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“New Zealanders are huge fans of trust … this is a huge change that will affect many New Zealanders,” said Martelli McKegg’s legal partner Timothy Orr, adding that most trusts had multiple beneficiaries.
He estimated that there would potentially be many thousands of people who were completely unaware that they were beneficiaries of trusts, unless they had been receiving some benefit from them.
Orr said sharing information with all beneficiaries could result in some complicated legal challenges for the trustees.
Some trusts were discretionary trusts, or had been created decades before by past generations for the benefit of all their descendants, which could now number in the hundreds.
The trustees were the legal owners of the assets of a trust and were also responsible for determining how those assets were managed and who received the benefits from those assets.
Changes in the law meant that it would be easier for beneficiaries to challenge trustees’ decisions, as a result of increased disclosure rules.
“For a long time in New Zealand, it would be fair to say that many trusts, I would say, have operated with what some people have termed a veil of secrecy or shroud of secrecy.
“[The government was] trying to ensure that the beneficiaries have a greater opportunity to hold the trustees accountable for how they manage the trust, “Orr said, adding that all political parties supported the changes.
He said that many trustees would undoubtedly be challenged by the changes and could choose to resign or liquidate a trust rather than comply with the new regulations.
However, he said the trustees would have to get down to business addressing any issues, as it would take time to get their affairs in order before the end of January.
Orr said the trustees should read the legislation and seek legal advice.
RNZ
