Trusts Act 2019 which will come into effect on 30 January 2021 is the first major reform to New Zealand trust law since the Trustee Act 1956. 

If you are the Settlor or a Trustee or a beneficiary of a Trust? Now is the time to take action to ensure that you understand the changes and get ready for it. 

Samuel Ames, an Associate from Turner Hopkins, joined us to share his insights into the changes of Trust legislation. This webinar covered the following:

1) When the new Act comes into effect? - 04:07

2) What do I need to be aware of the new Act? - 06:16

3) Beneficiary information and what can/should be provided? - 07:54

4) Trustee duties – mandatory and default duties - 27:34

5) Retention of trust documents - 30:36

6) Appointment, removal and discharge of trustees - 32:17

7) The importance of reviewing your family trust and what to tell your trust advisor - 36:33

8) Q & A - 42:00

Click the video below to view the recording

Trust Act Changes

1. When the new Act comes into effect?

Commencement date: Saturday, 30th January 2021

Overall objective: to make the law of trusts more accessible 

2. What do I need to be aware of the new Act? 

Maximum Duration

A trust can now run for 125 years.

Most family trusts run for 80 years (or less).  The 125-year period will apply to all trusts unless otherwise stated in the trust deed.

Beneficiary Information

Presumption 1: that trustee will provide basic trust information to beneficiaries

Meaning:

• That they are a beneficiary
• Name and contact details of trustees
• Details of appointment, retirement and removal of trustees
• The right to obtain a copy of the trust deed or trust information

Before giving information, consider whether presumption applies – list of factors

Must provide at least one beneficiary with basic trust information within 12 months.

Presumption 2: that trustee must give a beneficiary trust information on request

Meaning:

• Any information regarding the terms of the trust, the administration of the trust or the trust property; and which is reasonably necessary for the beneficiary to have to enable the trust to be enforced but does not include reasons for trustees’ decisions”.

Consider whether presumption should apply – list of factors.

Must provide within a “reasonable period of time”, unless trustee decides not to disclose further information. 

Considering whether to give information

• nature of beneficiary’s interests in the trust and likelihood of receiving trust property in future
• is information subject to personal or commercial confidentiality?
• expectations and intentions of settlor at time of creation of trust
• age and circumstances of beneficiary
• the effect on beneficiary of receiving the information
• the effect on relationships within the family (in the case of family trusts)
• practicality of giving information in redacted form

Trustee Duties

Codification of trustee duties

• Mandatory duties: duty to know the terms of the trust; duty to act in accordance with the terms of the trust; duty to act honestly and in good faith; duty to act for the benefit of the beneficiaries or further permitted purpose and duty to exercise powers for a proper purpose.
• Default duties: general duty of care; duty to invest prudently; duty not to profit from trusteeship;

More applicable when drafting new trust deeds.

Retention of Documents

Each trustee must retain core documents:

• Trust deed and any variations
• Records of trust property
• Trustee decisions
• Written contracts
• Accounting records
• Documents of appointment, removal and discharge of trustees

If more than one trustee, one trustee may hold all trust documents but each trustee must hold the trust deed and any variations

3. Appointment, discharge and removal of trustees

Changing trustees – person with power of appointment can change trustee – deed of appointment and removal

Better provisions to deal with incapacitated trustees

Person with power to remove trustees

• must remove a trustee if trustee has lost capacity
• may remove a trustee for the proper execution of the trust

New and existing trustees may complete any formal requirements on behalf of former trustee who loses capacity

Removed trustee must co-operate with change of trustees

Person with power to remove or appoint trustees must exercise power honestly, in good faith and for a proper purpose

 

4. The importance of reviewing your family trust and what to tell your trust advisor

• What is the purpose of my trust?
• Trustees need to be familiar with new law and what is required of them
• Review trust deed – is it fit for purpose?
• Settlor wishes
• Beneficiary expectations

If you have any questions, you cna contact Samuel via: phone 09-486-9579, or email: samuel.ames@turnerhopkins.co.nz

Read further: 

How to use family trust to protect your assets in New Zealand?