Thinking of winding up your family trust? Learn when a trust no longer serves its purpose and what to consider before dissolving it. Core Legal in Masterton and Wellington can help.

Do I Still Need My Family Trust? A 2025 Legal Guide for Trust Owners in NZ

Many people set up family trusts for asset protection, estate planning, or relationship property reasons. But with changing laws and life circumstances, a question we hear often at Core Legal Masterton & Wellington is: “Do I still need my trust?”

Let’s consider a common scenario. A builder set up a trust early in his career to protect his assets from potential creditors and to keep his home separate from relationship property. Fast-forward several decades, he is now retired, happily married to his long-term partner, and their finances are completely merged. His wife has lived in the trust’s house and contributed to its upkeep for years.

After receiving legal advice, the builder realised:

• He no longer faced business risks needing creditor protection.

• His relationship property protections had long since eroded, as the trust’s assets became intermingled with the relationship.

• The Trusts Act 2019 had introduced new compliance obligations, making trust administration more complex and costly.

In short, his trust no longer served its original purpose.

Why You May Have Set Up a Trust

Common reasons for establishing a trust include:

• Creditor protection for business owners or professionals at risk of legal claims.

• Providing for children who may not be financially mature.

• Estate planning in blended or complex families.

• Relationship property protection in new or uncertain relationships.

• Historically, rest home subsidy planning.

However, legal reforms have significantly altered the landscape. Rest home subsidy laws and relationship property rules have evolved, often limiting the effectiveness of trusts in these areas.

Should You Wind Up Your Trust?

If your trust no longer meets its goals, maintaining it may be more trouble than it’s worth. Trusts now require:

• Accurate record-keeping

• Annual meetings and trustee decisions

• Possibly an independent trustee

• Ongoing legal and accounting fees

An improperly managed trust can even fail to protect your assets if challenged in court. That’s why regular trust reviews are crucial.

If you’re retired, no longer in business, or your asset protection needs have changed, winding up the trust could simplify your estate planning and save money.

What’s Involved in Winding Up a Trust?

Closing a trust must be done correctly:

• Your lawyer will review your trust deed to ensure all legal steps are followed.

• Trust assets must be distributed to beneficiaries, often involving legal documentation and property transfers.

At Core Legal, we specialise in trust law and estate planning. We offer fixed-price initial consultations to help you understand your options and make informed decisions.

Speak to a Trust Law Expert Today

If you’re unsure whether your trust is still serving you, contact the team at Core Legal Masterton & Wellington. We’ll help you evaluate whether your trust remains fit for purpose—or whether it’s time to wind it up and move forward with confidence.