The First Major Trust Law Reform In 70 Years
The Trust Act 2019 comes into force on 30 January 2021. Under the act the Trustee obligations have changed.
The requirements of a Trustee are higher and more onerous. No longer can trustees plead ignorance to the new Trust laws, as Trustees are now expected to understand the new trust requirements and adhere to them. New Trustee duties are now formalised and set out in legislation.
Indemnity Clauses are Void – The new Act places restriction on indemnity clauses – where a trustee is dishonest, demonstrates wilful misconduct or is grossly negligent, a Trustee cannot rely on exclusion from liability under the indemnity clause.
Information Required for Beneficiaries:
As a minimum, trustees are now required to provide beneficiaries with basic Trust information. This is a positive obligation on trustees to provide this information that applies even if the beneficiary has not requested any information about the trust. See basic Trust information here
What Does This Mean for Trustees?
For trusts existing before the Trusts Act, you will need to consider the following:
- If you’re willing and able to undertake the increased obligations;
- If you’re comfortable with the increased information provided to beneficiaries as greater transparency will mean that infomation that some trust owners might prefer to keep private will no longer be private;
- If you are still willing to be a trustee of a trust given the obligations imposed on you;
- If the reasons for setting up the trust are still relevant;
- If the trust will offer the same protection; and
- If the trust will still be cost-effective with the extra trust compliance requirements as compliance duties will increase the time and cost of administering some trusts, meaning some are no longer cost-effective.
- Who the beneficiaries are and what information they could be entitled to.
- Removing beneficiaries that do not fit with the purpose of the trust (i.e. some final beneficiaries could be appointed under a will instead).
If you have a Trust, we advise you contact us or your trust lawyer to discuss the new rules and ensure the Trust is still necessary.