News & Information - North End Law

Hamilton Based Commercial and Property Law Firm

Time To Review Your Trust - June 2020

The Trusts Act 2019 ("Act") comes into force on 30 January 2021.

While all trusts should be regularly reviewed by trustees, settlors, lawyers and accountants to ensure they remain fit for purpose, such reviews are now essential as many trust arrangements will need to change in light of the provisions of the Act.

  • The Act replaces the Trustee Act 1956 as well as updates or restates law that exists already.
  • The Act also imposes new requirements for trust arrangements which will likely require action by trustees and settlors or changes to the way the trust operates in the future.
  • The Act applies to all trusts whether they have been around for decades, months or are established after 30 January 2021.

Key changes of which trustees and settlors need to be aware.

1. Lifetime of a Trust

Under the Act the lifetime of a Trust can now be 125 years. However, this extension of time does not automatically apply to existing trusts. Trustees of existing trusts will need to look to their trust documentation to determine if an extension of the trust lifetime is possible or desirable.

2. Trustee Duties

Minimum trustee duties are now specifically outlined in the Act. There are two types of duties stated; mandatory duties and default duties. Mandatory duties cannot be modified or excluded and apply to every trust. Default duties also apply to every trust, however, these duties can be modified or excluded if the correct process is followed.

3. Documents to be kept by trustees

The Act requires each trustee to personally retain core documents (or copies of them). Core documents are defined and listed in the Act.

Failure to comply with this obligation may mean a trustee will be liable for breach of trust should a claim be made against them.

It is no longer sufficient to only have a solicitor or accountant hold those core documents.

4. Beneficiaries Right to Information

The Act contains a presumption that trustees will provide basic information (as defined in the Act) to beneficiaries. This means that trustees must, without request from a beneficiary, give to the beneficiaries' certain details about the trust.

An example of "basic information" is telling a beneficiary that they are a beneficiary, providing the name and contact details of the trustees (including when there are changes to the trustees) and letting the beneficiaries know that they have the right to ask for information about the trust.

For many trustees and settlors, the mere possibility of beneficiaries being given basic information is undesirable.

Trustees must consider at reasonable intervals whether they should be providing basic trust information to beneficiaries.

Such consideration and the reasons for the decision should be carefully recorded in trustee resolutions to best protect the trustees.

The requirement for trustees to provide basic information does not negate the obligation to respond to a request for information from a beneficiary.

If a beneficiary asks for information about the trust, the trustees must first look the Act for guidance on what, if anything, needs to be disclosed and follow the process outlined in the Act carefully.

While the Act does provide limited situations where trustees may withhold basic information from beneficiaries or refuse requests for information, it is most likely that basic information will need to be disclosed to at least one beneficiary who is not also a settlor.

However, there is more discretion available to trustees when considering and responding to requests for information from beneficiaries.

5. Compulsory Removal of Trustees

The Act now makes it compulsory for the person with the power to remove trustees to remove any trustee who becomes incapable of acting.

If an incapable trustee is not removed, then the person holding the power of removal may find themselves answerable to the beneficiaries for any loss which arises from their failure to act.

It may be possible to avoid the obligation to remove a trustee, if their trustee powers have been otherwise delegated, but trusts will need to seek legal assistance to ensure this exemption applies.

6. Other Considerations

The Act further details how trustee appointment, removal (in addition to compulsory removal) and retirement is to be completed, how trusts are distributed, trustee indemnification and alternative dispute resolution methods.

If a trust deed is silent on how these matters are to be dealt with, then the Act provides the default position.

For some trusts, the default provisions of the Act may not be suitable and trust variations may need to be undertaken, if possible, to avoid the application of the Act in this respect.

Trustees may also need to give serious consideration to whether a trust should be ended and distributed rather than varied.

Next Steps

  1. Trustees and settlors need to familiarise themselves with their trust arrangements and the provisions of the Act (particularly the trustee duties) as soon as possible.
  2. All trusts should be reviewed prior to 30 January 2021 to ensure compliance and avoid unintended consequences once the Act comes into force.
  3. For those who need guidance on this process or assistance with changes that need to be made, we are available to help and welcome your enquiries.
    Contact North End Law

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Welcome to New Staff - 17 March 2020

We are delighted to announce the appointment of three new staff members.

Robyn Skynner has joined the firm on a part-time basis to take on the role of AML Compliance Officer. Those of you who have been through the process will know how time-consuming it is (hence the need for it to be undertaken by a new staff member) and for those of you who are yet to experience the process, you may well be contacted by Robyn at some time.

We have also appointed two new Associates – Shelly Carden and Alice Nunn.

Shelly has had 8 years' experience working in Christchurch originally and then for a major Hamilton law firm.  She has a particular interest in property, commercial and corporate transactions.

Alice has also had 8 years' experience and worked in the real estate industry before joining a major Hamilton law firm in 2012.  Her particular areas of interest are in trusts, asset protection and equine law. Alice joins us on 27 April 2020.

Their inclusion in the team will mean that Dianne and Judith can now allocate their work to senior solicitors as appropriate and the intention is that we will once again be able to attend to our clients in a timely manner.

You may also have heard that for a period we were not taking on any new clients. We are pleased to say that with the extra staffing, Shelly and Alice will be able to welcome new clients.

Erin Geange

Farewell & Welcome to New Staff - 15 November 2019

Erin Geange has resigned from our firm with effect from 15 November 2019. We wish her all the best as she spends more time with her family and working in her various family business interests.

We have welcomed Helen Hall-King as our newest staff member. Helen is a PA/Secretary providing support to the other legal members of our team.

Certified Document Hours - 09 July 2017

With the changes to the Anti-Money Laundering legislation which now applies to more entities (like law firms) we have experienced an increase in the number of people requesting certified copies of documents.

We have also experienced an increase in the number of people wanting to swear affidavits or make declarations.

The constant interruption to our working staff during the day is affecting their ability to deal with the files for clients who are paying us to do their work in a timely manner.  As a result we are going to make some changes.

With effect from 16 July 2017, we will be available to certify copies of documents, swear affidavits and take declarations during the following times:

  • Tuesday 4.00pm – 5.00pm
  • Wednesday 12.00am – 1.00pm
  • Thursdays 9.00am – 10.00am

We hope that by offering those different times we will be able to meet everyone's requirements.

Anti-Money Laundering - 09 July 2017

With the changes to the Anti-Money Laundering legislation which now applies to law firms, we are required to undertake Due Diligence for all our clients.

This has resulted in additional work for our staff and extra resources are required to ensure our compliance with the legislation.

As a result, we will be charging a one-off fee of $250 plus GST on each file opened for a new client – irrespective of the number of persons to be identified on that file.

If Enhanced Due Diligence is required we reserve the right to charge a further fee depending on the work required.

For our existing clients we will be charging a one-off fee of $100 plus GST.

These fees will be charged in addition to any estimate or quote given to you.