10 Reasons you should have a family trust

Family trusts are misunderstood. They masquerade as financial planning vehicles exclusively for the fabulously rich, however, they are just as relevant for everyday working people. Weston Ward and Lascelles’ family trust lawyers in Christchurch advise a diverse range of people in ways to protect their family’s financial future. Whether you're a business owner, property investor, or simply someone who wants to ensure your loved ones are protected, understanding the advantages of a family trust is essential. Afterall, a family trust is one of the most powerful legal structures available providing families with peace of mind for generations to come.

Here are ten reasons why you should consider establishing one:

1.  To keep assets in the family

This is the most common reason why people set up a family trust: to pass on family assets to the next generation. Certain assets such as a holiday home or farm, hold great sentimental value that goes beyond monetary value, and a New Zealand property trust protects these assets. Under a trust structure, after your death the asset remains in the family as it is owned by the trust entity. Without a trust in place, there are typically two options:

• If you bequeath the property in your Will, it may need to be sold to divide and share proceeds among beneficiaries.

• If you take the fractured ownership route, the asset is at risk of becoming unworkable in the future should relationships breakdown.



2.  Make estate planning simpler and more flexible

A family trust offers unparalleled flexibility in how your estate is managed and distributed after your death, beyond what's possible through a traditional Will. A family trust can be used as a protective mechanism in a variety of situations.

Consider a scenario where you’re worried your child might lose part of their inheritance if they break up with their partner. A family trust could be set so a prenuptial agreement (contracting out agreement) is signed before they receive their inheritance. Or the trust can keep ownership of the money and loan it to your child – if the relationship ends, the trust can ask for a repayment, keeping it safe from being split with the ex.

3.  Adapt easily as life and family circumstances change

Life is unpredictable. A family trust provides the flexibility to respond to changing circumstances, whether that's market fluctuations, or family developments – births, deaths and marriages, without the rigidity of other structures. Trustees have the discretion to make decisions based on current circumstances rather than being locked into predetermined arrangements that are no longer relevant to the beneficiaries needs

4.  Reduce the risk of disputes over your estate

For families with complex dynamics or worries about potential challenges to estate plans, a family trust makes sure your wishes are followed but also offers robust protection against claims and support. Working with experienced family trust professionals in Christchurch ensures the trust structure maximises these benefits.

Under the Family Protection Act 1955, family members (typically spouses, partners, children, or grandchildren) can challenge your Will if they believe they haven't been adequately provided for. These claims add fuel to the fire of family fallouts and often significantly deplete estates.

5.  Protect vulnerable or high-risk beneficiaries

The flexibility of a family trust extends to managing distributions for beneficiaries with special circumstances. Whether a child with disabilities, addiction issues, or simply with poor financial management skills, trustees can provide oversight, make distributions conditional on certain behaviours or achievements, or ensure funds are used for specific purposes like education or healthcare. This protective framework ensures your legacy benefits your loved ones rather than being squandered or exploited.

6.  Keep your family’s financial affairs private

Unlike Wills, trust arrangements remain private. The structure, assets, and distributions of your trust don't become part of the public record, protecting your family's privacy. For business owners, or anyone who values discretion in their financial affairs, this confidentiality can be particularly important. Business competitors, estranged family members, or the public cannot gain information about your wealth and how you have chosen to distribute it.

7.  Safeguard assets from relationship property claims

Under New Zealand's relationship property law, after the breakdown of a relationship your personal wealth can be seriously impacted, which may jeopardise what you are able to leave your children from previous relationships.

It cannot be overplayed the importance of seeking expert family trust advice, as developments in the law have meant they are not as protective as they once were. However, when family trusts are properly structured, they do still provide meaningful safeguards when formed as part of a comprehensive wealth protection strategy. It is crucial to seek the best legal advice.

8.  Manage your family’s tax position strategically

When set up properly, family trusts help with tax planning. While the tax rules in New Zealand have changed over the years and trusts don't offer as many tax breaks as they once did, they can still help you manage your tax bill more effectively. For example, the trust can distribute income to family members who earn less and therefore pay lower tax rates. You can also choose when to distribute money in a way that makes sense for your tax situation.

If you're a business owner looking to optimise both your business and personal finances, trusts can work within the business structures to reduce your overall tax. It's important to get legal advice from a business lawyer to make sure you're doing everything by the book while getting the most benefit possible. Weston Ward and Lascelles have both family trust lawyers and commercial lawyers under one roof, who work in tandem to optimise your tax position.

9.  Ensure a smooth transition for your business

If you own a business, a family trust can be a great way to pass it on to your children or others. Without a trust, your business might have to be sold after you die to divide the money among beneficiaries. With a trust, the business stays intact. Trusts provide continuity, minimise disputes, and allow for flexible distribution of income and capital, ensuring the business remains secure and aligned with the family’s long-term goals.

10.   Shield personal assets from creditors and lawsuits

Once assets are transferred into a trust, they are no longer owned by you personally. This means if you are self-employed or have a business in a high-risk industry and face civil litigation in Christchurch or elsewhere, these assets are generally protected from creditors seeking to satisfy judgments against you individually. This protection can be invaluable in today’s litigious environment.

How can you create a family trust in Christchurch?

Establishing a family trust is a significant decision. It requires expert legal advice and guidance to ensure its structured correctly for your unique circumstances. Weston Ward and Lascelles experienced trust lawyers in Christchurch can guide you through every aspect of trust establishment and administration, tailored to your specific needs and goals.

Don't leave your family's future to chance. Contact our Christchurch law firm today to schedule a consultation and discover how a family trust can deliver the protection, flexibility, and peace of mind your family deserves.