A comprehensive review of the law of trust and the Trustee Act 1956 (the Act) is underway, with the Law Commission issuing a report outlining a series of specific reform proposals. The proposed new Trusts Act will be a comprehensive statute that modernises the law of trusts in New Zealand.
In the Law Commission's view the proposed reforms will provide simplified, relevant procedures to better enable the day-to-day business of trusts with minimal expense, whilst maintaining the flexibility and entitlement for people to hold and dispose of their property as they wish.
The Report contains 51 recommendations, some of the key areas for reform include:
- Setting out the core characteristics of a trust and requirements for creating a trust
- Summarising the basic duties and obligations that trustees owe to beneficiaries
- Modernised trustee powers provisions
- A modernised, flexible approach to investment
- Improved procedures for the appointment and removal of trustees.
Of particular interest is a recommendation which would give creditors the ability to make a limited claim to satisfy a liability through the trustee's indemnity even where the indemnity is impaired and the trustee would not be entitled to rely on the indemnity. A creditor could only take advantage of this where the creditor has given value acting in good faith and the trust property received a benefit from the transaction between the trustee and the creditor. Another proposal is to give statutory recognition to the court's ability to appoint a receiver for trusts and to further provide the grounds on which a receiver may be appointed.
The Report was tabled in Parliament on 11 September 2013 and is currently awaiting a response from the Government which will be given by March 2014. The Law Commission intends to look at further areas of trust law in relation to purpose trusts and charitable trusts and in relation to statutory trustee companies and other corporates acting as trustees, where wider consideration needs to be given to their interaction with corporate and insolvency law.