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In New Zealand, trusts are a common legal structure used to manage and protect assets, but it’s important to distinguish between different types of trusts, especially when they relate to Māori land and taonga (treasures). Two types of trusts that are often discussed in this context are family trusts and whānau trusts, the latter being specific to Māori land and governed by Te Ture Whenua Māori Act 1993. This blog explores the key differences between a general family trust and a whānau trust under this Act.

What is a Family Trust?
A family trust is a legal entity created to hold and manage assets for the benefit of certain individuals or groups, typically family members. These trusts are commonly used for various purposes, such as asset protection, estate planning, and ensuring the financial security of future generations.

Key Characteristics of a Family Trust:

1. Flexibility: Family trusts are highly flexible and can be tailored to the specific needs of the family. They can include a wide range of assets, from real estate to shares and personal belongings.

2. Control: The settlor (the person who creates the trust) can retain a significant amount of control over how the assets are managed, often serving as a trustee alongside others they choose.

3. Protection: Assets within a family trust are generally protected from creditors, relationship property claims, and in some cases, from being included in means testing for government benefits.

4. Inheritance Planning: Family trusts are often used to ensure that assets are passed on to beneficiaries according to the settlor’s wishes, often with provisions that protect against irresponsible spending or external claims.

What is a Whānau Trust?
A whānau trust, on the other hand, is a specific type of trust established under Te Ture Whenua Māori Act 1993, which governs Māori land. The primary purpose of a whānau trust is to manage and preserve Māori land, or general land owned by Māori, and other assets for the collective benefit of whānau (extended family) members, ensuring that these taonga remain within the whānau across generations.

Key Characteristics of a Whānau Trust:

1. Purpose: Whānau trusts are primarily established to keep Māori land within the whānau, ensuring its protection and utilisation according to tikanga (Māori customs).The focus is on the wellbeing of the collective rather than individual gain. They also provide an alternative to fragmentation of shares in Maori land arising out of repeated succession as each generation passes on.

2. Governance: Whānau trusts are subject to the provisions of Te Ture Whenua Māori Act 1993, which imposes specific requirements regarding the management and use of Māori land. Trustees of a whānau trust must act in accordance with Māori customs and the wishes of the beneficiaries, often making decisions collectively.

3. Whānau-oriented: The beneficiaries of a whānau trust are usually the descendants of a particular tipuna (ancestor). The trust is intended to benefit all members of the whānau, including future generations, rather than just the immediate family of the settlor.

4. Perpetuity: Unlike family trusts, which have a finite duration (the law permits them to exist for a maximum of 125 years), whānau trusts are designed to exist in perpetuity, ensuring the land and assets are preserved indefinitely for the benefit of the whānau. They can only be terminated by an order of the Māori Land Court.

Key Differences Between Family Trusts and Whānau Trusts

1. Legal Framework: Family trusts are governed by general trust law, in particular the Trusts Act 2019, while whānau trusts are specifically governed by Te Ture Whenua Māori Act 1993. This Act imposes specific obligations and protections concerning Māori land, which do not apply to other types of trusts.

2. Cultural Considerations: Whānau trusts are deeply rooted in Māori culture and tikanga, ensuring that decisions are made with the collective interests of the whānau in mind. Family trusts, while they may reflect the cultural values of the settlor, are not bound by these considerations.

3. Asset Focus: Family trusts can hold a wide variety of assets, while whānau trusts are typically focused on the management and protection of Māori land and related taonga.

4. Beneficiaries: In a family trust, beneficiaries are usually defined by the settlor and can be limited to immediate family members. In contrast, whānau trusts are intended to benefit a broader group of whānau members, including future generations.

5. Duration: Family trusts have a set duration, while whānau trusts are designed to last indefinitely, preserving assets for generations to come.

Conclusion
Both family trusts and whānau trusts serve important roles in managing and protecting assets, but they operate within different legal and cultural frameworks. Family trusts offer flexibility and control over a wide range of assets, while whānau trusts are specifically designed to protect Māori land and other taonga, ensuring their preservation and appropriate use for the benefit of the whānau across generations. Understanding these differences is crucial for anyone involved in the management of Māori land or looking to create a trust that aligns with their family’s values and goals.

Want to know more about trusts? Tune into the Hamertons Lawyers Limited upcoming webinar ‘Trusts 101’ on 11 September at 12:30pm, register HERE.