By Catherine Atchison - 24 Sep 2013
On 11 September 2013 the Law Commission presented their review
of the Law of Trusts, A Trust Act for New
Zealand, to Parliament. The review calls
for the adoption of a new Trusts Act and the subsequent repeal of
the current Trustee Act 1956. The new Trusts Act will not
serve as a mere update of the current Trustee Act 1956, but will
provide simplified procedures, outline the core characteristics of
trusts and strengthen the common understanding of trust law for
those using it. It will bind together and build upon all accepted
rules of trust law, whether found in legislation or case law.
In light of the fact that New Zealand has one of the highest
numbers of trusts per capita in the Commonwealth, the importance of
this legislative review is not to be overlooked nor should its
broad-sweeping effects be underestimated. Conservative
estimates are that the proposed legislative change to our current
Law of Trusts will affect approximately 1 million New
Zealanders.
As a result of the Law Commission's primary purpose of
increasing beneficiaries' rights and clearly setting out Trustees'
roles and liabilities, the new Trusts Act will notably change how
New Zealanders approach the establishment and maintenance of
trusts.
The main recommendations put forward by the Law Commission are
as follows:
- the characteristics of a trust are to be outlined
- trustee conduct is to be defined, and mandatory trustee duties
introduced
- a default list of trustee duties is created
- a trustee's liability for breach of trust or dishonesty
cannot be limited
- the provision of information to beneficiaries and a trustee's
duty to disclose will be clarified
- the rationalisation of trustee powers, with a schedule of
powers provided
- a trustee's standard of care is to be linked to the skill and
knowledge of the trustee
- comprehensive and workable rules around trustee appointment and
removal, and change of trustee powers
- family court is to have jurisdiction (where parties consent) to
resolve issues in respect of relationship property.
- district court is to have jurisdiction for trust matters up to
a limit of $200,000 (or $350,000 as it may become)
- the perpetuity period for trusts is to be extended to 150
years
- change to the Property Relationship Acts to allow Courts to
order the transfer of trust assets if those assets would have been
available for division between the couple as relationship
property.
Many of the recommendations are long overdue, and whist the
changes may create some uncertainty for trustees and beneficiaries
alike, and in certain cases litigation, overall, it is a positive
step forward in clearly outlining the position of both trustees and
beneficiaries.
Contacts
Catherine Atchison
Kate
Caldwell