A long time in the making, the Trusts Bill passed its third reading yesterday (24 July 2019) and is now awaiting royal assent. Once enacted, there will be a transition period of 18 months.
Since the previous version of the Trusts Bill, only minor changes have been made, including updated references to the Financial Services Legislation Amendment Act 2009. As mentioned in our previous update, the Trusts Bill will restate and reform New Zealand trust law by clarifying and simplifying trust law and trustee obligations, replacing the Trustee Act 1956 and the Perpetuities Act 1964. It is a partial codification of existing equitable principles in relation to trusts, and in some instances (for example, perpetuities) significantly modifies current law. The Trusts Bill will apply to all express trusts (even those currently in existence), including trusts used in commercial transactions. This will affect not just family trusts, but also trusts regulated by the Financial Markets Conduct Act 2013 (such as trusts relating to managed investment schemes and debt securities), wholesale financing trusts, security trusts, custodial trusts and other trusts established for commercial purposes.
Now that the Trusts Bill's provisions are in final form it would be timely to consider whether any changes are required to existing trust deeds, especially those relating to commercial trusts, and whether any future trusts should take the Trusts Bill into consideration. There is a somewhat complex system of disapplying certain provisions of the Trusts Bill to specific types of trust, so care needs to be taken in this process.
Please contact any of our experts listed below if you would like to discuss any aspect of the Trusts Bill.