The Trust Act 2019 is coming into force in January 2021, bringing many new changes to trusts law as we know it. The current act has been in force since 1956 and over time has been interpreted by courts, which has amended the letter of the law. The purpose of the new act is to make trust law more accessible, by codifying the law and making sure everyone can understand their responsibilities and rights.
Under the new act there is an increased responsibility on trustees to carry out their duties properly, and greater accountability to the beneficiaries. The new act also divides trustees’ duties into two broad types: mandatory duties which you cannot contract out of , and default duties that apply unless your trust deed says otherwise. It is important to check your trust deed in light of the new act to ensure that the trustees are complying with the mandatory duties and to see if the default duties need to be modified.
The biggest change in the new act is that beneficiaries have increased statutory rights.
Beneficiaries have the right to be notified that they are beneficiaries, and be told who the trustees are, so they can hold them to account. They are also entitles to copies of the trust deed and any variations, information about the assets and liabilities, trust financials and information regarding the administration of the trust. This is the change that is likely to create the greatest concern for many trusts and it is important to get specialist legal advice if this concerns you.
The new act also extends the time period for truss from 80 to 125 years and makes it compulsory to remove incapacitated trusteed.
I would highly recommend that everyone review their existing trust structures, to ensure they comply and are fit for purpose.
Tammy McLeod BA LLB (Otago)
Director of Davenports Harbour Lawyers, and a trust law specialist.
