Multi-Entity Investing: Using Trusts and Companies to Protect Your Assets
- Joshua Flack
- Jun 20
- 5 min read
TL;DR
Most investors start with property in their personal name and never reconsider. That's fine for one or two properties. As the portfolio grows, the right structure, trust, company, look-through company (LTC), or a combination, becomes a real lever for asset protection and tax efficiency. The wrong structure can lock you in for years and cost more than it saves. This post explains the main options and what each one actually does. Get specialist legal and accounting advice before restructuring, because the right choice depends on your specific situation. This is for information purposes only to get you thinking.
Most New Zealand investors hold their first property in their personal name and never think about it again. For one or two properties, that's usually fine. As the portfolio grows, the asset base gets larger, and the gap between protection in one structure versus another widens. The structuring decisions start to matter.
This is also an area where bad decisions are hard to reverse. Restructuring later triggers tax, legal costs, and bank reapprovals. Better to understand the options before you commit.
What "Structure" Actually Means
When investors talk about structure, they mean the legal entity that owns the property:
Personal ownership (your name on the title)
A family trust
A look-through company (LTC)
A standard company
A partnership
Combinations of the above
Each one treats the property differently for tax, asset protection, succession, and lending. The right choice depends on what you're optimising for, and rarely is the answer the same as your neighbour's.
Personal Ownership
The simplest option. You own the property in your own name, or jointly with a spouse.
Advantages: simple, low cost, deductions flow directly to your personal tax position, lending is straightforward.
Disadvantages: zero asset protection. If you're sued personally or a business venture fails, your investment property is exposed. As your asset base grows, so does that exposure.
Fine for one or two properties early on. Less ideal once there's substantial wealth on the line.
Family Trust
A trust holds property for the benefit of named beneficiaries. The settlor establishes it, trustees manage it, beneficiaries benefit.
Advantages: asset protection is the main one. A properly structured and administered trust separates the assets from your personal estate, providing protection from personal claims.
Disadvantages: cost (setup and ongoing administration), complexity, and the Trusts Act 2019 increased trustee duties and disclosure obligations. Significantly, the trustee tax rate moved from 33% to 39% (effective 1 April 2024), which changed the tax-efficiency calculation. Trusts still have a clear role, but the tax-arbitrage angle that used to drive a lot of trust setups is weaker.
Trusts remain valuable for asset protection and succession planning. They're no longer the easy tax win they once were.
Look-Through Company (LTC)
An LTC is a company that's "looked through" for tax purposes. The company owns the property, but income, losses, and credits flow through to the shareholders and are taxed at their personal rates.
Advantages: corporate-level asset protection (each LTC is a separate legal entity, so problems with one don't automatically spread to another), with tax flowing through at personal rates. Useful for splitting income between spouses on different tax brackets.
Disadvantages: more administration than personal ownership, ring-fencing still applies, and LTC rules have specific eligibility requirements (number of shareholders, share class restrictions) that must be met and maintained.
A genuinely useful structure for many investors, often used in combination with a trust.
Standard Company
A regular company pays tax at the company rate (28%) on its profits. Losses stay in the company; they don't flow through.
Advantages: lower tax rate on retained profits, asset protection, useful for development activity where profits are reinvested.
Disadvantages: 28% tax on profits plus tax on dividends when distributed (the imputation system mitigates the double tax but doesn't eliminate it), less suited to long-term residential hold where losses are common, and the structure fits active business activity better than passive ownership.
Better suited to development and active property businesses than long-term rental hold.
Combinations
Real portfolios often use a mix. A common pattern:
A family trust as the long-term holder for asset protection and succession
LTCs holding individual properties or groups for liability separation and tax flow-through
A standard company for any development activity
The right combination depends on the asset base, the type of activity, the family situation, and what you're protecting against. There isn't one right answer.
The Lending Reality
Structure affects borrowing significantly. Banks treat entities differently:
Personal lending is the most straightforward
Trust lending requires the trust deed, trustee verification, and often personal guarantees from trustees or beneficiaries
Company and LTC lending involves different documentation and assessment
Cross-entity lending and guarantees add complexity
The asset protection benefit of a trust is partly undermined if the bank requires personal guarantees, which they routinely do. This is the uncomfortable reality the structuring conversation has to include. The protection isn't absolute; it's stronger against some risks than others.
When to Restructure
Restructuring isn't free. Transferring property between entities can trigger:
Bright-line implications
GST consequences in certain situations
Legal and accounting costs
Bank reapprovals and refinancing fees
That means restructuring usually only pays off for substantial portfolios where the long-term protection or efficiency gain outweighs the one-off cost. For one or two properties it rarely makes sense to restructure after the fact.
The better path is to think about structure before you've accumulated. Most investors don't, because the early decisions feel small. By the time it matters, the cost of moving is significant.
Where This Leaves You
Structure is a real lever. The right one protects assets, manages tax sensibly, and supports portfolio growth. No structure at all leaves a growing asset base exposed.
But this is genuinely technical territory. The right answer depends on your portfolio size, family situation, activity mix, and goals. General articles can only sketch the options. The actual decision needs specific legal and accounting advice for your situation.
Don't restructure on internet reading. Get specialist advice. But know the options before that conversation, because an informed client gets better advice than one starting from zero.
Structure and lending interact closely. Banks have preferences and policies for different entities, and the structure decision affects how, and how much, you can borrow across the portfolio.
At CRISP, we work alongside your lawyer and accountant on the lending side of the structuring conversation. The right structure only works if the lending around it works. Both have to line up.
Relevant tools and resources available for free here:
Other relevant articles to check out:
About the Author:
Joshua Flack is a mortgage and lending adviser and the founder of Crisp Financial. Before finance, he spent two decades running businesses across construction, facilities services, and franchising, which is why his advice starts with how the numbers actually work rather than how the brochure says they should. He works with home buyers, investors, and self-employed borrowers across New Zealand, with particular depth in complex and non-standard lending. Crisp Financial Limited (FSP1012114) operates under the Link Financial Group FAP licence. The information in this article is general in nature and is not regulated financial advice.
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