Written by Andrew Stewart – Partner, Morrison Kent
The long-awaited Trusts Act 2019 will come into effect on 30 January 2021. Anyone involved with a trust now has until that date to prepare for the changes.
Many trusts in New Zealand are passive asset holding vehicles. Historically, these trusts have involved relatively minimal management or involvement from the trustees, except where the trust is carrying out transactions. However, under the new Act, trustees (including independent trustees) are required to take a far more active and ongoing role in the administration of their trusts.
The new Act sets out trustee duties under two headings. Some duties are “mandatory” duties and apply to every trust. Other duties are “default” duties and will apply unless specifically negated. Now is a good time to review your trust deed and make a decision as to any amendments that might be required.
New obligations are also introduced by the new Act. Two of these obligations relate to keeping of trust records and disclosure of information.
We suggest that now is a good time to complete a trust review in anticipation of the new Act coming in to force to ensure that the trust is ready to be managed appropriately once the new law applies. Some common areas for consideration are:
- Ensuring each trustee has (and retains) copies of trust records;
- Ensuring that trustees are aware of the obligation under the new Act to provide some basic information to beneficiaries (the existence of the trust, the fact they are beneficiaries, the names and details of trustees, and the right of a beneficiary to request a copy of the deed of trust information);
- Ensuring the list of beneficiaries set out in the trust deed is correct. How wide are the classes of beneficiaries and is there priority as between beneficiaries for consideration?
- Reviewing trustee duties to ensure appropriate changes are made ahead of January 2021.
If you have a trust (or are thinking of forming a trust), you should be seeking specialist legal advice to see how the new Act could affect you, sooner rather than later.
Article source: Morrison Kent