New law puts a new light on trusts
New trust law has landed, bringing with it more rights for beneficiaries and raising the bar on what’s expected of trustees.
The Trusts Act 2019 was passed on 30 July 2019. It represents the most significant change to trust law in decades and aims to make trust law more accessible for New Zealanders.
The Trusts Act in brief
The new Act means greater transparency of trustee activity and increased trust compliance requirements. Trustee duties are now formalised in legislation.
It also means more rights for beneficiaries - starting with telling them that they are a beneficiary of the trust and regularly providing them with more information without them needing to request it.
There are clear rules about when trustees need to provide information to beneficiaries, as well as a presumption that this should be disclosed unless an exception applies. Information can only be withheld from all beneficiaries in exceptional circumstances, meaning the days of the family trust being private are over.
"It’s a good time to start thinking about your trust and what it might mean for you. If you’re a trustee of a trust, it’s a good time to check in and make sure you’re still up for it," says Public Trust CEO Glenys Talivai.
"We contacted our customers early on in the Trusts Bill journey to get them thinking about what’s right for them. We’ve certainly seen an increase in the number of trusts being wound up.
"We’ve also seen an increase in people shying away from being a trustee, which reflects a strong existing market trend in that direction. As a professional trustee, this is a great opportunity for us to step in and help out."
The new law will come into force on 30 January 2021. Now is a good time to review your trust and, if you’re a trustee, to think about whether you want to carry on in that role.
Trusts do still hold an important place in estate planning and protecting and managing assets in the right circumstances.
Public Trust recommends using this time to think about whether:
- you’re willing and able to undertake your obligations as trustee
- you’re comfortable with the increased information that has to be provided to beneficiaries
- the reasons for setting up the trust are still relevant
- the trust will still offer the same protection
- the trust will still be cost-effective with the extra trust compliance requirements.
It may be that keeping the trust is still the best option, despite possibly needing to do things differently. Alternatively, it may be best to wind it up.
Public Trust has established a trust review service specifically with the new Trusts Act in mind. Those wishing to find out more can call 0800 371 471.