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Changes to trust law - what you need to know

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.


Catherine Atchison

Kate Caldwell


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