Both structures have advantages and disadvantages. Trusts offer flexibility and potential asset protection. Companies offer limited liability and different tax treatment.
The right choice depends on your situation.
