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Trust Review will happen, just not right now

Justice minister Amy Adams said that the Government had accept the recommendations of the 2013 Law Commission's review of Trusts and Trust Law in New Zealand.

At the latest Law Society Conference, Ms Adams said that a new act is critical and long overdue. There has been no major reform to the Trustee Act since it's formation in 1956, almost 60 years ago.

Although Ms Adams has said that it is one of her core requirements, don’t expect to have an exposure draft (the first step in passing the reform legislation) until the end of next year.

Ms Adams said the delay was necessary to ensure there aren’t any unintended consequences in the new Act.

New Zealand has more Trusts per capita than any other country with a trust for every 18 New Zealanders, nearly double Australia’s one for every 34 people and compared with 148 in Canada and 294 in the UK. It works out at around a quarter of million Trusts. It's estimated that 15% of residential property in New Zealand is owned by Trusts.

What does this mean for us? Well, most likely using Trusts will become more onerous and costly, as many of the recommendations involve greater transparency (i.e. the need to open up records and information to vested parties), greater Trustee responsibilities (i.e. personal liability), and possible regulatory oversight (i.e. something similar to the Companies Office that Companies must report to). These changes will no doubt result in a reduction in the number Trusts as people decide that the Trust has become too costly, or risky, to continue with.

It still comes back to making sure you are using a Trust for the right reasons. Although in the past Kiwis have treated it otherwise, Trusts aren't for everyone.

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Guest Tuesday, 22 October 2019