Publications > Trusts and Wills Articles
Law Commission Review Of The Law Of Trusts
Abolition of Gift Duty and Your Trust
Key Steps In Establishing An Asset Protection Programme Using A Family Trust
Getting The Power Of Appointment Right
Choosing The Right Trustee
The Importance Of A Letter Of Wishes For A Discretionary Trust
Managing Your Trust – Trustees Must Act Jointly
Trust Documents – What Do You Have To Disclose?
Rights Of Beneficiaries
Tax Residency And Tax Treatment Of Your Trust
Trust Administration Checklist
Distributions From Discretionary Trusts
The Duties, Office And Powers Of A Trustee
The New Zealand Law Commission is currently reviewing the law of Trusts in New Zealand. An issues paper released by the Law Commission on 30 June 2011 discusses the duties, office and powers of a trustee.
The Law Commission has summarised the key duties that each trustee owes to beneficiaries.
- To know and understand the Trust Deed, all relevant documentation, and the nature of all Trust property.
- To adhere to the Trust’s terms.
- To maintain impartiality between beneficiaries when managing or distributing the trust property.
- To act in the beneficiaries’ best interests.
- Not to profit personally from their position as trustee.
- To act voluntarily, without benefit, and without payment for their services (except in specified circumstances).
- To invest the Trust’s property and vary such investments from time to time, exercising the level of care, diligence and skill a prudent business person would when managing the affairs of another person. Professional trustees are held to a higher standard: a professional trustee must exercise the level of care, diligence and skill a prudent person engaged in that profession, employment or business would exercise.
- Not to delegate fundamental decision-making powers, not even to co-trustees, unless authorised by statute, trust deed, or necessity.
- To actively participate as trustee. A trustee cannot passively rely on their co-trustees.
- To act unanimously.
- To pay the correct beneficiaries. Trustees will be liable for wrongly paying persons who are not beneficiaries.
- To keep proper accounts, and give information as required if that information is necessary to ensure that the trustees have acted properly.
The Law Commission also discusses which of these duties can be limited or excluded by express provision in the Trust Deed, and which of these duties are of such fundamental importance that they are, or should be, irreducible. In this discussion, the Law Commission highlights the importance of striking a balance between holding trustees to account and ensuring sufficient numbers of persons are in fact willing to act as trustee, particularly in regards to professional trustees. The second part of the issues paper reviews the processes for the appointment, retirement and removal of trustees. It also looks into the powers trustees have in managing and administering the Trust, investing Trust funds, and advancing Trust assets to beneficiaries.