NZ Trusts and the Trusts Act 2019 — Five Years On
Five years after the Trusts Act 2019 (Act) came into force, trustees and advisers have moved beyond initial adjustment and into the practical reality of ongoing compliance.
The Act did not change the fundamentals of trust law. What it did do was make trustee obligations clearer and more transparent. In practice, that has changed how trusts operate on a day‑to‑day basis.
Trustee Behaviour
A central theme of the Act is that trusts must be actively administered. Passive trusteeship is not appropriate. Trustees are expected to be informed, engaged and regularly turning their minds to their responsibilities.
For some family trusts this has required a genuine shift in behaviour, particularly where trusts were historically informal or largely dormant. Trusts that already generated income and were subject to regular financial reporting tended to adapt more easily, as compliance disciplines were already in place.
Managing Mandatory Disclosure Obligations
One of the most significant changes under the Act is the presumption that trustees will provide basic trust information to beneficiaries, and respond to requests for further information, unless there is a proper reason not to do so.
In practice, this has led to more beneficiaries becoming aware of their status and an increase in requests for trust information. This was anticipated and reflects the Act achieving its objective of greater transparency.
Disclosure, however, is rarely straightforward. Decisions about what information should be provided need to be made carefully, particularly in family trusts where relationships can be sensitive. We have found that even in difficult family dynamics, appropriate disclosure often assists rather than harms trust administration when it is handled thoughtfully.
From an administrative perspective, many trustees now treat disclosure as an ongoing governance issue rather than a reactive task. Common practice includes reviewing disclosure annually, recording decisions to provide or withhold information, and documenting the reasons for those decisions. This aligns with the Act’s requirement that trustees actively and regularly consider disclosure, not simply respond when asked.
Trustees can depart from the presumption of disclosure, but only after considering the statutory factors, including confidentiality, the settlor’s intentions and the impact on relationships. Proper records of that process are critical. Failure to do so can leave trustees exposed to challenge.
Retaining Core Documents
The requirement to retain core trust documents for the life of the trust was another important change.
In many cases, this did not represent a significant shift in principle. Lawyers have always retained the documents they create for trusts, and other professionals such as accountants, did likewise for their documents (although financial records are generally only required to be kept for 7 years under financial reporting requirements rather than permanently under the Act). The practical difference lies in the expanded scope of documents that must now be kept, including financial records, loan documentation and contracts such as property sale and purchase agreements.
In practice, professionals engaged by the trust often hold much of this material. Electronic records have made long‑term retention easier, but they also create the challenge of ensuring information is centralised and accessible, rather than scattered across historic transactional files.
Common Compliance Gaps in Day‑to‑Day Trust Administration
Five years on, the most common issues we see do not arise from the technical changes in the Act, but from everyday administration.
Common gaps include trustees not holding or understanding the trust deed, poor record‑keeping around trustee decisions, and a lack of evidence that trustees have turned their minds to mandatory and default duties. Many family trusts still operate on the assumption that one trustee “runs the trust”, which is contrary to the legal requirement for collective and active decision‑making.
Another recurring issue is failure to follow proper decision‑making processes including documenting trustee meetings, resolutions, and the basis on which discretionary decisions are made. Even where outcomes are appropriate, the absence of written records can make it difficult to demonstrate compliance if a decision is later questioned by a beneficiary or reviewed by advisers.
The Act did not change the law on these types of administration matters, but they continue to be where trustees can trip up. Despite the increased compliance burden, trusts remain a relevant and effective tool for asset protection, but only where they are fit for purpose and properly run. When administered correctly, trusts continue to play an important role in succession planning, inter‑generational wealth transfer, and protecting vulnerable beneficiaries. The key shift is that trusts are not a “set and forget” structure. Trustees must be engaged, informed, making good decisions and then prepared to justify their decisions.
Looking Ahead
Five years on, the Trusts Act 2019 has achieved its core objective: improving trustee accountability and beneficiary transparency. For trustees, the message is clear. Trusts remain valuable, but only where governance keeps in line with the law. Regular reviews, clear documentation, and professional advice are now essential parts of responsible trust administration.
If you have any questions or would like to review how the Trusts Act 2019 applies to your trust, please get in touch with our Trusts team.
Special thanks to Partner Emma Tomblin, Senior Associate Ashleigh Bowater and Senior Associate Isabella Gorringe for preparing this article.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
