(Aug. 15, 2019) On July 24, 2019, the Trusts Bill was passed by the New Zealand Parliament. The Bill, which was introduced in August 2017, replaces the Trustee Act 1956 and Perpetuities Act 1964 and seeks to provide a “clear, modern statement of the law relating to trusts.” The Minister of Justice, Andrew Little, stated that the principal changes in the Bill include the following:
- clarification of key features of a trust and the duties of trustees
- clear rules about when trustees are required to provide information to beneficiaries so that beneficiaries can enforce their rights
- practical and flexible trustee powers that allow trustees to manage and invest trust property in the most appropriate way
- options for removing and appointing trustees without having to go to court in straightforward cases
- modern dispute resolution procedures
- permitting amendments to certain financial and commercial trusts to enable specified provisions of the Bill to not apply to those trusts.
The Bill is largely an update and restatement of the law related to trusts, which is contained in the two Acts referred to above as well as in various common law rules. Upon introducing the Bill, the then-Minister of Justice, Amy Adams, explained that the Bill would “make trust law easier to access and understand,” providing “better guidance for trustees and beneficiaries, and mak[ing] it easier to resolve disputes.” She also stated that the Bill was largely based on recommendations made by the New Zealand Law Commission, which conducted a project to examine the law of trusts between 2009 and 2013.
Trusts are a major aspect of the New Zealand legal system, with around 300,000 to 500,000 trusts operating in the country. One law firm, Minter Ellison Rudd Watts, stated that the Bill
will enhance accessibility to trust law by bringing fundamental principles and rules of trust law, which have been developed by the courts over centuries, into one piece of accessible legislation. The Act will also set out the core principles of trust law, provide default administrative rules for trusts, and provide mechanisms to resolve trust-related disputes.
The Act is not intended to be an exhaustive code, as the courts will continue to develop trust law in areas that are not covered by the Act.
The Bill will come into force 18 months after receiving royal assent, allowing existing trusts to adapt to the new law.