Tael Solutions West Auckland Accountants Tips - New Trust Act – January 2021

If you’re protecting your family property in a trust, there may be changes you need to make before the new Trusts Act comes into force in January 2021. The changes to the Trusts Act (the first in more than 60 years!) aim to make trust law more efficient and accessible, simplify core trust principles and essential obligations for trustees, and make it easier to resolve disputes. The Trusts Act puts into law the duties of trustees and requires much greater transparency around trust activity.

With these changes, trustees now face increased compliance requirements.  Here’s what you need to do.

1. Review your trust: Talk to us and your lawyer to review arrangements for your trust. There might be opportunities to improve your tax structure and reduce your risk profile.

2. Revisit your succession planning: The new legislation has extended the maximum life-span of trusts by 80 years, to 125 years. This means you’ll need to make significant succession planning adjustments.

3. Be prepared for beneficiary requests: The new law means most trust beneficiaries will be able to request financial reports on the state of the family trust and find out ‘who gets what’. Be prepared for extra admin and costs.

4. Compliance duties will increase the time and cost of administering some trusts, meaning some are no longer cost-effective.

5. Know your responsibilities as a trustee, which include:
a. Knowing the terms of the trust
b. Acting according to the terms of the trust
c. Acting honestly and in good faith
d. Acting for the benefit of the beneficiaries, or to further the permitted purpose of the Trust