Trusts Act 2019
The new Trusts Act 2019 comes into effect on 30 January 2021. It is an update of much of the existing law from the previous statute and includes principles drawn from various Court cases over recent times.
There are some changes about which Settlors and Trustees should be aware.
Mandatory duties: These duties cannot be modified or excluded by the trust deed.
- Know the provisions of the trust
- Act in accordance with the provisions of the Trust
- Act honestly and in good faith
- Deal with the Trust property according to the provisions of the Trust Deed
- Act for the benefit of the beneficiaries in accordance with the Trust Deed.
There is nothing new in the above but the Act has restated this as being part of the Trustee’s mandatory duties.
Default duties: These are duties by which the Trustees must abide unless the Settlor varies these when the Trust is established.
- A duty of care
- To invest prudently
- Not to act in self interest
- A duty to consider the exercise of the Trustees powers
- Not to fetter the Trustee’s discretion
- To act unanimously
- Not to profit from the trusteeship
- Not to benefit from exercise of the Trustee’s discretion
These can be modified when the Trust is established eg to allow a decision by a majority, to purchase an asset that might be considered a wasting asset eg a private memorabilia collection, a retirement unit.
It is now a requirement that all Trustees ensure that proper records are maintained. Core documents must be kept. If Trustees are not confident that at least one Trustee will maintain core documents then each Trustee should hold and maintain their own copies.
Core documents include:
- Trust Deed and variations to the Trust Deed including documents evidencing appointment and removal of Trustees
- Financial accounts or otherwise records that identify assets and liabilities and income and expenditure that are appropriate to the value and complexity of the Trust
- Records of Trustees decisions
- Letter or memorandum of wishes
- Written contracts entered into by Trustees
- Previous Trustee’s records
- Other documents necessary for the administration of the Trust.
Beneficiary to be provided with information There is a presumption that basic trust information must be provided to a beneficiary.
Basic information to be provided
- The fact that the person is a beneficiary
- Names and contact details of Trustees
- Details of any changes in Trustees
- A beneficiary has a right to request further information.
Upon request for further information there is a presumption that the information will be provided within a reasonable time. The beneficiary can be required to pay the reasonable costs of providing such information.
The Trustees when considering the presumption to supply information to a beneficiary must consider:
- The nature and interests of the beneficiary. Is there a specific benefit to be provided to the beneficiary eg university fees provided they go to university, a benefit on reaching a certain age.
- The nature and interests of the other beneficiaries.
- The intention of the Settlor when the Trust was established
- The age and circumstances of each beneficiary
- The effect of giving the beneficiary the information
- The nature and context of any request for information
- Any other factor the Trustees reasonably consider to be relevant
Trustees will have to carefully consider any decision not to disclose.
If you are a Settlor or Trustee we recommend that you contact us to discuss how the new Trusts Act will affect you.