The Trusts Act 2019, which came fully into effect on 30 January 2021, replaced the Trustee Act 1956 and fundamentally changed the legal landscape for family trusts in New Zealand. If you are a trustee of a family trust - whether in Auckland or elsewhere - it is essential that you understand your obligations under this legislation.

Why Was the Trusts Act 2019 Introduced?

New Zealand has one of the highest rates of trust usage per capita in the world. For decades, family trusts have been used to protect assets, manage succession planning, and provide for future generations. However, the previous Trustee Act 1956 was outdated and did not adequately address modern trust practices.

The Law Commission reviewed trust law extensively and recommended a new Act that would codify the duties of trustees, establish clear disclosure obligations, and provide more accessible dispute resolution mechanisms.

Mandatory Trustee Duties

The Trusts Act 2019 sets out a number of mandatory duties that every trustee must comply with. These cannot be modified or excluded by the trust deed:

  • Know the terms of the trust deed - Every trustee must be familiar with the trust deed and any subsequent variations.
  • Act in accordance with the trust deed - Trustees must follow the terms of the trust, not act outside their powers.
  • Act honestly and in good faith - Trustees must act with integrity in all trust matters.
  • Act for the benefit of beneficiaries - Decisions must be made in the best interests of the beneficiaries, or in furtherance of the permitted purpose of the trust.
  • Exercise powers for a proper purpose - Trustee powers must be used for the reasons they were conferred.

Default Trustee Duties

In addition to mandatory duties, the Act introduces default duties that apply unless the trust deed specifically modifies or excludes them:

  • The general duty of care - to exercise reasonable care and skill
  • The duty to invest prudently
  • The duty not to exercise powers for the trustee's own benefit
  • The duty to consider the exercise of powers actively (not simply rubber-stamp decisions)
  • The duty not to bind or commit trustees to a future exercise or non-exercise of discretion
  • The duty to avoid conflicts of interest

We strongly recommend reviewing your trust deed to confirm which default duties have been modified, if any.

Disclosure to Beneficiaries

One of the most significant changes under the Trusts Act 2019 is the requirement for trustees to disclose basic trust information to beneficiaries. This is known as the "presumption of disclosure."

At a minimum, trustees must make the following basic trust information available to every beneficiary:

  • The fact that a person is a beneficiary
  • The name and contact details of the trustees
  • Details of any changes in the trustee role
  • The right of beneficiaries to request a copy of the trust deed and trust information

Trustees may withhold information in certain circumstances - for example, where disclosure could cause harm to a beneficiary or to the relationship between beneficiaries. However, this must be a considered decision, not a blanket refusal.

What Should You Do Now?

If you are a trustee of a family trust, here are the steps we recommend:

  • Review your trust deed - Ensure you understand its terms, and check whether any variations are needed to align with the new Act.
  • Confirm beneficiary details - Make sure you have current contact information for all beneficiaries and have met your disclosure obligations.
  • Document your decisions - Keep proper minutes of all trustee meetings and resolutions. The Act places greater emphasis on active decision-making.
  • Review your investments - Ensure trust investments are prudent and appropriate for the trust's purposes.
  • Seek legal advice - If you are unsure about any of your obligations, speak with a trusts lawyer. Non-compliance can result in personal liability for trustees.

How Indus Legal Can Help

Our wills and trusts team in Auckland regularly advises trustees on their obligations under the Trusts Act 2019. We can review your trust deed, prepare trustee resolutions, advise on disclosure requirements, and help ensure your trust is fully compliant. Whether you are establishing a new trust or managing an existing one, we provide practical, plain-English advice tailored to your circumstances.

Contact us today on 09 869 4888 or email office@induslegal.co.nz to arrange a consultation.