Date: 15th October 2017
There are between 300,000-500,000 trusts in New Zealand and now the law governing trusts will be updated for the first time in over 60 years. Parliamentary plastic surgery is in store for the Trustee Act to make trust law easier to access and understand.
This will be the first significant change since the introduction of the Trustee Act 1956. The old Act has been viewed as being narrow in scope, with trust administration being complicated and expensive. However, there should be no need to change existing family trusts, as the new Act will largely restate existing law.
The Trusts Bill will provide better guidance for trustees and beneficiaries, and make it easier to resolve disputes. Some of the changes include:
The draft Bill includes a process for disclosure of trust information. This includes the trust deed, documents relating to the property and administration of the trust, and other information holding trustees accountable. Trustees will have some flexibility with disclosure, but the Bill favours keeping beneficiaries informed.
If a specified commercial trust arrangement was created before the beginning of the Act, it will be exempt from some provisions. That could reduce the need to amend existing terms, like trustees keeping particular information and providing certain information to beneficiaries.
Specified commercial trusts created after the beginning of the Act will be able to modify or exclude particular provisions, like preventing beneficiaries terminating the trust by unanimous consent where that would run across financing arrangements made to protect the rights of lenders and borrowers.
Particular express trusts subject to the requirements of the Financial Markets Conduct Act are not subject to some of the Bill’s requirements. The FMCA is to be amended to reflect the Bill’s wording with regard to various duties relating to the functions of supervisors and managers.
If you would like to discuss what a trust would entail or what your responsibilities might be as a trustee, contact us.
Quite possibly, little or nothing. But if you’ve had a trust quietly ticking away in the background for some years, it could mean a lot. Our advice is to get in touch with us to discuss your trust and any possible impact. A few minutes doing this now could save a lot of pain later.