If you set up a family trust in the 1990s or 2000s, you were in good company. Many Auckland families did, often on advice that made sense at the time. Since then the deed has sat in a drawer while the law changed, your family changed and the reasons for having the trust may have changed too. A trust that isn't looked after can cost you more than it protects.

Here are the main reasons to pull that deed out and give it a proper look.

The law changed

The Trusts Act 2019 came into force in January 2021. It rewrote the rules for trustees. Trustees now have mandatory duties they can't contract out of, record keeping requirements, and in most cases an obligation to tell beneficiaries basic information about the trust. Many older deeds were written under the old law and don't reflect any of this. If your trust hasn't been reviewed since 2021, that alone is a good reason.

Your life changed

Your trust was built around your circumstances twenty or thirty years ago. Think about what's different now:

You've retired, or retirement is in sight
You've downsized, or you're planning to sell the home or business the trust was set up to hold
Children have grown up and have partners, children and finances of their own
A trustee has died, lost capacity or moved overseas, or you're wondering who should take over from you
You've separated or repartnered, or an adult child has

Any one of these can mean the trust no longer does what you want it to.

The original reason may have gone

Many trusts from that era were set up with gift duty, creditor protection or residential care subsidies in mind. Gift duty was abolished in 2011, and the rules around asset testing for the residential care subsidy have tightened considerably, so a trust may not deliver the protection it was set up for. If the trust no longer has a clear purpose, you're carrying the cost and admin for nothing. Sometimes the right answer after a review is to keep the trust and tidy it up. Sometimes it's to wind it up. Either way, it should be a decision, not a default.

Poor admin can undo the whole thing

A trust only works if it's run properly. No trustee meetings, no records, personal spending mixed with trust money. If it ever comes under attack, a court can look through a badly run trust as a sham or find the assets were never properly protected at all. A review is the chance to get the housekeeping right before it matters.

What a review looks like

A proper review is thorough. We read the deed and any variations, check the trustees and beneficiaries are still right, confirm what the trust owns and that it's all correctly transferred, and assess whether the administration meets the standards the Trusts Act now requires. We then give you clear written advice on whether the trust is still fit for purpose, what needs fixing if it is, and whether winding it up would serve you better. It's also the natural time to check your wills and enduring powers of attorney still line up with the trust, since the three work together.

If your trust hasn't been reviewed in the last few years, we recommend making time for one. Contact us and we'll review your deed, explain where things stand and set out any changes worth making.

Frequently asked questions

How often should a trust be reviewed? Every three to five years is a sensible rhythm, or sooner if something significant changes, like a death, a separation, a property sale or a trustee stepping down. If your trust hasn't been reviewed since the Trusts Act came into force in 2021, start there.

What should I bring to a review? The trust deed and any variations, a list of what the trust owns, and details of the current trustees and beneficiaries. If you can't find the deed, tell us. We can often track down a copy.

Do I have to tell the beneficiaries about the trust? In most cases, yes. The Trusts Act presumes trustees will give beneficiaries basic trust information, though there are limited grounds to withhold it. This surprises a lot of people with older trusts, and it's one of the things we work through in a review.

Can we just wind the trust up? Often, yes. If the trust no longer serves a purpose, winding it up can save cost and admin. It needs to be done properly, as there can be tax, property and relationship property consequences. A review will tell you whether winding up makes sense for you.

A trustee has died or lost capacity. What now? The trust keeps going, but the trustee needs to be formally replaced, and any trust property in their name needs to be transferred. This is common with older trusts and well worth dealing with sooner rather than later.

Will a trust protect my assets if I need residential care? Not necessarily. Asset testing rules allow gifts to a trust to be looked through, particularly gifting above certain limits. If this was the main reason for your trust, it's worth a fresh conversation about whether it still works.

This article is general information, not legal advice. Every trust is different, so talk to us about your own situation.

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