Trusts Bill

One thing that many trustees struggle with is to understand precisely the nature of their duties and their responsibilities, and we’re very pleased that in the bill as presented to the committee of the whole House, those obligations and those duties are very clearly laid out in Part 3 of the bill. It lays out right at the very beginning, in clause 19A, the guiding principle in performing duties. It is stated there that in performing the mandatory duties, which are set out in the legislation, and except to the extent modified or excluded by the terms of the trust, the default duties are those set out in the legislation, and a trustee must have regard to these in the discharge of their duties and obligations. They are duly laid out there.

It is a duty for trustees to act for the benefit of beneficiaries or to further the permitted purpose of the trust, particularly in relation to charitable trusts and those with an enduring existence. It is important, for example, that trustees meet their duty to exercise their powers for a proper purpose. So all of these are contained in here, and I think they are very well crafted and drafted and laid out, and there will be no confusion or misunderstanding about exactly what is expected of trustees.

I was in a meeting with a group of people just last week, in a building owned by a particular trust, and I was in the boardroom of that building. It was the boardroom where the trustees of the particular trust meet, and I was very impressed to see on a plaque on the wall, in a very prominent position, the list of basic trustee duties and responsibilities laid out. So for that trust, whenever its trustees met, there could be no confusion or misunderstanding about how those trustees, when they were meeting and making their decisions, were to discharge their responsibilities to the beneficiaries in whose interests they were to act. Some trusts in New Zealand do it right and do an excellent job. Many struggle, and I think a law that is as clearly articulated as this one would be of great benefit and assistance to the many trustees and the many trusts in their care when it comes down to this.

I was intrigued to see, in clause 41, a requirement of trustees to have about their person various documents, including the trust deed, including the most recent financial account and any variations, and records of property held by the trust. So they must be on a trustee’s person at the time they’re meeting unless they are or can be confident that another trustee has those records. If that trustee vacates their position, they are required under this legislation to pass on the documents they have about their person to the trustee that replaces them. That is very explicit and very clear, but I think that is a very worthwhile obligation to have.

As somebody who has been a trustee on trusts before, the first place you turn to the minute you become a trustee, and what I always had about me at every meeting, is the trust deed. That is the document from which a trustee’s authority originates, and it’s very important to know what the extent of that authority is, what the powers are, and the proper construction and constitution of the trust board. So all of that is laid out in Part 3 of the bill in a very clear way, and rules for deciding, for example, which presumptions apply and which don’t apply, and how and when they do. So, once again, it’s a great credit to the drafters of the legislation, the members of the select committee who have got it this far, and members of the House who have had their input to create what I think is a very well-written piece of law for trustees in discharging their responsibilities.

The question was put that the amendments set out on Supplementary Order Paper 255 in the name of the Hon Andrew Little to Part 3 be agreed to.

Amendments agreed to.

Part 3 as amended agreed to.

Part 4 Trustees’ powers and indemnities