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Trust Law is Changing

Are you a trustee of a trust? Are we a Trustee of your Trust? From 30 January 2021, New Zealand trust law is changing. There are key duties all trustees must be aware of. There are also some changes to Brent Kelly Law’s policy on being trustees of our clients’ trusts. Here we give an overview of the key changes you need to know – make sure you’re ready. 

Mandatory duties

ALL trustees will be required to abide by these mandatory duties:

  • Know the terms of the trust
  • Act in accordance with the terms of the trust
  • Act honestly and in good faith
  • Deal with the trust property and to act for the benefit of the beneficiaries in accordance with the terms of the trust deed
  • Exercise the trustees’ powers for a proper purpose

Default duties

These are obligations all trustees must abide by UNLESS the settlor decides otherwise when the trust is established. Default duties include:

  • A general duty of care
  • A requirement to invest prudently
  • A prohibition on trustees acting in their own interests
  • A duty to consider the exercise of trustees’ powers
  • A duty not to fetter a trustee’s discretion
  • A duty to act unanimously

Duties not to profit from the trusteeship or benefit from the exercise of trustee discretions

Trust documentation

Trustees will have new duties relating to trust documentation including:

  • Each trustee will be obliged to keep copies of the trust deed and any variations
  • They will have to either keep their own copies of ‘core trust documents’ (which are defined in the Act) or to ensure that at least one of the other trustees holds all of the core trust documents and will make them available on request
  • If a trustee is not confident in their fellow trustees’ ability with paperwork, they will need to keep these documents personally

Beneficiary access to basic trust information

‘Basic trust information’ must be made available to beneficiaries, including: 

  • Information that a person is a beneficiary of the trust
  • The name and contact details of the trustees
  • Details of trustee changes as they occur 
  • The beneficiary’s right to request further trust information

Presumptions

The Act also creates 2 presumptions. Trustees do have the ability to decide that either or both do not apply. These are: 

1. ‘Basic trust information’ must be made available to beneficiaries including:

  • Information that a person is a beneficiary of the trust
  • The name and contact details of the trustee
  • Details of trustee changes as they occur 
  • The beneficiary’s right to request further trust information
2. If a beneficiary requests further trust information, including a copy of the trust deed, the trustee must provide that information within a reasonable time period. The trustee may ask the beneficiary to pay the reasonable costs of providing that information.

List of factors

A list of factors is set out in the legislation and the trustees must consider these factors when deciding whether these apply in the circumstances. These include, amongst other things:

  • The nature and interests of the beneficiary (including whether the beneficiary is likely to receive trust property in the future)
  • The nature and interests of other beneficiaries
  • The intentions of the settlor when the trust was established
  • The age and circumstances of the beneficiary in question and the other beneficiaries of the trust
  • The effect of giving the beneficiary the information
  • The nature and context of any request for further information, and
  • Any other factor a trustee reasonably considers is relevant. Trustees will have to carefully consider any decision not to disclose information.

Is a Brent Kelly Law team member a Trustee of your Trust?

Some of our clients’ Trusts have a Brent Kelly Law team member listed as a Trustee. In light of these upcoming law changes, our policy on acting as a Trustee on client trusts is changing. 

We are currently working through a process of reviewing our position as a Trustee on all client trusts. 

If we are a Trustee of your Trust, please get in touch to speak with us about the changes that may need to be made to your Trust.

Contact us today  

Phone 07 871 7878 

Alex McIvor: alex@kellys.co.nz 

Mark Davies – mark@kellys.co.nz