The Law Commission has published its Preferred Approach Paper on Law of Trusts.
This is the latest step in a review of New Zealand's trust law, which began in 2002. Legislation reforming particular aspects of the law was introduced in 2007 but later abandoned in favour of the broader review currently underway by the Law Commission.
The Paper forms part of Stage 1 of the review, concerned with the Trustee Act 1956, the Perpetuities Act 1964 and the general principles of trust law. Stages 2 and 3 will consider charitable trusts and trustee companies.
The objectives for reforming New Zealand's trust law include:
- modernising trust law;
- clarifying trust law, currently spread between legislation and particularly complex case law;
- creating a more useful trusts statute, providing for matters not currently covered by the Trustee Act 1956 (such as the establishment and management of trusts);
- reducing administrative difficulties and costs;
- enhancing the fairness of trust law; and
- ensuring that New Zealand's trust law is both fit for the New Zealand context yet consistent with overseas trust law.
Stage 1 has so far involved five issues papers, covering different aspects of general trust law and inviting submissions. The Preferred Approach paper presents the Law Commission's thinking and provides one final opportunity for submissions before the Law Commission makes its recommendations in a final report.
The key feature of the Law Commission's preferred approach is a new "Trusts Act" to replace the Trustee Act 1956. This would be concerned with the broader trust relationship and not only with trustees. The statute would restate and outline the core principles of the trust relationship, clarifying trust law and making it more accessible to those who use trusts (although falling short of complete codification).
Other features of the proposed Trusts Act include new mandatory and default provisions, strengthened trustee accountability provisions and measures to limit the need for unnecessary court direction and supervision.
The Paper can be accessed on the Law Commission's website here, along with the other issues papers released. The due date for submissions is 22 February 2013