It is pretty well known that New Zealanders love trusts. While the exact number is not known, the Ministry of Justice estimates there are between 300,000 to 500,000 trusts in New Zealand. At Milford, we deal with a large number of trustees and settlors every day. In fact, a significant proportion of our Private Wealth client base is made up of trusts. That is why we felt this was an important topic to cover. Not because we are trust experts, but because we know many of you will have your own trusts in place and we want to ensure you are kept well informed about important upcoming changes to the law governing trusts. We also encourage you to speak to your lawyer or trust adviser about these upcoming changes and how they could affect you.
A new piece of legislation called the Trusts Act 2019 will come into effect early next year, replacing the (over 60-year-old) Trustee Act 1956. A lot has changed since the 1950’s and the intention of the new act is to modernise language and key concepts. The New Zealand Law Commission in their review of the law of trusts stated the central aim of the review was to “make the day to day administration of trusts easier and make resolution of difficulties less expensive and more efficient.” Many commentators point to the removal of the aura of secrecy that often seems to surround trusts together with the new disclosure requirements that now affect the beneficiaries named in the trust deed to be the most significant changes.
Some of the key changes include:
- mandatory and default trustee duties
- rules relating to trust record keeping
- clarification of key features of a trust
- strengthening of the ability of beneficiaries to hold trustees to account via information disclosure
- requirements for when trustees are required to provide information to beneficiaries
- flexible trustee powers
- options for removing and appointing trustees without having to go to court in some cases.
If you are a trustee, you should consider speaking to your lawyer or trust adviser about these upcoming changes and how they could impact you.
In whatever way the changes affect your trust, and whatever you decide to do, we can help with what that means for your investment with us. Some of our clients have already started to consider the changes and have been discussing them with us and their legal advisers. As ever, if you decide to make any amendments to your trust deed please keep us informed.
This blog was written by Louise Minton BA/LLB, Manager, Quality of Advice at Milford Private Wealth. Louise practiced Trusts and Estates Law at a leading Auckland law firm for six years prior to moving into the financial service industry where she has a depth of experience across banking, a professional trustee company, share broking and funds management.