Is Your Family Trust Still Fit for Purpose in 2026?

The start of a new year always feels like a clean slate—a time for resetting goals, tidying up the garden, and perhaps finally getting to that “admin pile” on the desk. In 2026, there’s one document in that pile that deserves more than a glance: your family trust.

For many New Zealanders, a trust was something set up years ago and tucked away in a safe, largely forgotten. But the legal landscape in New Zealand has shifted significantly over the last few years. With the bedding-in of the Trusts Act 2019 and the more recent 39% trustee tax rate, the set-and-forget days are officially over.

So, if you’re asking yourself, “Is it worth having a family trust in NZ?” or wondering if yours is still doing the job it was meant to do, let’s look at why 2026 is the year for a proper check-up.

Why Start a Family Trust in the First Place?

Historically, the reasons for setting up a family trust were pretty straightforward. People wanted to protect the family home from business creditors, simplify things for family trust beneficiaries after they passed away, or keep assets safe from potential relationship property claims.

These family trust benefits are still very much alive. A well-managed trust remains one of the best ways to ensure that your hard-earned assets stay within the family for generations. However, the cost of admission for these benefits has changed. Between stricter disclosure rules and higher tax rates, you now have to be much more intentional about how you run the show.

The 2026 Reality Check: Tax and Compliance

The biggest question on most people’s minds right now is the 39% tax rate. Since 1 April 2024, trust income that is not distributed to beneficiaries is generally taxed at 39% (unless the trust earns less than $10,000 a year).

This has changed the math for many. If your trust is holding significant cash or investments and you aren’t making active decisions about family trust distribution rules, you might be paying more tax than necessary. This is often where we see people questioning, “Is family trust still a good idea?” The answer usually depends on your “why.” If your primary goal is asset protection—keeping your home safe from a business failure or protecting an inheritance—then the extra tax or compliance cost is often seen as a fair price for that security. But if the trust was purely for tax efficiency, it might be time to sit down with your lawyer and accountant to see if the structure still fits.

When Should You Review Your Trust?

Seasoned lawyers like us often suggest a three-year rule for trust reviews, but certain life events should trigger an immediate conversation.

If your children have reached adulthood, the way you manage family trust beneficiaries needs to evolve. Under the newer laws, trustees have a much stronger obligation to keep beneficiaries informed. So, if you haven’t told your 21-year-old that they are a beneficiary of the family trust, you might actually be in breach of your duties.

Other triggers include:

• A change in your health or the health of a trustee.
• The purchase of a new property (yes, a family trust can buy property—it’s one of their most common uses, but the debt must be handled correctly).
• Changes in your business life or marriage.
• The simple passage of time—New Zealand law now allows a family trust to last for up to 125 years, a massive jump from the old 80-year limit. This provides a great opportunity to extend your trust’s lifespan and protect your legacy further into the future.

Who Controls a Family Trust?

One of the most common points of confusion is who controls a family trust? While the trustees manage the day-to-day, the “Appointor” holds the real power—the ability to hire and fire trustees.

In 2026, we are seeing many founding trustees reaching an age where they want to step back. If your trust deed doesn’t clearly state who takes over that power of appointment, you could be heading for a legal headache. This is why we often look at the family trust and Will together; your Will should act as the backup plan for who takes the reins of the trust when you can no longer do so.

The “Fit for Purpose” Verdict

So, is it worth having a family trust in NZ? For most, the answer is still a resounding yes—provided it’s managed well.

A trust that is ignored is a trust that is vulnerable. If you haven’t held a trustee meeting in years, haven’t kept minutes of your decisions, or haven’t updated your “Letter of Wishes,” the protection you think you have might not hold up if it’s ever challenged in court.

Let’s Get Your Trust Sorted at Shanahans Law

At Shanahans Law, we’ve been helping West Aucklanders manage their legacies since 1956. We know that trusts can feel like a maze of jargon and red tape, but our goal is to make the process straightforward and human.

We don’t believe in cookie-cutter legal advice. When you come in for a trust review, we’ll look at your specific family situation, your assets, and your goals for the future. We’ll give you a straight answer on whether your trust is still your best option, or if it’s time to wind it up and simplify your life.

Is it time for your 2026 check-up? Contact the team at Shanahans Law today for a practical review of your family trust.

Disclaimer: The content of this blog is for general informational purposes only and does not constitute legal advice. While we aim to provide helpful information about legal processes, all legal situations are unique and fact-dependent. You should always seek specific legal advice from a qualified solicitor, whether at Shanahans Law or in another firm, regarding your individual circumstances before making any legal decisions. Reliance on the general information provided here is at your own risk.