On 30 January 2021 the new Trusts Act (“the Act”) will come into force.
The Act aims to simplify trust law and make it more accessible.
The main changes include creating mandatory and default duties for trustees and provisions about providing information to beneficiaries. The purpose of these duties is to ensure beneficiaries can hold trustees to account.
If you have a Family Trust, are a trustee or a beneficiary what do you need to know?
The Trustees mandatory duties are:
- To know the terms of the trust.
- To act in accordance with the terms of the trust.
- To act honestly and in good faith.
- To act for the benefit of beneficiaries.
- To exercise power for a proper purpose.
The Trustees default duties include:
- A general duty of care.
- A duty to invest prudently.
- A duty not to exercise power for their own benefit.
- A duty to avoid conflicts of interest.
- A duty to act unanimously.
The default duties can be modified by the terms of your trust deed.
The Trustees also have duties to keep copies of the trust deed and any variations and other core documents, such as any contracts the trust enters into and trustee minutes.
There is now a presumption on trustees to make available basic trust information. The basic trust information is:
- The fact that the person is a beneficiary
- The name and contact details of the trustee
- The details of each change of trustee
- The right of a beneficiary to request a copy of the terms or the trust or trust information.
There is a process for helping the trustees decide what information should be provided to the beneficiaries when requested.
What should you do now?
We strongly recommend that you review the terms of your trust and discuss these with us.
You should consider:
- Do you have all of the trust documents or know where they are?
- Who are your trustees? – do you have or need an independent trustee? Are your trustees still able and willing to carry out their duties?
- Do you want the trustees who are also beneficiaries to be able to benefit themselves?
- Do you want the trustees to be able to act where there is a conflict of interest?
- Who are the beneficiaries of the trust? – Do you want to remove anyone or limit the categories?
- Do you want to have different classes of beneficiaries?
- Should the Settlor state his or her intentions for the disclosure of trustee information?
- Do you even need a trust? – Have your circumstances changed since setting up the trust so that there is no longer a benefit in keeping it?
We would love to talk to you about your trust and make sure that you are ready for the new Act.
Although the Act comes into effect on 30 January 2021 your trust can be reviewed or varied at any time either before or after that date.