the trusts act 2019 - update
what’s happening?
The new Trust Act 2019 (“the Act”) comes into effect from January 2021.
It is estimated there are over 500,000 trusts in New Zealand and the Act with have an extraordinary impact on thousands of New Zealanders. This is a considerable time of change and there is significant work to be carried out in getting prepared for the changes. We want to ensure that our clients are ready doe the changes before January 31 2021, this leaves us less than 9 months to help you be prepared!
what does it mean for trustees?
The key things that professional trustees and settlors should be aware of and consider under the Act include:
mandatory duties: the previous law always overshadowed and imposed duties on trustees, however the new Act sets out quite clearly the duties of a trustee. Some trustee duties cannot be excluded or modified by a trust deed. Some of the duties imposed on trustees are:
A duty to act honestly and in good faith;
A duty to act for the benefit of beneficiaries;
A duty to exercise the trustee’s power for the purpose.
information disclosure/record retention: the Act creates an obligation on the trustees that all basic trust information should be made available to certain beneficiaries, if requested by them. In the first instance that also includes informing a person that they are a beneficiary, the contact details of the trustees and any changes of trustees. The Act sets out the information all trustees must hold and for how long that information should be kept for.
what does it mean for beneficiaries?
As from January 2021, all beneficiaries must be told by trustees that they are beneficiary of a trust. The trustees must also provide beneficiaries with regular information about the trust, without them having to request it. As a beneficiary you can, as a minimum, expect to see the trust deed, the names of the current trustees and some basic financial info.
what do you need to do?
We have added a new member to our team, Natalie Picton, who is our Trust Administrator. Natalie’s role is to ensure we get to each of our trust clients before it’s too late! Natalie will be in touch with all our trust clients over the coming year. But if you are super excited to get ahead and conduct your review sooner rather than later, then by all means please get in touch with her. If you aren’t a client of ours but have a trust and are concerned about the changes, we are happy to help!
what happens if you ignore?
If you choose to ignore the Act you will be in breach of your obligations as a Trustee. You could find a beneficiary making loud noises, and they could even go as far as applying to the courts to have you removed from your role.
straight talking legal advice
For straight talking legal advice about the new Act please contact us to discuss what changes are required for your trust to become compliant.