Trust Law - changes are coming
November 24, 2016
Family trusts are a common structure used to secure the family home and other valuable assets from creditors and assist in succession planning and inheritances. It is estimated that 15% of family homes in New Zealand are owned by a family trust.
All trusts set up in New Zealand are governed by the Trustee Act 1956 (the Act). In 2009, the Government asked the Law Commission to look at the Act as they had concluded that the Act is outdated, it doesn’t reflect common trust practice and often requires legal advice to navigate the complex and old. The Law Commission review provided recommendations that they believe will modernise and make the legislation clearer.
On the Law Commission’s recommendations, the Government has introduced a draft Trusts bill (the Bill) to revamp the 60 year old Act with the objection of being fit for purpose. According to the Government’s press release, the proposed changes to the Act 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 aim of the Bill is to provide a practical and usable statute. The Government is currently taking submissions on the draft Bill (closing 21 December 2016) and expecting a final version of the Bill to be introduced to Parliament in 2017.
If you have any questions, concerns or would like to discuss your situation, including whether a trust is appropriate for you, please contact us
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