New Zealand Herald data journalist Keith Ng estimates that 325,000 New Zealand properties have trusts involved in their ownership structure. See In properties we trust – it’s the Kiwi way by Anne Gibson (New Zealand Herald 18 January 2020). However, what the true number is cannot be definitively determined as s 153 of the Land Transfer Act provides that “Notice of a trust, whether express, implied, resulting, or constructive, must not be registered or noted on the register …” Similar provisions apply regarding the ownership of company shares.
Anne Gibson postulates regarding New Zealanders’ love affair with trusts. While it may well be fair to say that this love affair may be coming to an end, trusts cannot be discarded as simply as might be thought and, even when wound up, chickens can still come home to roost.
The reason for this? Trusts, unlike say companies, are not registered (and de-registered when no longer required). A trust is not a legal entity. Rather a trust reflects the relationship where a trustee or trustees hold assets for the benefit of the beneficiaries. While trustees can also be (and often are) beneficiaries; the trustees’ must consider the interests of all of the beneficiaries, not just any trustee/beneficiaries.
Properly administered trusts, settled for sensible and enduring reasons, have provided long-term inter-generational asset protection for hundreds of years. However, the effective commodification of trusts that has occurred over the last thirty years in New Zealand has resulted in a substantial number of trusts that are not properly administered and where trustees have little understanding of the duties and obligations of trustees or the risks of trusteeship. See for example Powers of attorney can bite. Another aspect of trusts that can be overlooked is the necessary loss of control. Many trusts are settled with good intentions (or at least a trust seems likes a good idea) but no appreciation as to what that trust might look like with the passage of time when a settlor trustee might retire or be removed. The cost and personal loss that can result is traversed in the case of Triezenberg v Mason, where a financially and personally expensive fight for trust control is played out in the court. See Loss of Morale, Buyer’s Remorse and More Remorse.
Former IRD manger Adam Hunt estimates that 80% of New Zealand trusts serve no genuine purpose. It might be more correct to say that 80% of trusts (or whatever the relevant percentage is, if this can be quantified) do not have sufficient assets, or are not sufficiently well managed to serve a purpose that warrants the cost and risk of ownership in trust solution.
The current juxtaposition of greater inquiry into the parties relating to any trust must be measured against the fact that there is no register of discretionary trusts and no enforceable obligation on trustees to notify beneficiaries. As noted in Enright v Enright at  and :
 … The duty of disclosure on trustees is a fiduciary duty. But there is a
question as to its extent. Lewin on Trusts considers trustees have “a duty to take
reasonable steps to inform an adult beneficiary with a future vested, vested defeasible or contingent interest under the settlement of its existence and the general nature of his interest under it, as soon as reasonably practicable after the interest comes into existence, unless the trustees reasonably believe that by reason of the remoteness of the interest the beneficiary has no reasonable prospect of successfully asserting rights to information on demand …”. The authors then say that “generally similar considerations apply to discretionary beneficiaries … In the case of discretionary trusts and powers which are presently operative or exercisable, there is an additional reason for disclosure, in that a proper consideration of an exercise of discretion from time to time may well involve communication with discretionary beneficiaries who have a realistic prospect of benefiting under the trust and power so that account can be taken of the beneficiaries’ needs and requests for consideration”. They consider disclosure should normally be limited to those discretionary beneficiaries who are, in
the circumstances, real potential candidates for benefit in the proper exercise of
discretion under the trust. They consider the information that should be given is
information about the general nature of the beneficiary’s interest, including the
conditions attached to it, but not advice or explanations about the legal implications
 The extent of the duty of automatic disclosure has not yet been clearly
determined in New Zealand. But, in considering an argument about disclosure in
response to requests by a discretionary beneficiary, in Erceg v Erceg, the Supreme
Court stated “[i]n the normal run of things, trustees will provide [copies of trust
documents demonstrating how the trust has been administered and managed and what has become of the trust property] to close beneficiaries on request or proactively, without the need for a request.”
The new disclosure obligations introduced by the Trusts Act 2019, which will come into full effect on 30 January 2021, may be the most compelling reason to limit the use of trusts moving forward.
- Erceg v Erceg  NZSC 28
- Enright v Enright  NZHC 1124
- Triezenberg v Mason  NZHC 2125
- Triezenberg v Mason  NZHC 920
- Triezenberg v Mason  NZHC 14