Trusts and the Family Home


Your family home is very important to you, not just because of its monetary value, but also because of the emotional security it provides you and your family.  Trusts are now less popular than they used to be.  However there are still some situations, such as owning a business with creditor exposure or exposure to health and safety risk, where it may be sensible to transfer your family home into a trust.  A trust can also protect the home for someone who is unable to manage their own affairs.

If your family home is already in a trust, you should review your trust to decide whether the time, expense and loss of privacy involved with meeting trustee obligations are worthwhile.  When reviewing your trust, some important questions to ask are: “Is my trust achieving its purpose?” and “Is my trust deed fit for purpose?”  The reason that your trust was set up may no longer apply.  For example, eligibility for residential rest home care subsidy has changed.  Assets gifted to your trust, such as your family home, may now be taken into account.  You may not qualify for a subsidy, even though you are incurring the time and expense involved in administering your trust.  If that is the case, you may want to wind up your trust.

If you are a trustee of your trust, it is important that you understand your obligations under the Trusts Act 2019.  You must comply with them, even if your family home is the only asset in your trust.  For example, there is a new and ongoing presumption that trustees will provide basic trust information to every beneficiary or their representative.  If a beneficiary is a young child, the information should be provided to their guardians.  You should know who your trust’s beneficiaries are and consider the relevant factors listed in the Act when deciding whether to make routine disclosure.

Trustees also have a duty to invest prudently.  If your family home is the only asset your trust owns, the trust deed should be checked to ensure it may be retained as the only asset.  Your trust deed may be able to be varied to update it, if that is desirable.  The trustees should also regularly review the basis on which you can continue to live in the family home.

If you have any questions about whether your family home should be transferred to a trust, reviewing your trust, or meeting trustee obligations, please contact us.

Contact Mary on DDI 371 1036