If you have a trust or are a trustee, it’s important you are aware of the upcoming changes to the law of trusts.

The Trusts Act 2019 will come into effect on 30 January 2021 and change the law of trusts in New Zealand. The objective of the new law is to improve the way in which trusts are managed in New Zealand, including by raising awareness of the duties trustees owe to beneficiaries, improving standards of governance and administration, and increasing disclosure and reporting obligations.

The new law distinguishes between ‘mandatory’ duties which trustees must comply with (such as to act in the best interests of beneficiaries, know and act in accordance with the terms of a trust deed, and act honestly and in good faith) and ‘default’ duties which apply unless they are modified or excluded by the terms of the trust deed.

The investment of trust funds

Trustees have a duty to invest “prudently” and therefore it is critical that trusts have a well-considered investment strategy which is appropriate to the circumstances of the beneficiaries. However, trustees are generally not experts in investment management and so they may need to procure investment advice from a qualified professional (such as Craigs) in order to fulfil their investment related duties. Another option for trustees to consider is the delegation of investment management to a Discretionary Investment Management Service.

We recommend you seek advice from a trust law specialist if you have a trust or are a trustee so that you are ready to comply with the new law. If you would like to know more about how Craigs can help with the investment of trust funds, please contact your investment adviser.