The new Trust Act modernises trust law and makes significant changes to the way trusts are currently administered in New Zealand. The Act aims to update trust law and make the law accessible to all (not just lawyers). The Act will come into force on 30 January 2021, and will then apply to all existing written trusts, as well as any new written trusts established. It could also apply to statutory trusts or other types of non-express trusts (such as constructive or equitable trusts) if the Court decides that the Act should apply.
The quality of governance and administration of trusts is often well below the standards of other countries. This new law will be targeted towards those that are poorly governed, but it will result in a higher level of scrutiny on all trusts.
From 2021 your duties will be broken down into two types, Mandatory and Default.
Mandatory trustee duties include:
Default trustee duties (which can be modified or excluded by the terms of a trust) include:
The most controversial aspect of the new law is the obligation to make available ‘basic trust information’ to beneficiaries. In New Zealand, it’s common for not all (or sometimes any) beneficiaries to be properly engaged with trustees and often beneficiaries are unaware of trusts under which they may have an interest. As a general principle, the new law requires there to be at least a basic level of reporting to all the adult beneficiaries and to the parents/guardians of all the minor beneficiaries.
Other changes include:
These changes have many implications, especially for those who set up their trusts under the less burdensome legislation.
It may now be the situation for many where:
We will be contacting all our trust clients about what they need to do to update their trust and discuss the potential work involved. This is time-sensitive and needs to be addressed before the end of this calendar year so please respond to our correspondence when received or call us to discuss.
Thanks to MYOB for the source of information.