Trusts Act set to become a reality
Yesterday, the Trusts Bill (Bill) underwent its third reading in Parliament and is set to become the Trusts Act (Act). It now just awaits Royal Assent. The Act will signify the first significant legislative change to trust law in New Zealand in over 60 years.
A step in the right direction
The Act is a step in the right direction for trust law in New Zealand.
It will enhance accessibility to trust law by bringing fundamental principles and rules of trust law, which have been developed by the courts over centuries, into one piece of accessible legislation. The Act will also set out the core principles of trust law, provide default administrative rules for trusts, and provide mechanisms to resolve trust-related disputes.
The Act is not intended to be an exhaustive code, as the courts will continue to develop trust law in areas that are not covered by the Act.
Existing trusts to be affected
The Act will apply to most existing and new trusts.
There will be a transitional period for existing trusts to adapt to certain aspects of the new regime.
The Act will introduce various changes to trust law, including:
- increasing the lifespan of express trusts from 80 to 125 years
- providing better guidance for trustees and beneficiaries
- creating mandatory and default trustee duties
- restricting the use of trustee exemption clauses and trustee indemnity clauses
- clarifying the ability of trustees to delegate powers and functions to another person
- streamlining the process for trustees to retire, be appointed, and removed
- streamlining the process for dealing with variations of trusts and termination of trusts
- clarifying the documents that trustees must give to beneficiaries
- enhancing trustees record retention requirements
- clarifying the courts powers in relation to trusts, and enabling the use of alternative disputes resolution and
- strengthening creditor protections.
Trusts and managing your assets
Trusts are an important aspect of managing assets. It is vital you understand your changing rights and obligations and where necessary, action these.
Please contact one of our experts if you have any queries or would like more information on the impact that the expected changes may have on your affairs.