K3 Legal's Chantel Goodman clarifies the obligation for trustees to retain core trust documents
This article was provided by K3 Legal
The Trusts Act represents the first major reform in New Zealand’s trusts law since 1956. Since coming into effect on 30 January 2021, the legislation has impacted trustees, beneficiaries, and legal practitioners.
The Act has simplified the complexity of trust law for greater accessibility and offers trustees improved guidance to achieve this. Moreover, the law bolstered beneficiaries’ ability to hold trustees to account by ensuring that beneficiaries have enough information to enforce the terms of the trust.
One way the Act does this is by creating an obligation for trustees to retain core trust documents. Core trust documents are identified in the Act as:
- the trust deed and any other document that contains terms of the trust;
- any variations made to the terms of the trust;
- records of the trust property that identify assets, liabilities, income and expenses of the trust;
- records of trustee decisions;
- written contracts;
- accounting records and financial statements;
- documents of appointment, removal and discharge of trustees;
- memorandum of wishes; and
- any other documents necessary for the administration of the trust.
Every trustee must keep a copy of the trust deed and any variations made to the terms of the trust. The remainder of the documents may be kept by one clearly identified trustee, provided that the trustee holding them will make each document available to other trustees of the trust upon request.
A trustee must keep core trust documents for the duration of their trusteeship. When they cease to be a trustee, they must give any core trust documents they are holding to the new or continuing trustee of the trust.
Core trust documents may be held in electronic form for ease of transfer and disclosure (for more information on disclosure, see part 2 of our series on the Trusts Act – disclosure of trust information to beneficiaries). Trustees should ensure that the originals of all core trust documents are kept in a safe location.
Trustees should take stock of what core documents they are currently holding and take steps to fill in any gaps. Trustees may also wish to take this opportunity to re-familiarise themselves with the trust deed and terms of the trust.
A note regarding trustee resolutions
Records of any trustee decisions made should be recorded in a trustee resolution and retained as a core trust document. If a decision is ever attacked, resolutions can provide written evidence to assist trustees to defend a claim.
A trustee resolution should explain the relevant background information pertinent to the decision and provide a comprehensive summary of the factors considered by the trustees in reaching their resolution. It is important that appropriate trust law is applied to each trustee decision and proper consideration is given to the beneficiaries’ interests to ensure that trustees are acting within their powers under the terms of the trust and the Act.
If you require advice regarding your trust and the Trusts Act 2019, contact Chantel Goodman; [email protected] or 093661366.
Disclaimer: This publication should not be construed or acted on as legal advice. It is brief and general in nature. Specific advice should be sought.
Chantel Goodman works predominantly in the field of trust law with experience in setting up complex trust structures and advising on the implications of the Trusts Act 2019. Her other areas of interest include commercial law and relationship property law involving trusts and companies. While completing her legal studies, Chantel worked as a research assistant to the Dean of Law at Otago University, gaining invaluable research experience which she has since used to assist in High Court proceedings.
Prior to joining the K3 Legal team, Chantel worked for a boutique trust law firm where she was involved in all trust related matters including corporate trust structures and foreign trusts. Chantel holds a LLB from Otago University as well as a BBS(Hons) degree from Massey University.
