What You Need to Know About the Trusts Act 2019
The Trusts Act 2019 came into force on 30 January 2021. It replaces the Trustee Act 1956 and applies to all existing and future trusts in New Zealand.
The Act is intended to make trust law simpler, more transparent, and more accessible to the general public.
“How does this affect me as a trustee or beneficiary of a Trust?”
- As a trustee there are greater compliance requirements for the trust and all trustees are required to contact beneficiaries and supply them with basic trust information.
- As a beneficiary, the trustees of any trust you are a beneficiary of are required to notify you that you are a beneficiary and provide you with basic trust information.
A summary of the key provisions in the Trusts Act 2019 are:
- The life of a trust is extended to 125 years, it was previously limited to 80 years.
- There are compulsory duties for trustees, which cannot be changed. These are:
- A trustee must know the terms of the trust.
- A trustee must act in accordance with the terms of the trust.
- A trustee must act honestly and in good faith.
- A trustee must deal with trust property for the benefit of the beneficiaries.
- A trustee must exercise the trustee’s powers for a proper purpose.
- There are optional duties for trustees, which can be modified or excluded in the trust deed. These are:
- A trustee must exercise the care and skill in administering a trust that is reasonable in the circumstances.
- When investing, a trustee must exercise the care and skill that a prudent person of business would
- exercise in managing the affairs of others.
- A trustee must not exercise a power directly or indirectly for the trustee’s own benefit.
- A trustee must consider actively and regularly whether the trustee should be exercising one or more of the trustee’s powers.
- A trustee must not bind or commit trustees to a future exercise or non-exercise of a discretion.
- A trustee must avoid a conflict between the interests of the trustee and the interests of the beneficiaries.
- A trustee must act impartially in relation to the beneficiaries and must not be unfairly partial.
o A trustee must not make a profit from the trusteeship of a trust.
- A trustee must not take any reward for acting as a trustee, but this does not affect the right of a trustee to be reimbursed for the trustee’s legitimate expenses and disbursements in acting as a trustee.
- If there is more than one trustee, the trustees must act unanimously.
- If any of the optional duties for trustees are changed in the trust deed, the advisor must point this out to the settlors.
- There is a limit on trustee exemption and indemnity clauses. The terms of a trust deed must not limit or exclude a trustee’s liability for any breach of trust arising from the trustee’s dishonesty, willful misconduct, or gross negligence.
- Trustees must keep all trust information and documents stored for the life of the trust.
- Trustees must make available to every beneficiary or representative of a beneficiary the basic information relating to the trust, this is:
- the fact that a person is a beneficiary of the trust; and
- the name and contact details of the trustees; and
- the occurrence of, and details of, each appointment, removal, and retirement of a trustee as it occurs; and
- the right of the beneficiary to request a copy of the terms of the trust or trust information.
- There is a presumption that a trustee must give a beneficiary or the representative of a beneficiary the trust information that person has requested within a reasonable time unless certain provisions apply.
- There are updated requirements for the compulsory removal of a trustee. The person who has the power to appoint and remove trustees must use that power to remove a trustee if that trustee loses capacity and there is no other person able to affect the removal.
If you have any questions or concerns about how the Trusts Act 2019 might affect your Trust, please contact us on (03) 3774421 or email us at firstname.lastname@example.org