The new Trusts Act 2019 will simplify trusts law. To date, trustees had no legal requirement to keep beneficiaries informed about the trust, or report on their activities. The Act will firm up the requirements to provide information to beneficiaries unless there’s good reason not to.

Another positive to come from the new Act is that trustees can refer disputes to an alternative dispute resolution process like mediation or arbitration, instead of the court, making it much more affordable to resolve disputes. The Act also alters the maximum lifespan of a trust from the usual 80-year term to 125 years.

Currently, there seems to be a lack of general understanding around what being a trustee actually means, and what trustees have to do. The Act outlines the duties that trustees have when they sign up to their role. The mandatory duties include:

1) Know the terms of the trust

2) Follow the trust’s terms

3) Act honestly and in good faith

4) Use their powers for a proper purpose

5) Act for the benefit of the beneficiaries or to further permitted purposes of the trust.

There are also 10 default duties listed in the Act that can be changed by the trust deed including: a general duty of care, investing prudently, avoiding conflicts of interest, and others. Trustees will also need to comply with minimum requirements for record-keeping and document retention.

The Act aims to improve clarity around trustee responsibilities and trust structures. 

Beneficiaries will be able to receive information on trust activities more easily, giving them greater insight into how trustees manage the trust. 

Trustees, meanwhile, will be better informed on the requirements of their role before agreeing to take on the responsibility which should mean less surprises about what is involved.

Feedback, comments and questions are always welcomed – please feel free to e-mail me on [email protected].

T: 03 443 0900

W: www.aspiringlaw.co.nz

Danielle Ward is a Solicitor at Aspiring Law, and specialises in Elder Law and Life Planning, including Wills, Trusts and Enduring Powers of Attorney.

Please remember, this information is designed as a general guide, and should not replace specific legal advice on a particular issue.