Why “Mum and Dad” Trusts Still Matter
It’s easy to think: *“Our Trust only holds the family home—surely it’s not worth the effort.”*
But even a home-only Trust can provide protection that’s worth far more than the small effort to maintain it.
1. Simple to Run
If your Trust owns just your home:
- You don’t need a separate bank account.
- Rates, insurance, and maintenance can be paid jby you ust as if you owned the property personally.
- You can declare the Trust **non-active** with IRD —so no annual tax return is required.
Day-to-day life looks no different from personal ownership.
2. Strong Protection Remains
A home-only Trust still protects you from:
- **Future partners:** Without a Trust, a new partner could gain a 50% share of your home after three years (sometimes sooner, under recent court decisions).
- **Creditors:** If you face a claim—for example, from an overseas accident without ACC cover—your home stays shielded.
- **Care costs:** The increase in your home’s value inside the Trust remains protected from rest home means testing.
3. Safe Inheritances for Children
Without a Trust, your will forces inheritances to be paid out—even if your child is:
- Bankrupt,
- Going through a separation, or
- In residential care.
With a Trust, trustees can hold back funds until it’s safe, or transfer assets into a child’s own Trust so no one else can touch them.
Real-Life Stories
**✅ Success – Patricia**
Patricia placed her $250,000 home into a Trust in the 1990s. Today, it’s worth $1,200,000. Because the Trust still owns it, that $950,000 gain is protected from residential care means testing.
**⚠️ Failure – Ken**
Ken wound up his home-only Trust on the advice of his friends, whose lawyers had told them that Trusts no longer gave any asset protection. Later, he remarried, and his new partner became entitled to half the home after three years of marriage. Without the Trust, he lost half of his core asset.
The Bottom Line
Even a “Mum and Dad” Trust with only the family home can shield the most significant asset most families ever own. It’s a simple way to lock in protection for you—and for the next generation.
📖 **Next step:** Contact us to book a **Trust Check** at our offices or via Zoom with Kirsty Hourigan +64 9 4155704. We’ll review your Trust and show you how to keep it simple, low-cost, and protective.
Disclaimer: This blog is general information only, not legal advice. The decision to wind up a trust has serious implications, including potential loss of asset protection and tax consequences. Please seek professional advice for your situation before taking any action.
