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Trusts Bill
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Hon Andrew Little
Trusts Bill
Government Bill
290—3
Contents
Key
1
Title
2
Commencement
Part 1
General provisions
3
Purpose
4
Principles
5
Application, and relationship of Act with trust terms, common law and equity, and other enactments
6
Overview of this Act
7
Interpretation of Act
8
Inherent jurisdiction of court not affected
9
Definitions
10
Transitional, savings, and related provisions
11
Act binds the Crown
Part 2
Express trusts
12
Meaning of express trust
13
Characteristics of express trust
14
Sole trustee cannot be sole beneficiary
15
Creation of express trust
16
Maximum duration of trust
16A
Application of maximum duration rule to resettlements
17
Accumulation of income by trust
18
Distribution of trust property on expiry of trust
19
Age of majority
Part 3
Trustees’ duties and information obligations
Subpart 1—Duties of trustee
19A
Guiding principle in performing duties
Mandatory duties
20
Mandatory duties
22
Duty to know terms of trust
23
Duty to act in accordance with terms of trust
24
Duty to act honestly and in good faith
25
Duty to act for benefit of beneficiaries or to further permitted purpose of trust
26
Duty to exercise powers for proper purpose
Default duties
26A
Default duties
27
General duty of care
28
Duty to invest prudently
29
Duty not to exercise power for own benefit
30
Duty to consider exercise of power
31
Duty not to bind or commit trustees to future exercise of discretion
32
Duty to avoid conflict of interest
33
Duty of impartiality
34
Duty not to profit
35
Duty to act for no reward
36
Duty to act unanimously
36A
Adviser must alert settlor to modification or exclusion of default duty
Subpart 2—Exemption and indemnity clauses
37
Restriction on trustee exemption clauses
38
Restriction on trustee indemnity clauses
39
Invalidity of exemption clause or indemnity clause
40
Adviser must alert settlor to liability exclusion or indemnity clause
40A
Court consideration of gross negligence
Subpart 3—Trustees’ obligations to keep and give trust information
Documents to be kept by trustees
41
Trustee must keep core documents
42
Keeping documents where there is more than 1 trustee
43
Documents must be kept for duration of trusteeship
44
Trustee must pass on documents
Giving information to beneficiaries
45
Definitions for purposes of sections 46 to 51
46
Purpose and application of sections 47 to 51
47
Presumption that trustee must notify basic trust information
48
Presumption that trustee must give information on request
49
Procedure for deciding whether presumption applies
50
Procedure when trustee decides to give no information
51
Beneficiary may be required to pay cost of giving information
Part 4
Trustees’ powers and indemnities
Subpart 1—Powers of trustee
52
General powers of trustee
53
Status of provisions on specific powers of trustee
Investment powers
54
Trustee has power to invest
55
Matters which trustee may consider in exercising power to invest
Power to determine treatment of returns and accounts
56
Power to determine whether return on investment is income or capital
57
Apportionment of receipts and outgoings between income and capital
Powers to apply trust property for beneficiary’s welfare
58
Trustee’s power to pay
or apply
income for child beneficiary’s welfare
59
Trustee’s powers with respect to income of child beneficiary
60
Trustee’s power to pay
or apply
capital for
capital
beneficiary’s welfare
61
Trustee may impose conditions on payment for beneficiary’s welfare
62
Trustee not liable for certain losses in relation to amounts paid or applied for beneficiary’s welfare
Exercise of trustee powers and functions by others
63
Trustee’s power to appoint others to exercise or perform certain powers or functions
64
Trustee’s duties to keep appointments under review and to fulfil general duty of care
65
Trustee’s liability for acts of appointee limited
66
Trustee’s power to delegate powers and functions in specified circumstances
67
Notice of delegation of trustee’s powers and functions
68
Trustee’s liability for acts of delegate limited
69
Application to Public Trust to consent to become delegate
Special trust advisers
70
Role and appointment of special trust advisers
71
Reliance on special trust adviser’s advice
72
Remuneration of special trust advisers
Other powers and rights of trustee
73
Application of insurance money for loss or damage of trust property
74
Trustee’s power to adjust interests in trust property of portfolio investment entity
75
Trustee’s liability limited where notice given to distribute trust property without regard to unknown claims
Protection of purchasers and mortgagees dealing with trustees
76
Protection of purchasers and mortgagees dealing with trustees
Subpart 2—Trustees’ indemnities
77
Trustee’s liability for expenses and liabilities incurred, and trustee’s right to indemnity
78
Indemnification of trustee with agreement of beneficiaries where indemnity impaired
78A
Power of court to approve indemnification
78B
Power of court to waive requirement of consent to indemnification
79
Ranking of trust property
80
Creditor’s limited claim to trust property through trustee’s indemnity
81
Trustee’s lien on insurance money for premiums
82
Trustee’s indemnity for rent, covenant, or agreement under lease
83
Protection of trustee in handing over personal property to life tenant
84
Protection of trustee in handing over personal property to child
85
Protection relating to notice when person trustee of more than 1 trust
Part 5
Appointment and discharge of trustees
Power to remove or to appoint trustee
86
Who may remove trustee and appoint replacement
87
Person with power to remove or appoint trustee may apply to court for directions
88
Duty to exercise power to remove or appoint trustee honestly and for proper purpose
89
Application to review exercise of power to remove or to appoint trustee
Appointment of trustee
90
Who may be appointed as trustee
91
Statutory trustee may be sole trustee
92
How trustee is appointed
93
How trustee accepts or rejects appointment
94
Acts of trustee not invalidated by defect in appointment
Retirement of trustee
95
How trustee retires
Death of trustee
96
Devolution of powers on death of trustee
Removal of trustee
97
How trustee is removed
97A
