Trusts are in the Law Commission’s sights as it looks to modernise trust law in New Zealand.
Commission president Grant Hammon said that because trusts were an important way of managing personal and family property, it was vital that New Zealand had robust tax laws.
He said trusts were unusually common in New Zealand and provide an alternative way of managing property.
But the nature of the trust relationship and its legal implications are not always well understood.
The Commission said it appeared a large number of this country’s trusts had limited property, such as just a family home.
It says trust legislation could be made more useful by including general principles of trust law and default positions that reflect the modern use of trusts.
Its proposals include making trustee duties clearer, providing a clear definition of what constitutes a trust, giving trustees more flexibility in their approach to investment, streamline the law and providing ways to reduce the reliance on the court to resolve administration issues, and addressing problems that can arise when a corporate is a trustee.
The Commission is also looking at how trusts are used in relationship property agreements because of concern about the potential for injustice. The Commission has raised several options including the amendment of relationship property legislation to alleviate trusts’ impact.
Final recommendations will be released next year. Submissions can be made until February.