New trusts law, the Trusts Act 2019 comes into force on 31 January 2021. This new law will apply to both new and existing family trusts.
We recommend that trustees review their current practice and seek advice to ensure that they understand what is required of them and so that their trusts will meet the requirements of the Trust Act.
Importantly, the Act:
Trustees Duties are specified:
Record Keeping Obligations:
Trustees are obligated under the Trusts Act to keep “core” or basic documents and information including the trust deed itself, variations to the trust deed, records of property and records which identify the assets, liabilities, income and expenses, contracts, and accounting records. This may seem obvious, but many trusts do not keep accurate records. Trustees will need to consider changing their practices in respect of such trusts.
Stace Hammond uses specialist Trust Management software to ensure our trust clients are compliant with the new record keeping requirements, and so clients can remotely access their documentation at any time.
Disclosure of Information to Beneficiaries:
This has been a contentious issue. The objective is for beneficiaries to be able to obtain information about the trust and their rights in respect of the trust and to be able to hold trustees accountable.
The Act creates a presumption that a trustee must make available to every beneficiary “basic” trust information- trust documents and the right to request other trust information including the trust deed and financial and asset records – unless the trustee reasonably considers otherwise.
In deciding whether it is reasonable to not disclose information the Act specifies a list of factors to be considered relating to the circumstances of the trust and the beneficiary and the like.
If the trustee decides to not disclose trust information to beneficiaries, the trustee may be required under the Act to apply to the High Court for directions in respect of that decision.
Trustees and settlors have up to 31 January 2021 to review trust documents to ensure that all is in order – trust records, document keeping systems, the financial position and records of trusts.
Many trust deeds allow for amendment of trust terms. If you are have a trust, or are a trustee, talk to us now about how you can better manage your responsibilities under the new Trusts Act.