Solicitor Emily Hartson-Maea says with the new Trusts Act 2019 set to come into effect this weekend it is even more important that Pasifika families have good discussions about why they would set up a Family Trust, who would be responsible for maintaining the Trust documentation, and keeping the Trustees and the Beneficiaries updated regarding the Trust assets.
The new Act comes into effect tomorrow, 30 January 2021. It updates and improves the law governing trusts for the first time in more than 60 years and will apply to all existing trusts in New Zealand, as well as any trust created on or after that date.
Of Samoan decent, Emily is Managing Solicitor for HMLegal Ltd, and has been practicing law in New Zealand for more than 30 years. One of the areas she specialises in is Wills and Trusts and has held workshops for Pasifika communities to understand what it means to form a Trust. Emily says trusts are useful when we consider more of our elderly parents may find it difficult to deal with the family home, and the responsibility needs to be shared between the children.
She says a very basic description of a family trust is an arrangement that is set up to take ownership of your assets from you personally, and transfer that ownership to a separate being, the Trust. Effectively it means that you no longer personally own that asset (normally the family home but can include other assets).
She explains, “the Trust through the nominated Trustees make decisions about the assets, for the benefit of specified Beneficiaries. The Trustee’s actions are governed by the Trust Deed which sets out the purpose of the Trust, the powers of the Trustees, identifies the Beneficiaries or classes of Beneficiaries, the term of the Trust, and how it will be wound up when it comes to the end of the Trust term.”
Emily adds it is very important that people need to know that the trust assets, especially with the most common Family Trust, no longer belong to the original owners (for example Mum and Dad). The Trustees, as a group, make decisions about the asset.
She outlines what the new law reform means for people and families who have entered into Trusts. Basically, the Trustees are required to be more proactive in fulfilling their duties under the Trust, and to the Beneficiaries.
Mandatory Duties: Trustees must know the terms of the Trust and act in honest and good faith. Trustees must deal with the Trust property for the benefit of the Beneficiaries and according to the purpose of the Trust.
Default Duties: Unless altered in the Trust Deed, the Trustees must exercise reasonable skill and care in administering the Trust according to any special knowledge or expertise. They must invest prudently and actively consider the exercise of their powers that may bind or commit trustees in the future, ensure they avoid conflicts of interest, act impartially between Beneficiaries and act unanimously with the other Trustees.
Beneficiaries are now entitled to basic information e.g. the fact that they are a Beneficiary, the Trustees contact details, and a copy of the trust deed and other “trust information” if they request it.
It is estimated there are between 300,000 and 500,0000 trusts in New Zealand.
Lawyers practising in trust law can be found on the New Zealand Law Society | Te Kāhui Ture o Aotearoa’s website: https://www.lawsociety.org.nz/for-the-public/get-legal-help/.
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