Family trusts are widely used in New Zealand for asset protection and estate planning. People often establish trusts to safeguard assets from risks such as business liabilities or relationship property claims, and to assist with succession planning and provide for future generations. 

Many people agree to act as trustees without fully appreciating the responsibilities involved. It is common for trustees to rely heavily on professional advisers to manage trusts without realising that they themselves hold significant legal and fiduciary duties that cannot be delegated.
The Trusts Act 2019 sets out mandatory duties for trustees. These include knowing the terms of the trust, acting honestly and in good faith, and acting for the benefit of the beneficiaries. These duties cannot be excluded by the trust deed.
While professional advice from lawyers or accountants is often essential, obtaining advice does not replace a trustee’s responsibility. Trustees must consider the advice they receive and ensure decisions are properly discussed and documented.
Trustees must act unanimously when making decisions, unless the trust deed provides otherwise. Trustees cannot simply defer to one trustee or to professional advisers. Each trustee must actively participate in decisions affecting the trust.
Trustees should also be aware of potential personal liability. When acting properly in the administration of the trust, trustees are generally entitled to be indemnified out of the trust assets for liabilities incurred in their role. However, trustees who act dishonestly, engage in wilful misconduct, or are grossly negligent may be personally liable for losses suffered by the trust. 
Conflicts of interest may also arise in family trusts, particularly when an individual acts as settlor, trustee, and beneficiary at the same time. While this is permitted, trustees must ensure that their personal interests do not override their fiduciary duties. Decisions must always be made in the interests of the beneficiaries as a whole.
Good trust governance requires active engagement by trustees, including regular trustee meetings, proper documentation of decisions, and periodic reviews of the trust structure to ensure it remains fit for purpose and compliant with the Trusts Act 2019.
At Schnauer & Co Lawyers, we regularly advise trustees on their duties and responsibilities, as well as on the ongoing administration and governance of trusts. Whether you are acting as a trustee, settlor, or you are a beneficiary, our team can help ensure that your trust is properly managed and continues to achieve the asset protection and succession planning objectives for which it was established.

Schnauer & Co, 
1 Shea Terrace, Takapuna 
09 486 0177 
schnauer.com