Our current Trustee Act is over 60 years old. For some years, replacement legislation has been discussed, with a view to making trust law clearer and fixing a number of issues trusts currently face. In 2013 the Law Commission published a series of discussion papers, culminating with a proposed Trusts Bill. That proposal appeared to have little political momentum, as it was never introduced to Parliament. However, following consultation with lawyers and accountants across New Zealand a new Trusts Bill has been produced by the Ministry of Justice.
The core objective of the Trusts Bill is to provide “clear, simple and accessible” trust law to the public. It is intended to make information about how trusts work more accessible to both trustees and beneficiaries.
Much of the Trusts Bill restates the existing law, but there are a number of changes, including:
However, the biggest change will be a new requirement for trustees to provide certain information to every beneficiary of a trust. This information will include:
The purpose of this new requirement is to ensure beneficiaries have sufficient information to ensure the trustees are complying with their obligations and the terms of the trust. There will also be an obligation to advise all beneficiaries if there is a change of trustee, and the Bill includes a clear list of documents each trustee must keep.
Before disclosing information to a beneficiary, the Bill requires the trustees to consider 13 different factors, and allows the trustees to refuse to provide trust information in certain circumstances. Some of the factors trustees must consider are:
Although the Trusts Bill has been introduced to Parliament, it has yet to work its way through the Parliamentary process (select committees, further readings in Parliament, etc). We expect the Bill, once passed, to have an 18 month commencement period. This should allow time to amend trust deeds, if necessary, once the new rules are known.
We will be monitoring progress of the Trusts Bill. If you would like more information regarding the Trusts Bill, or have questions regarding your trust, please contact your usual trust advisor at Gibson Sheat. We are recommending clients take this opportunity to ensure they are aware of the terms of their trust deed, and that they know who the current beneficiaries are.