Trust Law Reform: The Trusts Act 2019
Nov. 19, 2019
The much-anticipated Trusts Act 2019 (the Act) will come into force on 30 January 2021. The Act makes significant changes to New Zealand trust law and replaces the Trustee Act 1956 and the Perpetuities Act 1964.
The Act modernises and clarifies the law relating to express trusts, codifies mandatory and default trustee duties, simplifies the core principles of the law and provides mechanisms for resolving trust-related disputes. The rules will apply to existing trusts and new trusts.
The Act is not an exhaustive code of the law relating to express trusts and is intended to be complemented by the rules of common law and equity which means a degree of flexibility will be maintained so that trust law in New Zealand can continue to evolve.
Generally speaking, the Act increases the rights of and protections for beneficiaries while imposing more obligation and responsibility on trustees. Consequently, there will be greater transparency for beneficiaries, but trusts will become more demanding for trustees to administer.
The degree of privacy enjoyed by trustees in the past will reduce under the Act. Perhaps the most significant change is the introduction of a legislated presumption whereby trustees must, in most cases, notify beneficiaries of basic trust information, including the fact that that they are a beneficiary of the trust so that they can enforce their rights. The Act specifies factors which trustees must consider when deciding whether the presumption to disclose applies.
Further changes under the Act include:
A new statutory definition of express trust
The extension of the maximum duration of a trust from 80 to 125 years
The introduction of mandatory and default trustee duties
An obligation on trustees to keep core documents of the trust
The inclusion of clear guidance for the appointment and discharge of trustees
Flexible powers for trustees to manage trusts
A simplified process for the vesting of trust property
Modernised dispute resolution procedures
The introduction of the role of special trust adviser
Expansion of a trustee’s ability to delegate powers and functions
Existing trusts should be reviewed and possibly varied to accommodate these changes to New Zealand trust law. Please contact us at firstname.lastname@example.org to have your trust reviewed or for assistance in meeting your obligations under the Act.
Disclaimer: The information contained in this article is general in nature and not tailored to your personal circumstances. It is only current as at the date posted and should not be relied upon as legal advice. For legal advice applicable to your situation, please contact us for an appointment.