TRUSTS
By Perpetual Guardian
New landscape
for trusts
Perpetual Guardian general counsel Henry Stokes says new laws will be game-changing for the management of trusts.
For the first time since the 1950s, New Zealand trust law is being overhauled – and one of the country’s leading legal specialists says it’s going in the right direction, but financial advisers and other professional services providers who work as trustees will need to step up and move quickly to help their clients. The new Trusts Act 2019, which comes into effect on January 30, 2021, replaces the Trustee Act 1956 and the Perpetuities Act 1964. The new Act aims to make trust law more accessible, to clarify and simplify core trust principles and essential obligations for trustees and preserve the flexibility of the common law to allow trust law to continue
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to evolve through the courts. It is important to note that the new Act provides more beneficiary rights than ever before. Henry Stokes, General Counsel for Perpetual Guardian, says the Trusts Act 2019 contains mandatory and default duties of trustees, a first for New Zealand. “The whole landscape of trust law has changed significantly in the last five to 10 years, with lots of changes in case law that have crystallised trustee duties and highlighted some large gaps and inconsistencies in trust law. Many trustees are laypeople, not trained professionals, and there was previously no single source to tell them what they needed to know about their responsibilities – in plain language.”
Five key things for professional trustees to consider under the Trusts Act 2019: • For financial advisers, lawyers and accountants who serve as professional
trustees, holding that role will become increasingly difficult with new requirements for more accountability from trustees. The costs of running a trust properly will be much higher as each trust will require more attention than in the past. As a professional you will need to ask yourself, Is the cost of administering this trust in balance with the benefit to the beneficiaries of having the trust? • The cost of indemnity insurance is going up as insurers start to push back on the degree of responsibility in trustee services on top of normal advisory obligations. For some professionals the ability to even get cover is in question. In the new environment indemnity clauses contained in trust deeds may not be as reliable as in the past. Many professionals are starting to talk to trust companies like ours about collaborating so they can preserve their client relationship while mitigating all the risk that has arisen in the new legislative environment. Professional
