Trusts are an important part of New Zealand society and the economy. It’s estimated there are between 300,000 to 500,000 trusts in New Zealand.
Parliament is now considering the Trusts Bill, which will update and improve the general law governing trusts for the first time in more than 60 years.
The Bill will provide better guidance for trustees and beneficiaries, and make it easier to resolve disputes. Generally, the proposed reforms seek to clarify core trust concepts, make trust legislation more useful, fix practical problems and reduce costs. It also aims to modernise outdated language and concepts.
Some of the changes include:
a description of the key features of a trust to help people understand their rights and obligations
mandatory and default trustee duties (based on established legal principles) to help trustees understand their obligations
requirements for managing trust information and disclosing it to beneficiaries (where appropriate), so they are aware of their position
flexible trustee powers, allowing trustees to manage and invest trust property in the most appropriate way
provisions to support cost-effective establishment and administration of trusts (such as clear rules on the variation and termination of trusts)
options for removing and appointing trustees without having to go to court to do so.
The reform follows the Law Commission’s report Review of the Law of Trusts: A New Trusts Act for New Zealand.
In 2015, a reference group of 7 expert trust lawyers tested the Commission’s proposals. They considered the real-world implications of reforming trust law and their feedback helped shape the new draft legislation.
In late 2016, the Government consulted on an exposure draft of the Bill, and a number of improvements have been made as a result of the submissions.