Reforms to the laws governing trusts in New Zealand came into effect on 30 January 2021 and is the first shake-up in 65 years. To understand the possible implications for you as a trustee (who manages a trust), we advise discussing the changes with a specialised, trust solicitor.
New Zealanders are big on trusts. The Ministry of Justice estimates there are 300,000 to 500,000 trusts in this country, making it one of the world’s most trusted countries.
Under the new changes, the aim is for an easier understanding of trust law. Clearer roles and responsibilities mean trustees now have to notify people when they are beneficiaries of the trusts they manage.
The underlying principle is that beneficiaries should have enough information to be sure that trusts are being run correctly. What does that mean? Until now, trustees have enjoyed a high level of privacy. With this change, many people will be finding out for the first time that they are beneficiaries of a trust. It also gives them rights to ask for information on trust assets – giving a clear picture of overall worth. Some will not be comfortable with this info sharing. Others will appreciate the open discussions, making it more user-friendly and transparent for all involved.
At Viranda, we see two-sides. Asset Manager, Rosie suggests “that when there are changes, it resets trustees and beneficiaries to familiarise themselves with their rights and obligations under the new Act. Sometimes things can tick over in the background, but this will allow all parties involved to have the discussions around the changes. However, some will find this more onerous and expensive to run, with more documentation having to be circulated.”
A greater pool of beneficiaries with newfound knowledge and awareness could open up more disputes. Regardless, there are still very legitimate uses for trusts and we think it’s going to be interesting to see how it all unfolds.