Anybody who has a trust or is a trustee should now be aware that the reform of trust law, which will see the Trustees Act 1956 replaced with a new Trusts Act, is winding its way through our parliamentary process. The new Trusts Act is likely to come into force this year. One small, but important, change arising from the recent Select Committee stage is the requirement that trustees, under the new law, must have regard to the context and objectives of the trust when performing their duties. This provision is intended to clarify the current legal position that the nature and extent of trustee duties depend on the terms, context and objectives of the particular trust. This means that any specific statements about the objectives or purposes of the trust which are recorded in the trust deed or in any Memorandum of Guidance will be under renewed focus when the Trusts Act becomes law. This raises the following questions:
• What does your trust deed say about its objectives or purpose?
• Is there a Memorandum of Guidance for your trust and is it current?
• How confident are you that your trustees will be able to meet these obligations?
The lack of clarity on these matters may compromise your trustees and result in more costly and difficult trust administration and increases the risk of claims or litigation from beneficiaries.
I encourage you to contact me if you have concerns or questions in relation to this matter or any other matter concerning the forthcoming changes to trust law– Andrew Logan, Principal (DDI 03 343 8452 / Andrew@mmlaw.co.nz)