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Family and Corporate Trusts are being reviewed … what you need to know …
The Law Commission has recently released a series of proposals as part of its review of Trust Law.
The Commission has recommended the following changes …
Trustee obligations
Trustees will no longer be able to contract out of:
- The obligation to act honestly and in good faith for the benefit of the trustees;
- The duty to adhere to and understand the terms of the trust;
- The duty to account to the beneficiaries for trust property, and;
- The duty to exercise their trustee powers for their proper purposes.
That Trustees should be obligated to retain
- Copies of the trust deed;
- Any variations to the trust deed;
- Documentation of any trust property and;
- Records of trustee decisions, any written contracts entered into, and any accounting records and financial statements.
Access to justice and minimising litigation costs
- The District Court be given jurisdiction to determine claims up to $500,000 (present jurisdiction is for claims up to $200,000), this means cheaper court costs.
- The Courts have the power to remove trustees convicted of a dishonesty offence.
- Trustees can use dispute resolution measures even when the trust deed does not specifically make mention of this.
Transparency
- The Companies Act should require a company, when acting as a trustee of a trust, to describe its status clearly. For example: “ABC Ltd acting as Trustee for XYZ Trust”
- An appropriate mechanism be put in place to appoint a liquidator or receiver for the trust should it become necessary.
Rights of beneficiaries
- If a trustee has acted unlawfully whilst making a decision in their capacity as trustee that beneficiaries can apply to the court to have a trustee decision reviewed.
The Commission invites submissions on the proposals. These are due Friday 22 February 2013.
If you are a trustee and want further information about the proposals or if you would like assistance in preparing a submission please contact us on (04) 4736850.