Trusts are a popular way of protecting property and managing assets.

A trust is created when a person (the settlor) transfers property to people (known as trustees). Trustees are obliged by law to use the property for purposes that the settlor has specified. Usually one of these purposes is to make payments from the trust property to people (called beneficiaries).

Although a trust is normally given a name and is often referred to as if it is a separate entity, like a company, it is not. A trust is a relationship between trustees and beneficiaries which imposes duties on the trustees to deal with the trust property in the interests of beneficiaries.

The way the trust property is to be dealt with and the parties involved are usually set out in a document known as the trust deed. Trusts can also be created by wills.

Trusts can be set up for charitable purposes such as education or established specifically for the benefit of the members of a particular family. The terms of trusts can differ markedly depending on the purpose for which a trust has been established.

The Trusts Act 2019 ("the Trusts Act") applies to all express trusts in New Zealand, including family trusts. If settlors and trustees have not already done so since this legislation came into force on 30 January 2021, they should organize a comprehensive review of their trust deeds.

This guide deals with one particular type of trust – the family trust – but much of the information will also apply to other types of trusts.