The Trusts Act 2019 will come into force on 30 January 2021, which will have significant implications for trusts. If you are settlor or trustee of a trust, it is important that you carefully consider these implications now, and make any required changes to the trust as soon as possible before 30 January 2021.
We summarise the changes which require your most immediate attention:
From 30 January 2021, in general, trustees must provide every beneficiary with information about the trust. This includes beneficiaries who have no fixed entitlement to the trust and only have a chance of receiving from the trust at the trustees’ sole discretion. Information that trustees are to provide to beneficiaries includes:
(a) that the person is a beneficiary
(b) name and contact details of trustees
(c) details of changes in trustees, as they occur
(d) the beneficiary’s right to request the terms of the trust and trust information (any information regarding the terms of the trust, the administration of the trust, or the trust property, that is reasonably necessary for the beneficiary to have to enable the trust to be enforced (with the exception of the trustees’ reasons)).
There are limited circumstances where trustees may decide not to provide some or all of such information to a particular beneficiary. However trustees must apply to the court in order to withhold information from all beneficiaries.
It is important to carefully review the beneficiaries of your trust now.
A number of our clients are taking steps to minimise the number of beneficiaries in their trusts, by removing those beneficiaries they do not want to receive information about the trust.
The role of trustee will be more difficult and onerous. A major reason for this will be regularly managing beneficiaries’ entitlements to information. Trustees are required by the Act to know about family relationships, beneficiaries’ circumstances, and about third parties who may be affected by decisions to disclose information.
At the same time, a trustee’s right to be indemnified from the assets of the trust for their decisions may be more limited.
Changing Your Trust
Varying the terms of the trust deed, resettling money from the trust into a different trust, or winding up your trust altogether will require unanimous beneficiary consent or a court order from January 2021. This will mean making changes to your trust after 30 January 2021 may be very difficult, if at all possible.
We note however the new Act does include the ability for trustees of trusts that do not have a provision in the trust deed to vary or resettle assets to do so with the unanimous consent of the beneficiaries of the trust.
Do You Still Need The Trust?
The above changes are just some of the key changes the new Act is bringing.
We suggest you consider whether it is still necessary for you to have your trust, or whether it is in your best interests to wind up the trust now before the Act comes into force. It may be that your wills are a more appropriate way of providing for your beneficiaries.
If you wish to keep your trust, there are a number of other changes we recommend be made to your trust deed.