Helping You Achieve the Freedoms of Time, Money and Peace of Mind
The Trusts Act 2019
This is what keeps us busy – staying on top of all the legislative changes! Here is a quick read about upcoming changes in the law of Trusts. Lets get the conversation started.
The Trusts Act 2019, (No 38 of 2019) received the Royal assent on 30 July 2019. The Act takes effect 18 months after 30 July 2019. This transition period will allow trustees to review their existing trusts before the Act finally becomes effective.
The only aspect of the new Act that is in force is sub-part 5 of Pt 9 which came into force on 31 July 2019. Sub-part 5 makes amendments to the Financial Services Legislation Amendment Act 2019.
The Trusts Act will apply to most existing and new trusts and signifies the first significant legislative change to trust law in New Zealand in over 60 years. The Act replaces the Trustee Act 1956 and the Perpetuities Act 1964 to make trust law more accessible, clarify and simplify core trust principles and essential obligations for trustees.
The Act also preserves the flexibility of the common law to allow trust law to continue to evolve through the courts.
So we effectively have 18 months up until 30 January 2021 in which to work with Trustees to ensure compliance with the new law.
The term “legislative process” denotes the process by which legislation passes through the House and receives the Royal assent. The legislative process “can be seen as a series of hurdles or tests that a proposal for legislation (a bill) must negotiate if it is to survive and become law”. The test is essentially in two parts.
First, whether the bill is needed as an addition to the body of law.
Second, if a bill is deemed to be needed, whether it is fit for purpose. The question is whether the manner in which a bill seeks to affect change is effective and without adverse consequences - or, if unavoidable, minimal adverse consequences.
The New Zealand Parliament was said in 1979 to make the fastest law in the west. Not only was Parliament seen as passing too many laws, but it also was observed that it was passing them too quickly in an “end of session rush” at the behest of the Government of the day. This meant that often legislation - both more and less important - was introduced hastily and not considered thoroughly before it was passed. This has been described as a poor process constitutionally.
Under MMP there are more constitutional and political constraints on legislating than prevailed in the late 1970s. Minority Governments are the norm, and they require the Government to secure the backing of one or more other parties for each bill; parties that undertake to support the Government on confidence and supply matters tend to reserve the right to distinguish their positions on legislative proposals.
Moreover, it is in a Government’s interest to consult and compromise with other parliamentary parties if it is to progress its legislative agenda smoothly and with minimal opposition. House procedure has been changed to compensate the Government for the greater political difficulty of progressing a legislative programme under MMP.
Today, the House’s procedures is such that an improved and effectiveness legislative process exists. A balance has been sought between giving the Government appropriate opportunity to implement its legislative programme, on the one hand, and allowing for thorough scrutiny, on the other.
In particular, constructive engagement between parties has been encouraged, to focus the time of the House on matters of political and parliamentary importance, while facilitating the passage of bills with wide support to improve the statute book. Such engagement has been promoted by giving the Business Committee more flexibility to negotiate and determine arrangements for how the House will deal with legislation.
If you would like to start a review now please contact your usual contact person at Lynch and Associates Limited.
Chris's expertise is in the areas of tax, accounting, business development, forecasting, and auditing. He has a clear focus on adding value to his clients' lives and their businesses.
With a team of eleven experts in accounting, tax, auditing and business development services, we are building a business community with the sole purpose of helping you accomplish your business, personal and lifestyle goals.
To find out how we can help you, contact us now for a no obligation, no fees 60 minute coaching session in any areas of Tax and Compliance, Audit and Assurance or Business Strategic Development.
Chris Lynch, CA
Director Lynch & Associates Limited
Get in touch by email or phone:
+64 9 366 6008