Trusts Law Update – Trusts Act 2019
Posted by Kellie Bright on October 14 2019 in News
The Trust Act 2019 (Act) comes in to force on 30 January 2021 and brings important reform to the Trustee Act 1956.
The main objective of the Act is to make trust law more accessible to the public. It sets out and simplifies core trust principles and default administrative obligations, and provides mechanisms to resolve trust-related disputes. It also brings recent developments in case law into statute.
The key changes include:
- Codification of mandatory duties. The mandatory duties specified below must be performed by the trustees and may not be modified or excluded:
- duty to know the terms of the trust
- duty to act in accordance with the terms of the trust
- duty to act honestly and in good faith
- duty to act for the benefit of the beneficiaries or to further the permitted purposes of the trust
- duty to exercise powers for a proper purpose
The Act also imposes a number of default duties that may be modified or excluded by the terms of the trust.
- Trustees will be required to retain core trust documents. Such documents include:
- the trust deed and any variations
- records of the trust property
- records of trustee decisions
- written contracts entered into by the trustees
- accounting and financial records
- documents of appointment, removal and discharge of trustees
- letters or memorandums of wishes from the settlor
- other documents necessary for the administration of the trust
- Beneficiaries will have increased rights to trust information. Generally a trustee will have a duty to provide basic trust information to beneficiaries. This includes:
- the fact that the person is a beneficiary
- the name and contact details of the trustee
- the occurrence of, and details of each appointment, removal and retirement of a trustee as it occurs
- the right of the beneficiary to request certain trust information
However, there are various factors that the trustees must consider before disclosing information to beneficiaries. Such factors include:
- The expectations and intentions of the settlor when the trust was established (if known) as to whether the beneficiary would be given information
- The age and circumstances of the beneficiary
- The effect on the trustees, the beneficiaries and third parties of giving the information
- The effect of giving information on relationships within the family
- The practicality of imposing restrictions and other safeguards on the use of the information.
- The maximum duration of a trust is extended to 125 years (from 80 years).
- Trustees cannot be indemnified for liability arising from the trustee’s own dishonesty, wilful misconduct, or gross negligence.
- A trust can be terminated, varied, or resettled by the unanimous consent of beneficiaries.
- Alternative dispute resolution may be used to resolve trust disputes.
In anticipation of the Act coming into force it is important to understand the provisions of the Act and how it may affect your trust and its administration.
If you would like more information about the Act or have any questions, please contact us.
Author: Kellie Bright
This paper gives a general overview of the topics covered and is not intended to be relied upon as legal advice.