Compulsory removal of trustee
97B
Optional removal of trustee
98
Notice of decision to remove
99
Effect of notice
100
Removal where notice cannot be given
101
Application to prevent removal
102
Procedure on trustee’s application to prevent removal
103
Court may make order preventing removal
104
Court may make order for removal
Replacement of trustee
105
How trustee is replaced
106
Court may appoint or replace trustee
107
Replacing sole trustee with multiple trustees
Divesting and vesting of trust property
108
Divesting and vesting of trust property on change of trustees
109
Requirements to notify, register, or record divesting and vesting of trust property
110
Requirement to assist in transfer of trust property
111
Protection in relation to notifying, registering, or recording transfer of trust property
112
Departing trustee must be given certain documents
Part 6
Termination and variation of trusts
113
Termination of trust by unanimous consent of beneficiaries
114
Variation or resettlement of trust by unanimous consent of beneficiaries
115
Beneficiary’s right to share of trust property
116
Power of court to approve termination, variation, or resettlement of trust
117
Power of court to waive requirement of consent to termination, variation, or resettlement of trust
Part 7
Court powers and dispute resolution
118
Court may review trustee’s act, omission, or decision
119
Procedure for court’s review of trustee’s act, omission, or decision
120
Court may take into account investment strategy in action for breach of trust
121
Court may set off gains and losses arising from investment
122
Power of court to vary or extend trustees’ powers in relation to property
123
Court may relieve trustee from personal liability
124
Court may make beneficiary indemnify trustee for breach of trust
125
Trustee may apply to court for directions
126
Protection of trustee while acting under direction of court
127
Trustee may apply to court to bar claims
128
Trustee may apply to court to allow distribution of missing beneficiaries’ shares
129
Trustee may sue self in different capacity
130
Court may appoint receiver for trust
131
Court may order payment of remuneration to trustee
132
Court may charge costs on trust property
Jurisdiction of Family Court
136
Jurisdiction of Family Court
Alternative dispute resolution
137
Definitions for purposes of sections 138 to
142
142A
138
Power of trustee to refer matter to alternative dispute resolution process
139
ADR process for internal matter if trust has beneficiaries who are unascertained or lack capacity
140
Power of court to order ADR process for internal matter
141
Trustee may give undertakings for purposes of ADR settlement or
arbitration agreement and any
arbitral award
142
Trustee’s liability in relation to ADR settlement or
arbitration agreement and any
arbitral award limited
142A
Application of Arbitration Act 1996
Part 8
Miscellaneous provisions
Transfer to the Crown
143
Transfer to the Crown of non-distributable trust property
143A
Financial products transferred to the Crown
144
Administration by the Crown of transferred property
145
Public notice of property transferred to the Crown
Investigation of condition and accounts of certain trust property
146
Application to Public Trust for investigation of condition and accounts of trust property
147
Appointment of investigator by Public Trust
148
How investigator is to conduct and report on investigation
149
Costs of investigation borne by trustees
150
Application to court to determine who bears costs of investigation
151
Application to court to cease investigation
Life tenant to have powers of trustee in certain cases
152
Life tenant to have powers of trustee in certain cases
Transitional regulations
153
Regulations providing for transitional matters
Consequential amendments and repeals
154
Consequential amendments
155
Repeals
Part 9
Amendments to other Acts
Subpart 1AAA—Amendments to Arbitration Act 1996
155A
Amendments to Arbitration Act 1996
155B
New section 10A inserted (Arbitration of trust matters)
10A
Arbitration of trust matters
Subpart 1—Amendments to Financial Markets Conduct Act 2013
156
Amendments to Financial Markets Conduct Act 2013
157
New section 110A and cross-heading inserted
Application of Trusts Act 2017
110A
Application of Trusts Act 2017
158
Section 112 amended (General duties applying in exercise of supervisor’s functions)
159
Section 143 amended (General duties applying in exercise of manager’s functions)
160
Section 153 amended (General duties applying in exercise of supervisor’s functions)
161
New section 155A and cross-heading inserted
Application of Trusts Act 2017
155A
Application of Trusts Act 2017
162
Section 548 amended (Other regulations)
163
Section 550 amended (Procedural requirements for regulations relating to exemptions, exclusions, and definitions)
163A
Section 556 amended (FMA may grant exemptions)
163B
Section 557 amended (Restriction on FMA’s exemption power)
163C
Schedule 3 amended
Subpart 2—Amendments to Financial Advisers Act 2008
164
Amendments to Financial Advisers Act 2008
165
New section 77TA and cross-heading inserted
Application of Trusts Act
2017
77TA
Application of Trusts Act 2017
166
Section 154 amended (General regulations)
Subpart 3—Amendment to Financial Markets Authority Act 2011
167
Amendment to Financial Markets Authority Act 2011
168
Schedule 1 amended
Subpart 3A
—
Amendments to Financial Services Legislation Amendment Act 2019
168A
Amendments to Financial Services Legislation Amendment Act 2019
168B
Section 29 amended (New subparts 5A and 5B of Part 6 inserted)
Application of Trusts Act
2017
431ZJ
Application of Trusts Act
2017
Subpart 4—Amendment to Retirement Villages Act 2003
1
169
Amendment to Retirement Villages Act 2003
2
170
New section 105A inserted (Regulations exempting from provisions of Trusts Act
2017
)
105A
Regulations exempting from provisions of Trusts Act
2017
Schedule 1
Transitional, savings, and related provisions
Schedule 2
Provisions that apply except as modified or excluded in accordance with section 5(3A)
Schedule 3
Specified commercial trusts
Schedule 4
Amendments consequential on repeal of Trustee Act 1956
Schedule 5
Amendments consequential on repeal of Perpetuities Act 1964 and abolition of rule against perpetuities
Legislative history
The Parliament of New Zealand enacts as follows: