Trusts Bill receives favourable select committee report
The Justice select committee has released its final report on the Trusts Bill, recommending that it be passed with amendments.
The bill would replace the Trustee Act 1956 and the Perpetuities Act 1964 in a major reform of the law relating to trusts.
The bill seeks to take the most fundamental principles from the common law and put them into accessible legislation. The existing rules of law would continue to apply alongside this legislation, except where the bill makes clear it is replacing them.
The courts would draw on existing common law and equity rules when interpreting and applying the legislative provisions. Because the bill is not a complete codification of trust law, it strikes a balance between prescription and flexibility. The bill focuses on express trusts and aims to be clear enough so that all parties would know what is required, but also general enough so that it could apply to the broad range of ways trusts are used in New Zealand.
Recommendations by the Law Commission in its review of trust law from 2009 to 2013 are reflected in the bill. It has the main objectives of setting out clear and accessible core trust principles, ensuring more efficient trust administration, and simplifying and clarifying the role of the courts in relation to trusts.
Among the amendments recommended by the committee is insertion of new clauses which would clarify that the legislation applies to all express trusts, despite the terms of a trust deed, unless certain exceptions apply.
The committee has also recommended inserting a new clause to make it clear that a trustee has an obligation to have regard to the context and objectives of a trust when performing both their mandatory duties and their default duties. Definitions for "default duty" and "mandatory duty" would also be inserted into the bill, along with a definition of "lacks capacity".
The bill was referred to the committee on 5 December 2017 with submissions closing on 5 March 2018. The committee received 34 submissions.
Last updated on the 31st October 2018