From January 2021 | new trust legislation will take effect.

The legislation will give beneficiaries of a trust greater ability to request information from the trustees about the trust fund and the administration of the fund including decisions that have been made in relation to the investment of the fund and any distributions made from the trust fund.

This will add further responsibilities and potential liability on the trustees of a trust.

The result is likely to be that professional trustees who have typically provided services for trusts such as lawyers and accountants will be more reluctant to become involved as independent and professional trustees as they will now be accountable to all of the beneficiaries of the trust.

This isn’t to say that they didn’t have a liability or responsibility to the beneficiaries of the trust in the past, however it has always been a more discretionary role and the new legislation provides some statutory obligations upon trustees which had in the past been more the subject of case law rather than legislation.

It may also lead to many trusts being wound up as the element of control that a trust previously gave a Settlor and trustee by being able to administer the trust without reference to other beneficiaries will now be gone.

More information and guidance will be coming forth over the next few months and it will be a good opportunity for those of you with trusts to complete a review of the reasons that you set up a trust and whether there are still good reasons to retain the trust in the future.

Anti Money Laundering Requirements

Lawyers, Accountants and Real Estate Agents have recently become subject to the antimoney laundering and countering the financing of terrorism regime.

As such we now need to obtain and hold verification of a person’s identity and verification of their address. We also need to be satisfied in respect to any transactions involving the purchase or sale of a property as to the source of funding for such sale or purchase.

We will therefore be asking more questions and requiring more documentary evidence of your source of funds. This includes copies of statements in relation to any previous sales of property or businesses or statements from your bank or investment advisors.

You may have already had to provide such information to your bank when setting up your bank account or applying for a loan etc.

The regime is designed to make it harder to launder money however one wonders if the amount captured or kept out of the system by this regime in any way equates to the cost of compliance for the country, given that all of the above industries are having to comply with this new system which takes more time requires the holding of more information and the employment of more staff.

There are of course bigger picture reasons for becoming part of the system which means being a good world citizen and portraying New Zealand as a “clean” place to do business by having the appropriate safeguards in place.

Ironically many of these requirements are driven by the United States and there is no need to say that as of today much of the news coming out of the United States seems to revolve around international funds going into and out of politics in the US and high profile politicians being the beneficiaries of such funds.