- The Trusts Act 2019 comes into effect on 30 January 2021 following an 18-month transition period
- The Act applies to all express trusts, regardless of when they were created
- Some of the key changes are significant departures from prior practice
The Trusts Act 2019 comes into effect on 30 January 2021 and some of the key changes are significant departures from prior practice.
Crucially, the Act applies to all express trusts, regardless of when they were created.
The Act replaces the Trustee Act 1956 and aims to clarify and modernise the law relating to trusts. The changes include:
- descriptions of the key features of a trust to help people understand their rights and obligations
- mandatory and default trustee duties (based on established legal principles) to help trustees understand their obligations
- requirements for managing trust information, disclosing basic trust information to beneficiaries, and where appropriate disclosing trust information to beneficiaries who request it
- flexible trustee powers, allowing trustees to manage and invest trust property in the most appropriate way
- provisions to support the cost-effective establishment and administration of trusts (such as clear rules on the variation and termination of trusts)
- options for removing and appointing trustees without having to go to court to do so.
Features such as mandatory trustee duties, record keeping and disclosure of information will increase trustee responsibility and require trustees to have a more active role in the trust.
Time is running out. As a starting point:
- consider whether the trust is still required
- review trust deeds to identify what variations might be required. Not all trust deeds will contain powers of amendment
- identify the beneficiaries and consider removing those who are not intended to benefit from the trust (if there is a power of removal)
- identify and consider how and who will hold the core trust documents
- communicate with the trustees about their disclosure obligations, and the implications of the mandatory and default duties.
Commentary from other members in the links below, as well as the Trust Act 2019 legislation for more information.
What’s the future for CAs and trusts in NZ?
Given the increased obligations new NZ legislation imposes on trustees, CAs have had to question their involvement in trusts.Read more
The great NZ trust crackdown
New trust legislation in New Zealand will affect accountants as well as trustee clients, so it’s time to weigh the options.Read more