The Trusts Act 2019 (‘the Act’) is the most significant change in New Zealand trust law in over 60 years. Replacing the Trustee Act 1956 and the Perpetuities Act 1964, it creates new obligations for trustees and makes a number of welcome changes to clarify and modernise trust law.
The Act comes into effect on 30 January 2021. The Government has provided a transitional period to ensure trustees are familiar with the new legislation and have sufficient time to review trusts and ensure they comply with the new Act. Many trust deeds will need to be varied to comply with the new legislation.
The Act clearly sets out a trustee’s duties, and requires greater transparency regarding trust activities. With more onerous obligations on trustees, trustees will need to spend more time ensuring they meet those obligations. Compliance costs for existing trusts may also increase.
It may be an appropriate time to consider the future of a trust. Trustees should weigh up the benefits of a trust (to its beneficiaries) against the compliance costs and the disadvantages of the trust structure. Trustees should consult with their professional advisors so they can make an informed decision whether to continue with a trust.
In most cases, trustees will need to provide basic trust information (the existence of the trust, details of the trustees, and the beneficiary’s right to request additional trust information) to each beneficiary. Additional trust information will need to be provided if requested. In some situations, trustees may withhold basic trust information or additional trust information from a beneficiary after considering certain factors set out in the Act.
The mandatory duties should be nothing new to the majority of trustees, and are already present in current law. The Act confirms that these are requirements, and that no trustee can avoid these duties.
(unless the trust deed provides otherwise):
If there is a need to depart from the default duties, (eg. it may not be appropriate to require trustees to act impartially when considering all beneficiaries) then it may be appropriate to vary the trust deed to allow this.
Trustees must hold the following documents:
the trust deed
All trustees must hold the trust deed and any variations. One trustee, who agrees to make copies available to other trustees when requested, may hold the other documents.
To find out more about the Trusts Act 2019, or to discuss the implications of the Act on your trust, contact one of our trust specialists at Gibson Sheat. Phone 04 569 4873 or contact one of our trusts team.
A copy of our Trust Act 2019 information booklet is available here.