The Review of the Law of Trusts started back in 2002 with a discussion document followed by a small paper entitled Some Problems with the Law of Trusts. In the way the use of trusts has since grown, so too did the review.
The review morphed to a three-stage review of trusts:
stage 1 (the current stage) is a comprehensive review of trust law, the Trustee Act and the Perpetuities Act
stage 2 will be a review of charitable trusts and the Charitable Trusts Act, and purpose trusts generally
stage 3 will be a review of trustee companies and the trustee companies’ legislation.
The Law Commission has since published six Issues Papers on various trust issues. The Preferred Approach Paper, set out the Law Commission’s preferred approach to trust law reform and was subject to public consultation.
The Preferred Approach Paper focused on the law required for trusts to be established and managed successfully. Some significant reforms proposed included:
- A new trusts statute
- Trustees’ duties to the forefront
- Exemption clauses – a shift to stricter limits
- Broader trustee powers as a starting point
- Holding trustees to account – a broader power to review the exercise of a trustee’s discretion
- Streamlined administrative processes, a bigger role for the Public Trust, expansion of jurisdiction of District and Family Court (these proposals have not been advanced although some legislative reform is proposed and some further roles for the Public Trust are still proposed)
- A focus on corporate trustees … and insolvent trusts (these proposals will be considered in a separate review)
- Reform of the rule against perpetuities
The next step was Review of the Law of Trusts – a Trusts Act for New Zealand. This Report, was tabled in Parliament on 11 September 2013. The Report makes 51 recommendations for the introduction of a modern and comprehensive Trusts Act to replace the current Trustee Act 1956. The Report and a summary of the recommendations are available here.
In March of this year the Government formally accepted the principal recommendation of the Report that there be a new Trust Act (the first recommendation). But what next?
The Ministry of Justice is currently working through the details of the Law Commission’s 50 other recommendations. It is anticipated that that process will lead to a decision to complete the drafting of a Trusts Bill for consultation. However, for now this decision lies with the new Minister, Amy Adams.