The Law Commission has released a fourth Issues Paper in the Review of the Law of Trusts, 'The Duties, Office and Powers of a Trustee.' (NZLC IP26, 2011).

Part one of the paper examines the duties that a trustee owes to beneficiaries of a trust. It gives particular attention to the duty to inform beneficiaries about matters relating to the trust. Part one also looks at which of the duties should be considered part of the irreducible core of the trust, that is, which duties should be incapable of being excluded by a trust deed. The Commission considers whether there should be limits on what exemption clauses, which exclude the liability of trustees for failing to carry out the duties, can do.

Part two of the paper discusses the appointment, retirement and removal of trustees. It also addresses the powers given to a trustee. These issues are examined to identify whether the law is effective, or whether it should be modernised and improved.

Submissions on the paper closed 31 August 2011.

NB: The publication is online only, there are no hard copies available.

IP 26 Whole Document 'The Duties, Office and Powers of a Trustee: Review of the Law of Trusts Fourth Issues Paper'

IP26 Part 1

IP26 Part 2

IP26 Appendix - Set of Questions

This is the second issues paper in Stage 1 of the Law Commission’s review of the law of trusts.

The second issues paper will cover issues with the use of trusts (especially family trusts) in New Zealand. This paper will look at the purposes for which family trusts are established, including reducing tax obligations, protection of assets from creditors and relationship property claims, and meeting eligibility thresholds for government assistance. The paper examines different legislative and judicial responses to the use of trusts to “look through” or disregard a trust where a trust has been used to frustrate the underlying policies of particular statutes.

The Commission poses options for how the law could address concerns about the use of trusts. The paper seeks comment from as broad an audience as possible on issues such as why trusts are so common in New Zealand, whether limits should be placed on the uses to which trusts are put, whether high levels of settlor control is an issue for concern, how effective existing legislative mechanisms are at addressing the impacts of trusts and whether the law on sham trusts is satisfactory.

Submissions on this paper closed 31 March 2011.

Please note the Paper is only available online

Correction
At paragraph [3.37] (page 26), the third and fourth sentences should read:

In Kidd, the husband’s father established a trust in 1990 and the husband and wife commenced living together in 1998 and married in 2001. The husband was a final and discretionary beneficiary of the trust, and “any spouse” of the husband was a discretionary beneficiary.
 

IP20 - Some Issues with the Law of Trusts in New Zealand: Review of the Law of Trusts Second Issues Paper