The Trusts Act 2019 makes important changes to trust law in New Zealand and replaces the Trustee Act 1956 and the Perpetuities Act 1964. The Act has been enacted and will come into force on 30 January 2021. Trustees and beneficiaries should be aware of both the changes and impacts on their rights and obligations. The Act modernises and clarifies trust law, codifies the mandatory and default duties on Trustees, simplifies the core principles of a trust and provide mechanisms to resolve trust-related disputes. The main changes are:
1.The codification of mandatory and default Trustee duties: a) The five mandatory duties cannot be excluded or modified by the Trust deed and impose on all Trustees a duty to know the terms of the Trust, a duty to act in accordance with those terms, a duty to act honestly and in good faith, a duty to act for the benefit of beneficiaries, and a duty to exercise the trustee’s powers for proper purposes and b) The ten default duties apply unless expressly excluded by the Trust deed and include a duty to invest prudently, a duty not to exercise power for their own benefit, a duty to avoid a conflict of interest and a duty to act unanimously.
2. The length of a Trust’s life has been extended from a maximum of 80 years to a maximum of 125 years.
3. Requirements for the management and disclosure of trust information to beneficiaries. The Act sets out what information Trustees must keep and how long documents must be kept. Trustees may only refuse to provide information to beneficiaries after considering both their general obligation to provide information and a series of factors as to the nature of the information and the practicalities of restricting that information. The Act favours keeping beneficiaries informed and clearly outlines the basic trust information that is to be provided to every beneficiary. The process of disclosing information also includes a requirement on Trustees to notify all those who are qualifying beneficiaries. Trustees may only refuse to provide information to beneficiaries after considering both their general obligation to provide information and a series of factors as to the nature of the information and the practicalities of restricting that information.
4. Mechanisms to resolve trust disputes - in the interest of keeping trust related disputes out of the High Court, the Act provides for alternative dispute resolution mechanisms such mediation or arbitration.
The Trust Act 2019 is going to impact existing trusts. New trusts need to ensure they comply with the provisions of the Act. Want to know more? Contact Gina Jansen Lawyers on 09 869 5820 or email us at firstname.lastname@example.org.