An Auckland family trust specialist believes the vast majority of New Zealand's estimated 400,000 family trusts could be operating improperly.
The Law Commission is investigating the law on trusts with a particular focus on trustees who adminster them.
Family trust specialist Ross Holmes says 95% of trusts are formed with "zero running instructions" and it is inevitable trustees will make mistakes.
Mr Holmes says many trustees make decisions without consulting their co-trustees, and that can put the very validity of a trust at stake if it happens repeatedly.
The Law Commission says the legislation is vague, hard to understand and often ignored, and its investigation will clarify what could take its place.