The Trusts Act 2019 has modified and updated New Zealand’s trust law, with one of the more significant changes being the obligation on trustees to disclose certain trust information to the beneficiaries of the trust. 

These obligations include letting the trust’s beneficiaries know:

  • That they are beneficiaries;
  • The name and contact details of the trustees;
  • Any details regarding the appointment, removal or retirement of any trustees; and
  • Their right to request a copy of the terms of the trust or trust information (being information regarding the terms of the trust, the administration of the trust, and the trust’s assets and liabilities).

 

Hypothetical scenario
Marjorie is the wealthy settlor and trustee of an inheritance trust for her grandchildren. Her 18-year-old, wayward grandson, Tim, is one of the two beneficiaries. Tim is considering studying at university when he leaves school, however upon learning that he is a beneficiary of his grandmother’s inheritance trust, he decides that studying is no longer necessary because he decides to sit back and wait until he inherits the trust property.

 

The above scenario highlights how the obligation to disclose trust information may not always be favourable to the settlors of the trust, and in some situations, it can defeat the purpose of having set up the trust originally, i.e. preserving assets for the benefit of the family without it impacting negatively on them.
There may however be some exemptions to this disclosure obligation, which largely depends on the trust and the settlor’s individual circumstances. Have a think as to whether you are concerned about the disclosure requirements as it may be necessary to update the terms of your trust.

The Act comes into force on 31 January 2021, so there is still time to amend the terms of your trust to ensure that it complies with the new Act, and to prevent yourself getting into a situation like Marjorie above.