As Greenlion say, “Out with the old, in with the new”! They are referring to the new Trusts Act 2019 (Act) which will become operational on 30 January 2021, affecting all existing and future created Trusts in New Zealand. Trustees will need to satisfy mandatory duties, including disclosing information to beneficiaries. Beneficiaries will enjoy greater rights than before, finding it simpler to hold trustees to account. Ultimately the Act will affect all existing trustees who will be forced to comply with its provisions.
Greenlion have summarised some of the main points of the new Act here, and discuss things in more depth in the article on their website, starting with beneficiary rights. Under the new Act, individuals will have a right to be informed of the fact they are beneficiaries of a trust and trustees will have a positive duty placed on them to make this disclosure. Undoubtedly, one of the effects of this will be to strengthen the ability a beneficiary has to hold a trustee to account with respect to how they have carried out their trusteeship, particularly in the administration and investment arena.
To ensure this right is relatively easy to enforce, Parliament has gone one step further – it’s created a presumption that beneficiaries must be given basic trust information. Accordingly, a person must be advised they are a beneficiary, names and contact details of trustees together with details about changes to trusteeship must be provided. Also the fact a beneficiary can request a copy of the terms of the trust and basic trust information must be disclosed to them.
Trustees have a far greater compliance regime to satisfy than ever before. This will mandate the need for many trustees to bring their knowledge and their management practices up to date to ensure compliance with the Act’s provisions. There is also going to be a greater scrutiny of trustee’s actions with respect to administration and investment activities of the trust under their control. This could result in increased litigation making its way through the Courts as trustees are ordered to account.
How the Act impacts you, will depend upon your position in the Trust and what actions you’ve taken so far. For beneficiaries, the effect of the Act is simple - you’ll enjoy rights automatically to receiving information from 30 January 2021. As such, you should expect to hear from the trustees of the trust you’re a beneficiary of without having to take any action.
If you are a trustee, the impacts of the Act are vast. You’ll need to be familiar with the provisions of the Act and your obligations under it. There are a number of matters you should consider, so for more information on bookkeeping Auckland, chartered accountants Auckland and accounting services Auckland please go to https://www.greenlion.co.nz .