As Greenlion’s Trustee Services say, “Trusteeship isn’t for the naïve”, as they explain the consequences of the new Act. Some of the duties Trustees must satisfy under the Act are compulsory (mandatory duties) whilst others are able to be amended and even contracted out of (default duties). Through the passing of this legislation, Beneficiaries should find it easier to hold Trustees to account for their behaviours be it positive actions they’ve taken or omissions they’ve made. Accordingly, a consequence of the Act is Trustees are faced with increased responsibility and compliance obligations. Correspondingly, the potential liability associated with holding the role of a trustee has risen.
A specific mandatory duty all trustees must deal with revolves around disclosure to Beneficiaries. Under the Act, Trustees must now inform parties they are Beneficiaries of the Trust and provide them with the contact details of the Trustees. Additionally, Trustees must advise all Beneficiaries they have a right to request a copy of the Trust Deed and other Trust Information. This duty and how Trustees can handle it will be canvassed at the latest Trust seminar to be held on 5 May 2021.
As a consequence of the new Act, Greenlion’s Trustee Services desk has been very busy helping proactive clients put their affairs in order. In particular, Trustees have been reviewing and making changes to the Beneficiary structure of their Trusts in an effort to manage their disclosure obligations.
Additionally, Trustees are taking the opportunity to review the provisions of their Trust Deeds, making changes to bring their Deeds in line with the new legislative provisions. In some instances, what was not permittable previously has now become possible with the heralding in of the new Act.
Finally, savvy Trustees are taking the time to review their whole structure, including their Trusts and their Estate Plans. Many clients have updated new Wills, Memoranda of Wishes and Letters to the Survivors in the last few months.
Going forward, much will change for Trustees. Specifically, those professionals who have been holding Trusteeships in their personal names will be well advised to resign as they’ll find potential liability too high a risk to run. This is because a Trustee is personally liable at all times for the Trust under their watch.
The passing of this Act heralds the end of the Trustee in name only, without active involvement, as has been the case in many instances historically. Commentary on the economy, taxes, and potential opportunities available to Trusts will be discussed at the next Trust seminar. Ensure you have a ticket for that to gain valuable information, helping you with your personal and business decision-making.
In the interim, if you’re looking for assistance with any aspect of your structure or Trust, Greenlion are there to help, and for more information on financial consultancy and chartered accountants Auckland please go to https://www.greenlion.co.nz .
