Trust Law Reform

Haven Accounting | 3 MIN READ November 15, 2016

 

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Trust Law Reform – Update

The law of trusts and Trustee Act 1956 has been reviewed and the Law Commission has completed issues papers and a final report which was tabled in Parliament in 2013. The Government responded relatively favourably but acknowledged the undertaking as significant. Late last week a draft bill was released and is available for public consultation until Wednesday 21 December 2016.

The salient points, which are mostly applicable to those of you who are trustee of your trust, are as follows:

  • The bill seeks to clarify and restate the current law and promote efficient administration of trusts;
  • All trustees must hold the trust deed and any variations, and one trustee must hold all trust documentation;
  • Beneficiaries will have a right to certain trust documents and a right to know they are a beneficiary, some proactivity will be required;
  • Trustee Duties will be stated clearly and will be categorised as mandatory and default. These cannot be contracted out of;
  • The duration of a trust (perpetuity period) is being increased to 125 years – it is currently 80 years.
  • Existing trusts, if they have the power to do so, will be able to change to this new longer period after the bill is passed and enacted.

These changes, even though still only in draft form, raise important considerations for all those establishing and managing trusts. We will be reviewing our precedents over the coming weeks to
ensure they have enough scope to be adaptable given the draft bill. If you have any questions about this or wish for us to specifically review your Deed in light of the bill, please let Sarah or Melanie know. Any review of your Deed will be part of the annual administration of your trust, however any amendments will be charged at time and attendance starting from $150 plus GST per hour.

Food for thought – are you a good trustee?

a. Do you know the terms of your Trust Deed?
b. Do the trustees meet at least annually?
c. Do the trustees keep a minute book?
d. Are all trustee decisions recorded reflecting the documents executed?
e. Has your memorandum of guidance been updated recently?

f. Are all assets and liabilities held in the name of the current trustees?
g. Does your trust have its own bank account and is it only used for trust expenses/income?

If you cannot confidently say “yes” to all of these, please phone or email Sarah or Melanie and they will be able to help you to improve the administration of your trust.


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