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Beneficiary rights, Right to trust information, Trusts

Do we need a register of trusts?

A fundamental principle of trust law is a trustee’s duty to act in the best interests of the beneficiaries.  Equally recognised is a beneficiary’s right to trust information so that the beneficiary has the means to enforce the beneficiary’s rights.  However, what a beneficiary of a discretionary trust does not have, is a right to be notified that the person is a beneficiary.

The lack of any obligations of notification or ability to confirm any beneficial interests make most beneficiary rights somewhat phyrric.  This could be addressed through a register of trusts.  While such a register has been considered (see the fifth isses paper on the Law of Trusts), the sixth issues paper on the Law of Trusts has stated that a system of registation for trusts should not be introduced. 

While it is recognised that trusts are essentially private and a register could be subject to abuse, the option of a user pays register should not be discounted in such peremptorary fashion.  Trusts are villified and misunderstood in part due to a lack of transparency and the apparent secrecy under which they are operated.  Although the sixth issues paper does propose some positive notice obligations, it does so by introducing the concept of the “qualifying beneficiary” who is provisionaly defined as a beneficiary who “trustees reasonably consider has or may have … real prospects of receiving trust property”.  At law a trustee is obliged to consider all beneficiaries (not just the subset of “real” ones).  As a matter of law a person is or is not a named beneficiary or a member of a class of beneficiaries (eg the children of John and Billie).

With no formal method for determining the existence of beneficial interests and little prospect of legislative reform that will address this, it would be useful to hear your thoughts on a trust register and whether beneficiaries need to be able to identify their beneficial rights, even when these rights may only ever be contingent.

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Discussion

3 thoughts on “Do we need a register of trusts?

  1. Yes most definitely,as Australia Tax office requires all trusts to be registered ,why because of the Bottom of Sydney Harbour sham trusts showed . are we to believe that they are all white in NZ, or is the tax base being erroded,simply put they could be categorized into Public or Private but with all feeding thru IRD.The thought that voluntary Compliance occurs in NZ is out of whack with reality. With vested interests legislation change would be difficult but not impossible,so shine the light of transparancy into the trusts and see what comes to light.

    Posted by brian pethybridge | February 28, 2013, 3:49 pm
  2. This is the perfect web site for anybody who wants to understand
    this topic. You understand a whole lot its almost tough to argue with you (not that I personally would want to…HaHa).
    You certainly put a fresh spin on a topic that’s been discussed for many years. Excellent stuff, just wonderful!

    Posted by work office | April 20, 2013, 6:47 am
  3. Yes most definitely al deeds of trust should be registered and made available particularly to Settlors as they are currently open to abuse and relevant information as to which type of trust is not always familiar to people.

    Posted by Victoria. uK | April 7, 2017, 7:43 am

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