Proposed changes to trust law

March 5, 2014

in Trusts

Estates & WillsThe Law Commission is currently undertaking a review of trust law and has produced a Report, which recommends that a new Trust Act be introduced.  The recommendation is that the new Act would replace the current Trustees Act 1956 and address a number of areas which the Law Commission believes need updating.

Some of the key proposed changes include;


Trust deed and/or Trustees

  • That there be a statutory definition of “trust” which will set out the specific requirements necessary in forming a trust.  It is hoped that this will assist the courts when dealing with “sham trusts”;
  • The new Act, if approved, will set out the duties of trustees, including six mandatory duties and eleven ‘default’ duties.  These duties would apply unless the trust deed specified otherwise;
  • The Act would include a prohibition on trustees limiting their liability or receiving an indemnity for instances of ‘gross negligence’ (this is currently the position with respect to dishonesty or wilful misconduct of trustees);
  • That the rules which deal with changing trustees be amended in order to clarify the current framework and reduce the need for the court’s involvement in this issue;

Court powers and jurisdiction

  • The new Act proposes to allow the District Court the same jurisdiction as the High Court to deal with trusts.  The monetary amount involved however will need to be within the Court’s jurisdictional limit.
  • There is a recommendation that the Family Court have jurisdiction in certain situations and the Law Commission has proposed that the Property (Relationships) Act 1976 also be amended to allow the Family Court to make orders awarding partners/spouses compensation by way of trust assets compared with the current position where their claim would have otherwise been defeated due to the assets being in trust.
  • There is a proposal for the use of Alternative Dispute Resolution as the preferred method of resolving disputes, rather than the Courts.

If the Report is approved by the Government and the new Act implemented, the impact is likely to be wide reaching. Farry & Co will keep you updated on the progress of the Report.

We are specialists in the area of trust law.  If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co who normally advises you, or alternatively contact:

Kirsten Maclean

(03) 477 8870 or (09) 379 0055


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain. 

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