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How the new Trust Act 2019 will affect you

Dec. 2019

The 2019 Trust Act became law on 30th July 2019, but it will not come into force until 30th January 2021. This 18-month lead in time is to prepare for the changes. Under the new legislation, the trustees take on a more active role, and it applies to existing trusts, not just new ones. This article is a snapshot; we will release further articles on the changes next year.

The most widely heralded changes concern trustees having to provide certain information to beneficiaries. These changes are in one sense welcomed because they strengthen the ability of beneficiaries to hold trustees accountable. Conversely, there are circumstances where trustees may not wish to disclose information to a beneficiary as this may cause problems!

The starting point is that trustees must provide Basic Trust information to beneficiaries (even if not asked for!). Basic Trust information includes:

  • The fact that a person is a beneficiary.
  • The name and contact details of the trustee.
  • Details of, each appointment, removal, and retirement of a trustee as it occurs.
  • The right of a beneficiary to ask for a copy of the trust deed and other trust information about how the trust operates and what it owns.

Trustees must provide trust information that is requested by beneficiaries, and within a reasonable time. On the other hand, the trustees can weigh up if it is appropriate to provide any of this information, taking into account a whole range of factors including:

  • The age and circumstances of the beneficiaries.
  • The effect on the beneficiary of giving the information.
  • In the case of a family trust, the effect on relationships within the family.

So this is the main change: trustees will face greater scrutiny about providing information to beneficiaries. There are other detailed changes that update old rules, but it is fair to say that being a trustee is about to become much more onerous and trustees must become a lot more active.

If you would like a "health check" on your trust before the Act commences, please contact us.

Written by Matthew Corliss, legal intern and Blair Franklin, Partner.

Email: b.franklin@holmdenhorrocks.co.nz