The Trusts Act 2019 (the Act) came into effect on 30 January 2021. The Act replaced the existing Trustee Act 1956 and the Perpetuities Act 1964. The Act will become the primary source of law relating to trusts in New Zealand.
Purpose of the Act
The Act is intended to:
The changes made to the law by the Act are important to all settlors, trustees, and beneficiaries of trusts in New Zealand.
Trustee’s obligations to give information to beneficiaries
The Act creates two rebuttable presumptions in relation to the provision of information to beneficiaries as follows:
The basic trust information is:
The presumption changed the previous position, which was, that information is provided at the trustee’s discretion to a positive obligation on the trustees.
The new presumptions regarding disclosure are grounded in the view that beneficiaries are required to have knowledge of trusts and trust information in order to enforce the due and proper administration of trusts.
The presumptions can be rebutted in certain circumstances. Unless rebutted, the disclosure obligations extend to all beneficiaries of the trust. Many trust deeds contain a broad class of discretionary beneficiaries. In many cases it is likely that it will not be appropriate for all such beneficiaries to receive information about a trust from which they are unlikely to receive future distributions.
Trustees can consider the grounds on which the presumption of disclosure can be rebutted and could also consider the possibility of resettling a trust on a narrower class of beneficiaries.
Core Trust Documents
The Act sets out the following core trust documents that must be held and who must hold these:
At least one trustee must hold the core trust documents and all trustees must hold the trust deed and any variations of trust. The trustee responsible for retention of the core documents must be clearly determined.
Review of trustee decisions
Restatement of trustee duties
The Act specifies two types of trustee duties – mandatory duties and default trustee duties.
The mandatory duties are to:
Checklist for trustees
Have you considered whether:
We recommend seeking professional advice in relation to your specific circumstances. For specialist Trusts advice, please contact us at Dunedin (03) 477 7312 or Wanaka (03) 443 0044