A new Trusts Act 2019 will come into effect in January 2021 and will be the most comprehensive overhaul of New Zealand’s Trust law in more than 60 years.
A significant number of our clients have Family Trusts and there is now a window of opportunity of 14 months to review these Trusts.
We intend to contact our clients during this period but for those clients that want to review their Trusts sooner then do not hesitate to contact your Legal advisor direct.
There are a number of changes to existing Trust Law which include:
Trustees now have a positive obligation (in most cases) to notify the beneficiaries of a Trust that they have a right to disclosure. This is a significant change which Settlors will not have anticipated when settling their Trusts. Many Trusts were established with privacy in mind.
Retention of core documents
At least one Trustee must keep copies of core documents including bank statements for the life of the Trust. Financial statements will therefore need to be held for a longer period than the law now otherwise requires.
As well as a description of the key features of a Trust - the Trust Act 2019 also sets out a list of mandatory and default Trustee duties. We recommend that your Trust be reviewed to determine what variations need to be done to the current Trust Deed so that your Trust is compliant with the new legislation.
Most Trusts are limited to a period of 80 years. The new Act enables that period to be extended to 125 years. Many Trusts will be working well as intended by the Settlor. There is now an opportunity to extend the effective life of the Trust by another 45 years.
The Trustees and Settlors will therefore need to consider if they are:
- Willing and able to undertake the increased obligations imposed on trustees.
- Comfortable with the increased information that has to be provided to the beneficiaries.
- Confident the original reasons for setting up the Trust are still relevant.
- Confident the Trust with these changes/obligations offer the same protection.
- Confident the Trust be cost-effective with the extra Trust compliance requirements.
If you have any queries in respect the new Trusts Act 2019 and your Trust then do not hesitate to contact your Preston Russell Law Legal Advisor.