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Government approved review of trust law

Last year I wrote that the law commission had suggested changes to trust law, and that this would have a big impact on many family trusts.

The herald reports today that the Government agreed to back the introduction of a new Trusts Act. It has been decided however that more work is needed on what form the new trusts act will take, and how this will impact on existing trusts. The Government appears to be willing to make the changes, but possibly not changes which will apply retrospectively to trusts lawfully created before the changes.

Whether or not that is a good change is arguable. On the one hand, it would be unfair on correctly created and managed trusts to be radically changed. On the other hand, incorrectly operating trusts should not be able to hide from a law change just because of their age. This may be a red herring. Realistically, trusts created for the wrong reasons, and managed poorly, are able to be attacked now, and that is not going to change - if a trust is incorrectly created it is incorrectly created. New laws may simply make it easier to do so, which will be a benefit to beneficiaries who are being mistreated. At the same time if a trust is now 'safe', it is very unlikely that any changes could possibly alter that position. Because of this I do lean towards the view that the new Trust Act should be retrospective in its approach to trusts. That is my personal opinion.

We will have to wait and see what the final outcome is.

A copy of the herald page is below.

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11217972

• Posted By: Graham Day on Wed, 12th Mar 2014 @ 10:43:15

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