Estate planning and the duties of trustees
In accordance with the updated legalisation of the Trusts Act 2019 (“the Act”), the obligations that fall on trustees have been amended.
Trustees must adhere to mandatory duties which cannot be modified, and they must abide by the default duties of
specific sections in the Act. Without specifically going through all these duties (they can be found in sections 22 to 38 of the Act online), there is a general expectation that as a trustee you should know the terms of the trust deed, act honestly and in good faith, and act in the best interest of the beneficiaries, as that is for whom the trustee is holding the assets of the trust.
With the requirement of trustees to uphold the duties listed above, it is prudent to review who holds the position of trustee in your trust and whether they are currently the right person.
Additionally, if you act as a trustee for others, consider if you should continue in that role given these expectations.
Another key responsibility for trustees, now also detailed in the Act, is the disclosure of certain trust information to beneficiaries.
A trustee must be familiar with the details of when and if information can be provided or should be withheld.
Other key components of your trust and estate planning to regularly review:
Memorandum of Wishes
This is a record of how the remaining trustees should operate the trust and guides
the trustees in decisions on whether the trust should continue, be distributed, and when distributions should be made.
Your Will
This is for any personal assets that are not owned by the trust but may deal with any amounts owed to you by the trust.
Powers of Attorney
This is important for any matters that need to be dealt with if you are incapacitated or absent.
It’s common practice for a spouse or partner to act as one Power of Attorney and to have another in case you are both away or incapacitated.
These are a few fundamental details of the amendments in the Act, but there are a number of resources to familiarise yourself with the remaining changes.
To ensure you are correctly fulfilling your legal duties and that your trust and personal affairs are up to date should the unexpected happen, it’s recommended to seek advice. For more information or advice, contact the team at findex.co.nz.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex NZ Limited.
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