One of the objectives of this new law is to provide for greater transparency and accountability by trustees to beneficiaries. This objective is underpinned by trustee duties now being codified.
Whilst it may seem an obvious point to make, it should nevertheless be made... in order for a beneficiary to hold a trustee accountable, they must first know they are indeed a trust beneficiary. Prior to this new enactment, many people would be unaware they were beneficiaries of a trust. This is because trustees did not have a positive legal duty to inform a person of their position. The new Act has reversed this position entirely, however, mandating trustees have positive duties of disclosure to honour.Pursuant to the newly introduced statute, trustees must now inform people if they are a beneficiary of a trust. This includes fixed and discretionary beneficiaries. Furthermore, trustees must provide specific information to beneficiaries. Whilst trustees have a legal right to withhold information, this will prevail only in very exceptional circumstances.
Clearly, an effect of the new Act means privacy of trust matters will be curtailed to a certain extent. Simultaneously, a greater onus will be placed on trustees to not only meet their legal duties in the administration of trust affairs, but also to be seen by the beneficiaries to do so.
Existing trusts will enjoy a transitional period before they must comply with the Act’s provisions. However, on 30 January 2021 all trusts in New Zealand will be subject to the new regime. This gives trustees time in which to take action should they wish to change provisions of their trust deed, such as amending beneficiary classes.