There are an estimated 400,000 trusts in New Zealand, each with appointed Trustees responsible for the management of the trust. The duties imposed on trustees arise from legislation (Trustee Act 1956), case law and the trust deed creating the trust.
The Law Commission has been examining the role of trustees and the mechanisms for administering trusts. As a result of the Law Commission’s review the government is likely to revise the Trustee Act to set out in legislation the duties and responsibilities of trustees (similar to how director duties are defined in the Companies Act).
The duties of a trustee are often linked to beneficiary rights.
Trustees have a duty to:
- make acquaintance with the trust’s terms
- adhere to the trust’s terms
- maintain impartiality between beneficiaries
- act in the beneficiaries best interests
- not use trusteeship position to profit personally
- act gratuitously
- not delegate
- be active
- act unanimously
- pay the correct beneficiaries
- keep proper accounts and give information as required.
Ultimately trustees carry the risk of personal liability for failure to carry out their duties in a proper manner.
UHY Haines Norton Chartered Accountants are experts in trust management. The firm has developed a Trust Risk Review process for monitoring trusts.
If you would like further information about our Trust Risk Review process or help in reviewing your trust management, please contact one of us today.