Big Changes Ahead For NZ Trusts – Is Your Trust Fit For Purpose?
Trusts in New Zealand are facing a big overhaul. A new Act comes into force on 30 January 2021 which will bring welcome changes to the laws around trusts that have not had a major reform in 70 years. Do you have questions about your Trust?
The Act has the purpose of making trust laws more ‘user-friendly’. A key change is setting out clearly trustees’ obligations and beneficiaries’ rights.
Trustees will be required to give all beneficiaries basic trust information. This includes notifying them that they are beneficiaries, giving them contact details of the trustees and advising them that they have the right to request further trust information.
This may sound simple but it is a significant shift from the current position where people are often unaware that they are beneficiaries and are sometimes forced to go to court, during a dispute with trustees, in order to fight for the right to access trust information.
The most common trust information that beneficiaries are likely to want disclosed are the assets of a trust and how they are being managed by the trustees. In certain circumstances, trustees can refuse to disclose requested information but overall the Act strengthens the ability of beneficiaries to hold trustees to account.
Trustees need to be aware of the new obligations placed on them by the Act. They should review the trust deed to ensure that it complies with all the new requirements set out in the Act. If the trust deed does not comply, then it may be necessary to make changes to the trust deed. These changes should be made before the Act comes into force.
This is an ideal time to review whether your trust still meets your needs. A review may conclude that you no longer have a need for a trust. It may be appropriate to consider winding up your trust and holding trust assets in your own names. Again, the time to act is now so that any changes can be made before next January 2021 when the new Act comes into effect.