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New Trusts Act: Knowing Your Duties as a Trustee

Legal Assistant Melanie Gauthier recently wrote an article for the Horowhenua Chronicle on the New Trusts Act

Are you a trustee of a trust?  Are you aware of your duties and obligations as a trustee?

The new Trusts Act 2019 has reinforced the duties for all trustees.  Some of these duties are mandatory and apply to all trusts, some can be excluded or modified by the terms of the trust.

Mandatory duties

As a trustee you need to know the terms of the trust deed of your trust, always act in accordance with it and exercise your powers for a proper purpose.  If you are unsure about some clauses of your trust deed, we are happy to sit down and go through these with you.

The law also requires trustees to act honestly and in good faith.  Before making a decision for the trust, remember to inform yourself of matters that are relevant to the decision and to act for the benefit of the beneficiaries of the trust.

New default duties

Other duties can be excluded if the terms of the trust allows it.  If the terms of the trust deed do not exclude them, they apply to you as trustee.

The new duty to be wary of is the general duty of care.  It introduces higher standards for professional trustees or any trustee who has particular skills or experience.  This means that trustees with experience or skills when administering a trust must exercise the same care and skill as if they were acting as a professional and not just as the outright owner of the assets.

Other new duties such as the duty to invest prudently or the duty not to exercise your power as a trustee for your own benefit (if you also are a beneficiary of the trust), might apply to you if there are not excluded.  Please take the time to talk with us if you want to know what duties apply to you and if your trust deed allows it, we can assist in excluding or modifying these new duties.

Giving information to the beneficiaries of the trust

The new Act now presumes that the trustees will give basic trust information to every beneficiary.

What information needs to be disclosed to the beneficiaries?

The fact that a person is a beneficiary, the name and contact details for each trustee and the right for the beneficiary to request a copy of the terms of the trust or trust information.  Trustees should also disclose the details regarding any change of trustees as it happens.

Should all beneficiaries receive this information?

The presumption applies for every beneficiary.  However, special circumstances such as the age of the beneficiary or the effect of giving the information on the beneficiary or on relationships within the family can be taken into account and trustees can decide to withhold trust information from one or more beneficiaries.  It is advisable to disclose the trust information to all beneficiaries if possible and if not, at least to one beneficiary who is not also a trustee.

Keeping records for the trust

As a trustee, make sure you keep at least a copy of the trust deed and any variation of the trust deed.  At least one of the trustees should retain all the other documents of the trust, such as the records of the trust property, of trustee decisions, memorandum of wishes, accounting records ect.

Good trust management is key in order to avoid future complaints from beneficiaries who have not been satisfied by the trust.  Please get in touch if you would like to know more and we can assist in discussing and reviewing your trust documents.