The Trust Act 2019 - What you need to know
The Trust Act 2019 (“the Act”) comes into effect from 31 January 2021 and contains a number of changes as to how Trusts are to be governed and administered in New Zealand.
Generally speaking, the purpose of the Act is to increase both the accountability of Trustees, and the transparency for Beneficiaries and records.
One of the main changes that will affect every Trust is that Trustees will be required to disclose certain basic information to all Beneficiaries of the Trust. An appropriate procedure will need to be put in place to ensure that the Trustees’ disclosure requirements are met. This will involve identifying who the Beneficiaries of the Trust are, and exactly what information will need to be provided to them.
It is also timely to consider:-
Whether any variations to the terms of the Trust Deed may be required, for example to modify or exclude any default duties; or
Whether the Beneficiaries of the Trust are still appropriate, or whether they need to be amended, given the disclosure requirements; or
Whether the Trust remains “fit for purpose” or whether the Trust should be wound up (i.e. dissolved), and its assets distributed.
Is the Trust still “fit for purpose”?
Traditionally, the most common reasons for establishing a Trust have been:-
Asset protection from creditors;
Residential Care Home subsidies;
Relationship Property matters;
Over the years, changes have been made in various areas of law which may affect the above. We can give you specific advice as to whether the purpose for setting up your Trust continues to be effective, or what other ownership structures may be more appropriate in your circumstances. We would also recommend you discuss matters with your Accountant.
Please do not hesitate to contact the following for any queries you may have or if you wish to discuss your Trust.