Rainey Collins Lawyers

Maori Land Trusts – Key Features Examined

By Peter Johnston, Tuesday, 20 July, 2004, Maori Land

In this article, Peter Johnston examines some of the key features of three types of trusts over which the Maori Land Court has jurisdiction.  The trusts considered are Ahu Whenua, Whanau and Whenua topu trusts.

Ahu Whenua Trust

Ahu Whenua Trusts replace the old Section 438 trusts.  This type of trust is a land administration trust designed to manage whole blocks of Maori Freehold land.  Before setting up an Ahu Whenua Trust the Maori Land Court is required to be satisfied that the constitution of the trust will promote and facilitate the use and administration of the land for the beneficial owners.

Ahu Whenua Trusts are often used for commercial purposes and is the choice of trust for many farming operations over Maori Freehold land.

A key feature of an Ahu Whenua Trust is that it enables the Trustees to make key decisions concerning the administration of the land vested in them on behalf of the beneficial owners.  Subject to certain restrictions on alienation* it is possible for a trust order to give the Trustees wide and flexible powers.

The main restrictions on alienation are contained within Te Ture Whenua Maori Act 1993 (“the Act”).  Under the Act the trustees of an Ahu Whenua Trust can only alienate land by way of sale in limited and prescribed circumstances.  It is also possible for trust orders to contain provisions prohibiting the sale of land altogether and/or prohibiting the mortgaging of the land for security purposes.

It is therefore important for Trustees of existing Ahu Whenua Trusts (if they have not already done so) to read and understand the Trust order as this sets out what they can and cannot do.  Professional advice should be obtained, where appropriate, particularly if an alienation of land is being contemplated.

Whanau Trust

A Whanau Trust is a trust designed to hold and manage beneficial interests or shares in Maori land or general land owned by Maori.

A key feature of a Whanau Trust is that it enables whanau members to bring together all of their interests or shares in land for the benefit and advancement of the whanau and the descendants of the tipuna (either living or deceased) named in the trust order.

While a Whanau Trust exists, no person is entitled to succeed to any interests or shares held by the trust.  This prevents the further fragmentation of shares and is seen as a major benefit for many Maori.

One of the difficulties of Whanau Trusts is that once established, they are not easily terminated.  This difficulty increases with the passing of time.  Anyone wishing to place their beneficial interests or shares into a Whanau Trust should be very clear as to what they are doing and appropriate professional advice should be obtained in advance.

Anyone contemplating becoming a Trustee should also think very carefully before taking on such a role.  As a Trustee you are required to hold and administer the assets of the trust on behalf of the beneficiaries.  Trustees are also required to keep accurate and up-to-date records of all beneficiaries and to keep beneficiaries informed of any important decisions.  This can become increasingly difficult over time.

Trustees of a Whanau Trust also need to take great care when making decisions concerning any distribution or expenditure of trust funds.  In particular, it is important that clear procedures are put in place to ensure that any distribution or expenditure is properly made. Failure to do so can result in beneficiary dissatisfaction and/or the Trustees being held personally liable.

Whenua Topu Trust

A Whenua Topu Trust is a land administration trust designed to manage land belonging to an iwi or hapu.  Before setting up a Whenua Topu Trust, the Maori Land Court needs to be satisfied that the interests in land constitutes the whole or a substantial part of the total interest in land owned by the iwi or hapu.  The Maori Land Court must also be satisfied that the constitution of the Trust will promote and facilitate the use and administration of the land by the iwi or hapu.

Whenua Topu Trusts share many of the features of the Ahu Whenua Trusts and are subject to the same restrictions.

It is possible that the use of Whenua Topu Trusts will increase particularly where land is returned to iwi and hapu as part of any settlement of historical Treaty of Waitangi claims.  Where the land returned is commercial land, the Trustees will need to consider whether or not to retain the land as an investment or to apply to the Maori Land Court for an order that it form part of the corpus of the Trust.  Where the land is retained as an investment, the alienation restrictions imposed by the Act will not apply.

* Please note that ‘alienation’ in this Act includes not only ’sale’ but also alienation by way of ‘lease’, ‘licence’, ‘easement’, ‘mortgage’, ‘charge’ or ‘encumbrance’.

Call us Toll Free on 0800 733 424