Revamp to 60-year old trust law
On 10 November 2016, the Justice Minister, the Hon Amy Adams, released draft legislation that will update New Zealand’s trust law and aid in their administration.
Ms Adams noted that trusts play an important part in New Zealand. Between 300,000 and 500,000 trusts are operating today. New Zealanders use trusts to manage their finances with an estimated 15% of private houses held in a trust. They also form part of the economic backbone of the commercial and social sectors.
Because the 60-year old trust law is complex and hard to navigate, in 2009 the Government asked the Law Commission to look at how the law could be modernised and made clearer. Ms Adams said that given the importance of trusts to New Zealand’s society and economy, trust law should be simple to understand so that families and businesses can manage their affairs with confidence.
The proposed reforms are largely based on recommendations for modernising and clarifying trust law made by the Law Commission in 2013. They also reflect advice from a reference group of experts Ms Adams appointed in 2015, who considered the Law Commission’s recommendations and provided valuable input into refining them.
The draft Trusts Bill updates and improves the Trustees Act 2956, making the first significant change in 60 years. The proposed improvements include:
- making it easier for people to understand how to appropriately use trusts to manage their affairs
- clear mandatory and default trustee duties so people know what their obligations are if they are involved in managing a trust
- requirements for trustees to manage and provide information to beneficiaries
- flexible trustee powers and updated rules
- clear rules for when people make changes to a trust or wind them up, and
- more options for removing and appointing trustees without having to go to court while also preserving people’s ability to ask the courts to intervene to resolve disputes.
The draft Trusts Bill and information on how to make a submission is available online at https://www.consultations.justice.govt.nz. Submissions close at 5 pm on 21 December 2016.