Family trusts in New Zealand: how they work, what they cost and what they do not do
A family trust is a legal arrangement you set up while you are alive: you transfer assets such as the family home to trustees, who hold and manage them for named beneficiaries under a trust deed and the Trusts Act 2019. Public Trust's July 2026 price list has a non-refundable $818 set-up fee, and about $4,600 to $5,700 for a straightforward trust including asset transfer. Moving a home into a trust does not automatically take it out of the Residential Care Subsidy test.
A family trust is a trust created by a settlor during their lifetime, run by one or more trustees, for the benefit of the beneficiaries named in the deed. It takes effect once assets are actually transferred to the trustees. After that the trustees, not the settlor personally, are the legal owners, and they must follow the deed and the duties in the Trusts Act 2019. A family trust is different from a testamentary trust, which sits inside a will and exists only after death; see testamentary trusts in NZ. This page is general information, not legal advice, and a trust deserves a lawyer or trustee company's advice before you sign.
What a family trust involves
Three roles matter. The settlor creates the trust and transfers assets in. The trustees legally own and manage the assets. The beneficiaries are the people the assets and income are held for. One person can be settlor, a trustee and a beneficiary at once, and many family trusts are arranged that way, often with an independent trustee alongside the settlors.
Assets people put in a trust typically include the family home, rental property, shares, business interests and larger savings. Everyday accounts and low-value items are rarely worth the cost of holding in trust. Anything you keep in your own name outside the trust still passes under your will, or under the intestacy rules if you have no will; see dying without a will in NZ. A trust sits alongside a will and a power of attorney, not instead of them.
What a trust can and cannot protect
Succession and management. Assets already held by the trustees are not part of your personal estate, so they are not collected in by an executor in the usual way. A trust can also hold assets for a young or vulnerable beneficiary, or keep a family business together for the next generation.
Creditors. A trust set up well in advance, for real reasons, can put some assets beyond a later personal creditor. But subpart 6 of Part 6 of the Property Law Act 2007 (ss 344 to 350) lets a court set aside a gift, a transfer for less than reasonably equivalent value, or a transfer made with intent to prejudice a creditor, where the person making it was insolvent, about to take on debts beyond their means, or in a similar position (ss 346 and 348). A transfer made close to financial trouble is the one most likely to be challenged. Protection is weakest when the trust is a late reaction to risk.
Relationship property. The Property (Relationships) Act 1976 lets a court set aside a disposition made to defeat a partner's claim (s 44) and, where a transfer to a trust defeats a partner's rights, order compensation (s 44C); it can also order disclosure about transfers to a trust (s 44B). Treat a trust as an uncertain shield here, and get legal advice before relying on it. Our relationship property guide covers the Act.
Trusts and the Residential Care Subsidy
The most common mistake is believing that moving the family home into a trust automatically keeps it safe from the Ministry of Social Development's rest-home subsidy test. Work and Income's own page says otherwise in several ways (Work and Income: Residential Care Subsidy, updated 4 August 2026):
| Residential Care Subsidy point | What Work and Income says |
|---|---|
| Asset limit, single person aged 65 or over | Total assets of $300,811 or less, with the family home and car included as assets |
| Asset limit, partner not in care | $164,731 or less without the family home and car, or $300,811 or less with them (the partner can choose) |
| Gifts in the last 5 years | Up to $8,500 a year ($42,500 over five years) is not counted; the allowance doubles to $85,000 if a couple apply at the same time |
| Gifts older than 5 years | Up to $27,000 a year is not counted, shared between you and your partner |
| Sales in the last 5 years | Checked for fair value; sales below fair value, or sales in exchange for a debt, can prompt further questions |
| Trusts | Loans made to other people, including family trusts, count as assets, and income or payments from a trust or estate count as income |
| Disclosure | If you or your partner have ever transferred assets to a trust, or been a settlor, trustee or beneficiary, you must give more information |
The page does not say how a transfer of a home into a trust is valued, and it tells people to ask the Residential Subsidy Unit (0800 999 727). It also notes that a life interest in a property owned by a family trust or an estate can be treated as the family home. Our reading is plain: a trust is not a safe harbour, Work and Income asks about trust transfers and looks back five years, and anyone planning around rest-home costs should ask Work and Income and a lawyer first, not assume the home is out of reach. Thresholds change, so check the page before you decide.
What it costs
The figures below are for setting up the trust and moving assets in. Ongoing administration is extra.
| Provider | Set-up cost | Notes |
|---|---|---|
| Public Trust | $818 non-refundable set-up fee (deducted from the total); from $1,636 plus disbursements if you set up but delay transferring assets; about $4,600 to $5,700 for a straightforward trust including asset transfer | A more complex trust costs more; hourly rates from $313.95 (Associate Trustee) to $548.55 (Senior Solicitor) for additional work |
| MYNZ Trust | $1,550 plus GST fixed fee | Priced separately plus GST: transferring a property into the trust $1,400, trust tax reporting $1,200, IRD number application $150, initial gifting documentation $150 |
| estateplanning.co.nz | From $2,500 one-time set-up fee | Includes deed drafting, IRD registration and first-year minutes; ongoing administration $800 a year (basic) or from $1,500 a year (full service) |
| PK Law (Auckland), excluding GST | Simple trust $2,750; complex trust $3,750 | Includes base documents to transfer two assets and a memorandum of wishes; conveyancing not included; appointing a corporate trustee is $850 extra |
Sources: Public Trust Family Trusts price list (PTEL14 07/26), MYNZ Trust pricing, estateplanning.co.nz pricing (described there as starting points) and PK Law pricing, all retrieved 20 October 2026.
