The new Trusts Act 2019 was passed into law at the start of August. This has been a long journey since it was first discussed nearly twenty years ago, but at least we have clarity on what will be happening moving forward. The full law does not come into force until the end of January 2021 which leaves some time to review existing trust structures to ensure compliance with the new law. It is clear that
The new Trusts Act will have a significant bearing on how trusts are administered in the future. Issues that you will need to consider:
- Telling beneficiaries, they are in fact beneficiaries of a Trust. The majority of settlors of trusts in New Zealand have managed to keep the existence of the Trust from its beneficiaries. This now changes with the trustees having a positive duty to inform all beneficiaries of a trust they are beneficiaries.
- Disclosure of Information to beneficiaries. It is widely expected the new law will allow beneficiaries more access to trust information. Coupled with having to tell a person they are a beneficiary this may lead to unwanted consequences for the trustees.
- The duties imposed on a trustee have now been written into the new law as well, meaning the consequences of getting it wrong are more amplified going forward.
- Alternative dispute resolution procedures – one of the biggest hurdles facing the quick resolution to trust disputes is the time and expense it takes to have cases heard in the High Court. The new Act places more of an emphasis on alternative dispute resolution procedures to help parties reach resolutions to disputes in a faster and cheaper manner.
Along with the new Trusts Act the New Zealand Law Commission is currently reviewing the law regarding relationship property. Although a proposal at this stage one of the recommendations is for courts to be provided greater powers to share trust property when a trust holds property that was produced, preserved or enhanced by the relationship. This will mean more careful planning from a relationship property perspective will be required when involving trusts.
Covisory Trust Services are running a trust seminar on 24 October to outline these changes and what practical issues you need to consider. Please contact us if you would like to attend this seminar.