Family trusts have long been a cornerstone of asset protection and succession planning in rural New Zealand. For farmers and small business owners, they’ve provided peace of mind - shielding family wealth from business risk, relationship property claims, and even future tax implications.
But just because a trust was the right tool10 or 20 years ago doesn’t mean it still works for your needs today. With the introduction of the Trusts Act 2019, greater scrutiny from IRD, and changing family circumstances, it’s now more important than ever to review your trust and ask: is it still fit for purpose?
1. The Law Has Changed
The Trusts Act 2019 brought in new obligations for trustees, including duties around transparency,record-keeping, and communication with beneficiaries. Many older trusts were not drafted with these requirements in mind - and failing to comply could put trustees at legal risk.
2. Your Family Situation Has Evolved
Divorce, remarriage, blended families, or children entering new relationships can all complicate the original intentions of your trust. What once made sense may now leave your assets vulnerable or your intentions unclear.
3. You May Be Paying for Something You No Longer Need
Trusts come with annual compliance costs - accounting, legal reviews, and sometimes even independent trustee fees.If your trust no longer provides a clear benefit (e.g., you no longer run a business or face significant risk), those costs might outweigh the advantages.
4. Succession Planning Could Be Out of Date
Does your trust still reflect who you want to benefit from your estate? Are the right people in control as trustees? If your children are now adults or if you've welcomed new family members, it could be time to update your structure.
Questions to Ask Yourself
· Why did we set up the trust originally?
· Are those reasons still relevant today?
· Do we understand the trustee obligations under the new law?
· Are we confident the trust is still protecting what it should?
What You Can Do
We recommend a regular trust review - ideally every 2 to 3 years, or when major life events occur. A review can help ensure:
· The trust still aligns with your goals
· The structure is legally compliant
· Trustees are up to date with their duties
· Beneficiaries are appropriately managed and informed
If the trust no longer serves a clear purpose, it may even make sense to wind it up.
Let’s Talk
As rural legal specialists, we understand the unique dynamics that farming families and small rural businesses face. If you’re unsure about the relevance or health of your trust, we’re here to help.
Contact us to do a trust review - protect what matters most, the smart way.