A trust that is set up and then ignored loses much of what it was meant to do. Budget for annual trustee meetings and minutes, accounting, and tax returns. Trust income that is not distributed to beneficiaries is taxed at 33% if the trust earns $10,000 or less in a tax year and 39% if it earns more, from 1 April 2024 (Inland Revenue: Trustee tax rates).
Trustee duties and what beneficiaries can ask for
The Trusts Act 2019 sets mandatory duties that a deed cannot remove: know the terms of the trust, act in accordance with them, act honestly and in good faith, act for the benefit of the beneficiaries or a permitted purpose, and use powers for a proper purpose (ss 23 to 27). Default duties sit alongside these and a deed can adjust some of them.
Disclosure. The Act presumes trustees will give beneficiaries "basic trust information": that they are a beneficiary, the trustees' names and contact details, changes of trustee, and their right to ask for the trust terms. Before withholding information a trustee must reasonably consider the factors in section 53, and that test is objective (Mortlock McCormack: Trusts Act disclosure rules). A settlor who assumed a trust could stay entirely private from adult children or other beneficiaries should expect that to be tested.
Duration. A trust can run up to 125 years under section 16, unless the deed sets a shorter period.
Settlor as trustee. You can be a settlor and a trustee of your own trust, and many families do. How many trustees the deed should have, and whether to add an independent one, is a question for the lawyer or trustee company setting it up.
Disadvantages of a family trust
- Set-up and annual costs, and the time of keeping records and holding meetings.
- You give up personal ownership. Lenders deal with the trustees, which can complicate borrowing.
- Beneficiary disclosure duties, and court supervision if a beneficiary challenges a trustee.
- The asset-protection case is weaker than it was sold in the past, as above.
- Mistakes in administration can undo the benefits.
Family trust compared with the alternatives
| Option | When it applies | Typical cost (as at 20 October 2026) |
|---|---|---|
| Family trust | During your life, ongoing | From $818 to set up, about $4,600 to $5,700 with asset transfer at Public Trust, plus annual administration |
| Testamentary trust | Only from death, written into a will | Industry estimate of $1,500 to $3,000 for a will that includes one (lawyerfinder.co.nz, page updated January 2026) |
| Simple will, no trust | Straightforward estates with adult beneficiaries | From $69 for a Basic online will at Public Trust (prices as of 2 October 2025) |
| Enduring power of attorney | During life, if you lose capacity; it does not hold assets | See power of attorney in NZ |
If your goal is only to protect a young or vulnerable beneficiary's inheritance from the date you die, a testamentary trust is usually cheaper and simpler than a family trust run for decades first.
Is a family trust worth it for an average homeowner?
Often not. For a couple who own a home and KiwiSaver and want to pass them to adult children, a current will, an enduring power of attorney and the right insurance ownership do most of the job at a fraction of the cost. A trust earns its place where there is a business, a rental portfolio, a beneficiary who cannot manage money, a blended family with competing interests, or a succession plan that needs a structure to outlast one person. Ask a lawyer or trustee company what a trust would do for your situation that a will would not.
When the settlor dies
A properly set up family trust does not end on the settlor's death. The trustees already own the assets and carry on under the deed. That means trust assets generally do not go through probate, while personal assets do. If you are a trustee, the executor and trustee of a will guides explain how the roles differ. There is no inheritance tax in New Zealand to plan around; see inheritance tax in NZ.
Life insurance and trusts
Who owns a life insurance policy decides who is paid and how fast. Some families hold cover in a trust; see life insurance in a trust and who gets your life insurance payout. If a lump sum is part of your thinking, the buttons on this page open Momentum Life's online applications for two products issued by Momentum Life Limited. Quick Life takes ages 18 to 65 with no health questions and excludes pre-existing conditions and suicide for the first 2 years. Funeral Insurance takes New Zealanders aged 40 to 75 and, in the first 24 months, pays only for accidental death. Total funeral premiums can exceed the benefit, and the benefit may not cover a whole funeral. Neither product accepts new applicants over 75. Momentum Life Limited is rated B (Fair) by A.M. Best; see its financial strength page. QuoteHub is a Momentum Life partner and Smiths Insurance & KiwiSaver may receive a commission if you buy a Momentum policy; see how we are paid.
Advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931). QuoteHub is a trading name. Back to the estate planning hub.
Adviser's view
A family trust is a narrower tool than many families were told. It still suits succession planning, a vulnerable beneficiary or business risk, and it carries real running costs and disclosure duties. It is not a switch that takes the family home out of the Residential Care Subsidy test, and it is rarely worth it for an average homeowner whose main goal is simply to pass the house to the children.
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Cite this page QuoteHub NZ (2026). Family Trust NZ: Benefits, Costs and Setup. www.quotehub.co.nz/guides/estate/family-trust-nz. Updated 2026-10-20.
References
- Trusts Act 2019
- Property Law Act 2007, Part 6 subpart 6 (ss 344 to 350)
- Public Trust: Family Trusts price list
- MYNZ Trust: Family Trust Pricing
- estateplanning.co.nz: Pricing
- Work and Income: Residential Care Subsidy
- Inland Revenue: Trustee tax rates
- Mortlock McCormack: Trusts Act disclosure rules, 5 years on
- lawyerfinder.co.nz: Wills and estate lawyer cost NZ
- PK Law: Pricing
- Property (Relationships) Act 1976, ss 44, 44B and 44C
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