Mandatory Trustee Duties and Disclosure of Information to Beneficiaries of Māori Land Trusts

The Trusts Act 2019 has introduced a number of changes to trust law that Trustees of Maori land trusts need to be aware of.

One of the major changes is that Trustees of Maori land trusts will have mandatory duties that they need to carry out and it will not be possible to exclude or contract out of these in your Trust Deed.  The mandatory duties will be to:

• Know the terms of the Trust;
• Act in accordance with the terms of the Trust;
• Act honestly and in good faith;
• Act for the benefit of beneficiaries or to further the Trust’s purpose; and
• Exercise their powers for a proper purpose.

There are also other default duties that need to be carried out unless they have been specifically modified or excluded in your Trust Deed.

Keeping of documents

The Act requires core documents that Trustees must keep, including the Trust Deed, variation documents, records of Trust property and Trustee decision making, accounting records and financial statements, and documents appointing, removing and discharging Trustees. 

Trustees will need to keep the Trust Deed and any variations throughout their Trusteeship, and then pass them onto a current or new Trustee when they retire or stand down.  Trustees need to ensure that at least 1 other trustee holds all of the other trust information referred to above.

Providing Information to Beneficiaries

A major change for Trustees is that they will be required to provide beneficiaries with basic information about the Trust (sufficient for the Trust to be enforced).  There is no such provision in the old legislation. 

Basic Trust information is defined as:

• The fact that a person is a beneficiary of the Trust;
• The name and contact details of the trustee/s;
• The occurrence, and details of each appointment, removal and retirement of a trustee as it occurs; and
• The right of the beneficiary to request a copy of the Trust Deed and trust information. 

The Act requires this information to be provided to beneficiaries at ‘reasonable intervals’.  We would expect this be at least every 12 months and would suggest that Trustees consider at their annual meeting whether they should be providing such information to beneficiaries.

Trustees will also have to give other trust information to beneficiaries on request to enable the beneficiary to be able to enforce the terms of the trust.  This is likely to be information such as financial statements, the trust order and AGM minutes.

The Act sets out a number of factors for Trustees to consider when deciding whether or not to give some or all of the requested information, and it gives guidance about how to withhold information from beneficiaries.  This includes whether there is any personal or commercial confidentiality involved, the age and circumstances of the other beneficiaries, the age and circumstances of the beneficiary requesting the information, the effect on family relationships and relationships between other beneficiaries, the trustees and the beneficiaries and the practicalities of providing information where there is a wide class of beneficiaries.

The Act also allows the trustees to ask for payment from the requesting beneficiary to cover the reasonable costs of providing such information.

Trustees will be obliged to give basic trust information to all listed beneficiaries.  Many Maori land trusts will have practical issues with defining, and being able to contact, all of their beneficiaries.  For this reason, some trusts won’t be able to provide all information to all beneficiaries.  It will be important for trustees to closely consider the factors that are to be taken into account, and recording clearly in minutes why they have not provided certain information to some, or all, beneficiaries.

This will ensure, if there is a challenge by a beneficiary that it shows the trustees took all relevant considerations into account.

It pays for all those involved in trusts, whether family trusts or Maori land trusts, to be aware of the changes, so you can make any required changes to your trust deeds now and/or put in place processes for the trust going forward.

Claire Tyler
Trusts Lawyer
Wellington