Comes
into force early 2021
The
Trusts Act 2019 will come into effect on 30 January 2021. Much of the Act
updates or restates existing law. However, there are a number of changes about
which trustees and people with trusts should be aware.
Trustees’
duties
The Act
contains ‘mandatory’ and ‘default’ duties for trustees. Mandatory duties cannot
be modified or excluded by the trust deed so all trustees will have to observe
them. Mandatory duties are:
•
Knowing the terms of the trust
•
Acting in accordance with the terms of the trust
•
Acting honestly and in good faith
•
Dealing with the trust property, and acting for the benefit of the
beneficiaries, in accordance with the terms of the trust, and
•
Exercising trustees’ powers for a proper purpose.
Default
duties are duties which trustees must abide by unless the trust deed says
otherwise. These include a general duty of care, a requirement to invest prudently,
a prohibition on trustees acting in their own interests, a duty to act
unanimously and duties not to profit or benefit.
Default
duties can be modified or excluded by the trust deed. For example, the trustees
might not be required to invest prudently, and therefore may be allowed to lend
money to a beneficiary on an interest-free basis. It may also be helpful for
trustees to make decisions by majority vote, or for a trustee who is also a
beneficiary to be able to take part in trustee decisions despite their conflict
of interest.
Documentation
Trustees
will also have new requirements relating to trust documentation. Every trustee
must keep copies of the trust deed and any variations. They must either keep
their own copies of ‘core trust documents’ as defined by the Act, or ensure
that at least one of their co-trustees holds the core trust documents and will
make them available on request. If a trustee is not confident in their fellow
trustees’ recordkeeping, they will have to keep these documents personally.
Trust
information
The
legislation provides that ‘basic trust information’, including the names and
contact details of the trustees, changes of trustees, and a beneficiary’s right
to request further trust information, must be made available to beneficiaries
in most circumstances. The Act presumes that if a beneficiary requests further
trust information, including a copy of the trust deed, it must be provided
within a reasonable period of time.
Trustees
can decide not to disclose basic trust information or to decline a request for
further information. There is a process set out in the Act that considers a
range of factors such as the age and circumstances of the beneficiary, the
nature of their interest in the trust and the context of their request for
information. Trustees will have to carefully consider any decision not to
disclose information, and trusts generally will not be able to be run in
secrecy.
If you are a trustee, involved with a trust, or are thinking of establishing a
trust, please don’t hesitate to contact RSM Law about how the new Trusts Act
will affect you.
Disclaimer:
The above article has been reproduced with the approval of the editor of NZ
LAW’s newsletter FinePrint. It is true and accurate to the best of the author’s
knowledge. It should not be substituted for legal advice. No liability is
assumed by the authors or publisher for losses suffered by any person or
organisation relying directly or indirectly on this newsletter. Views expressed
are the views of the authors individually and do not necessarily reflect the
view of this firm. Copyright NZ LAW Limited, 2019
RSM Law is
a member of NZ LAW Limited, an association of independent legal practices.