New Zealand's love affair with the family trust could be coming to an end as families ditch the vehicle ahead of a major law change which will see the biggest shake-up of trust law in 60 years.
There are estimated to be somewhere between 300,000 and 500,000 family trusts in New Zealand - a high number relative to our population of five million.
From the end of January trustees will have to be compliant with new disclosure obligations - a move set to push up the cost of using a professional trustee - and will also have to notify individuals if they are a beneficiary of a trust for the first time.
For some families that means the cost of maintaining a trust may now outweigh the benefits of having it.
It is also making some families nervous that children and grandchildren will be able to find out exactly what they are in line to inherit, discouraging beneficiaries from becoming financially independent or encouraging them to borrow more to fund their lifestyle now.
Henry Stokes, legal counsel at Perpetual Guardian, said it had seen a 50 per cent rise in people winding up trusts this year compared to last year.
"It is a substantial increase. They may have had a good reason when they set it up but that no longer exists."
Some people also had concerns about the changes, he said.
"The concern is the pressure will come on from the child [to help them out financially].
"Others are concerned about children who may have issues like drug addiction."
Stokes said some parents were worried their children would look for an easy life and bank on receiving an inheritance as they will potentially have figures to work from enabling them to better calculate how much they get.
One family he saw recently was worried their son would borrow against his mortgage to have a better life now knowing he would inherit a lot once his parents died.
Stokes said while it was not up to parents to decide what their children did with an inheritance it was a fraught area.
He said there were provisions in the law that could be worked through if the trustees did not want to provide certain information to beneficiaries.
"There are a number of different options but there is a whole process to work through to get to that."
Public Trust general manager retail, Julian Travaglia, said it saw an initial flurry of people winding up the trusts when the legislation change was first announced in 2017 by National's Amy Adams.
"We did see another increase last year but it was much smaller. That was because we did have quite an increase in the previous year."
Travaglia said it was winding up around 30 family trusts a month at the moment.
"It is mainly because the initial reason doesn't apply any more."
Many people set up trusts in the 1990s to avoid their assets being means tested by the Government for rest home fees.
People who have over a certain value in assets have to pay for rest home care themselves and are not eligible for the government subsidy.
But trusts can no longer be used to shelter assets from this.
More recently family trusts have been used by those entering into new relationships to protect against claims on their assets should the relationship break up.
But Stokes said under the Relationship Property Act trusts did not provide the same protections they once did.
If the new partner has contributed to the trust's assets like paying part of the mortgage or maintenance on the property then they will have some claim over it.
"The law has evolved to meet changes in society."
But winding up a trust doesn't come cheap.
Stokes said winding up a trust cost about the same as setting one up - between $2k and $5k - depending on what assets were involved.
But he said people needed to consider the ongoing cost of having a trust. Administering it correctly also cost money with trustees required to meet annually, following correct disclosure requirements and considering any changes needed to the assets.
It could cost $500 a year if one of the trustees is a professional like a lawyer who needs to be paid for their time.
"It begs the question as to whether the cost of having it is warranted by the benefit." Travaglia said the cost of winding up a trust depended on the complexity of it.
If there is property held by the trust the title of the trust has to be transferred away from the trust.
"It's generally a couple of thousand dollars at the minimum."
But he said there were still good reasons for having a family trust.
Travaglia said they were a good option for estate planning - to stop unwanted claims against an estate and to protect assets against a family business failure.
They were also useful for providing for those with disabilities.
Julie Mander, senior solicitor at Trustees Executors, said it had seen a small increase in the number of people winding up family trusts largely due to the increase in cost of maintaining them.
Some people did not like the idea of the new mandatory disclosure regime but there were "carve outs" in the law if they were really concerned about it.
Mander said increased transparency and accountability of trusts would be a good thing.
"It is not something we would want to shy away from."
She said if people were worried about the changes they should seek professional advice.
"If they are worried about it they should go back to why they set it up in the first place. Is it still relevant?"
While there were issues to consider in keeping a family trust there were also risks in winding it up, she said.
"Sometimes it means you can never put it back in that position."