A question has been asked as to what Family Trusts are for and when you might need one

Trusts are for the protection of assets.  Money, property and investments belonging to a trust are held separately from those for whom the trust has been established (the beneficiaries).  Here are some examples of the kinds of protection available:


If you are sole trader or a professional without limited liability, your home and other significant assets, if placed in Trust, could be protected from creditors or from anyone claiming damages from you for negligence or a mistake made by you.

Relationship Breakdowns

Trust assets are not “relationship property” available for equal division between spouses or de facto partners if they separate.  While there are exceptions to this, which may allow claims to be made against trust property, a Trust can still be a useful tool for protecting property from the consequences of a relationship breakdown.  In many instances additional agreements between a couple may be also required for adequate protection.

Protecting Children

Transferring assets into a Trust for children can provide protection from claims by a child’s partner, de facto or married.  As well, a Trust can protect spendthrift children from themselves by preventing them from getting their hands onto capital that they might waste.

Special Needs Children

A Trust is probably the best way to protect funds set aside for the support of a special needs child.

Challenges to a Will

Assets put into a Trust, where the value has been fully disposed of by a gifting regime, are no longer the personal property of the testator of a Will.  As a result, these assets are as a rule protected both from family protection claims and from changes to the testator’s wishes being implemented after their death.

Rest Home Care

If assets have been held in a Trust for a sufficient time and gifting has been completed within required limits they are unlikely to be assessed as part of an application for a rest home subsidy so remain available for the family.

As well as the above, Trusts can sometimes incidentally reduce income tax.  However, you need to be careful that tax evasion is not the purpose of setting up the trust or that the trust is not seen by the IRD to have that purpose.

In order for a trust to provide adequate protection and to withstand scrutiny if challenged, both the set up and the ongoing operation of the trust will be crucial.  Expert advice is therefore essential.

Please note that Rainey Collins is not contracted to provide Legal Aid, other than in the Treaty of Waitangi area.  We therefore are unable to take on any Civil or Family Legal Aid work. If you require Legal Aid in those areas, you can search the list of Legal Aid lawyers on the Ministry of Justice website.