Trusts, they are a changing...

For those Mums and Dads out there with trusts, it seems an imminent overhaul of the current trust regulation is on the horizon. This may result in the development of the administration, compliance and regulation rules being tweaked to match those that currently govern companies. A paper due to be released next month by the Law Commission may review compliance procedures to include ‘fun and games’ like a trust register and the introduction of an ombudsman (paid for by trust levies). It is expected to outline a detailed statute of trust duties and steps that may make it easier for beneficiaries to remove non-performing trustees. It may be meaty and it may be hard to swallow.

Dot your I’s

Like its older wise cousin, the Companies Act, non-compliance of the ensuing Trust Statute could result in more than a slap on the hand for Mum and Dad trustees. More seriously, failing to carry out the duties may actually result in civil or criminal penalties. Once this new piece of legislation is detailed, more than 500,000 trusts in New Zealand will need to have a structure in place to ensure the power of the trustees and beneficiaries and the assets within it (which the Trust set out to protect in the first place) are protected.

Trust Us

Some of the nitty gritty we expect to be required is around the collection and upkeep of the correct documentation of annual gifting of settlors loans, the trust minutes, ensuring lease documentation is on file and up to date, clear documentation of the settlors wishes and intentions for the trust and a record of all Trustees, beneficiaries, gifts and events. Sound like fun? We will be keeping our ears to the ground on this one to be up to date and on top of the changes for our clients.