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New Trust Law proposed

Hamish Pryde • March 20, 2019

New Trust Law Proposed

There is a bill currently before Parliament which when enacted will be the first big change to New Zealand's trust law in more than 60 years.  There is estimated to be more than 500,000 Trusts operating in New Zealand. Nobody knows for sure as there is no central trust register like the company's register.

The proposed changes include:

           1)      Extending the perpetuity laws

Now when you set up a family trust the Trust it can only exist for a maximum of 80 years then you must wind it up and distribute assets. The proposed legislation suggests extending it to 125 years.  This is because people are living longer, and Trusts are often part of significant succession planning.

2)      More information access for the beneficiaries

The Trust bill in draft form proposes giving most Trust beneficiaries the legal right to financial reports on the state of the family trust - meaning beneficiaries will be able to request more information including who is getting what. Whether beneficiaries have the right to request this information under our current law is a grey area.  This will likely open a can of worms for the Trustees.  Trusts are often been set up for the benefit of the primary beneficiaries usually mum and dad and the trust's principal purpose was to care for them first and then the children.

3)      Trustees duties will be clearly defined

     There are three groups of behaviours the Trusts Bill classifies:

           The first are mandatory duties which a trustee must follow are set out in the act.

a)        A trustee must know the terms of the trust.

b)        A trustee must follow the terms of the trust.

c)       A trustee must act honestly, and in good faith.

d)      A trustee must act for the beneficiaries of the trust.

e)      A trustee must exercise the powers they have for a proper purpose

The second group of behaviours are governed by the "default" duties for a trustee to act with reasonable care and skill, to invest prudently, not to do things for their own benefit, and to act impartially towards beneficiaries.

    The third group of duties are about the information trustees must keep, and which of them must be made available to beneficiaries. These are to keep records        (including of trust assets, trustee decisions, and changes to the trust), and to make them available to sane, adult beneficiaries.

               The duty of trustee can be an onerous task and must be exercised diligently!

               We have been asked to act as Trustee on a number of occasions. We have an understanding of business, finances and are already privy to your financial                         information as your trusted advisor. We have to wear two hats if asked to be a trustee. One as your accountant, the other as you co-trustee.

                 Our experience can help you discharge your trustee duties in the appropriate manner.

                 We are happy to discuss any concerns you may have. 

By Hamish Pryde September 11, 2024
Paper is everywhere. We spend a lot of time and money moving paperwork around. But with today’s technology it is now possible to get rid of paper entirely. Digital documents are simpler, easier to store and send, more searchable and permanent. How long does it take to post a document to somebody via the ole stamp and envelope method, that is snail mail? It is more efficient and timelier to email the document. How many times do you go to print a document at home and find that your printer has run out of ink? Why do we still hold onto printing paper documents? Sometimes it’s just because that’s what we’ve always done and let’s face it change can be difficult at first. Paper alone is cheap. But when you start paying for printers, toner, servicing and maintenance, paper starts to look more expensive. Let alone the storage cost. Paper tax records for seven years can be quite a few boxes of paper. We have embraced some paperless technology as part of a modern business practice. This includes digital signatures, digital collaboration, paperless minutes of business improvement and coaching meetings, electronic work papers and my new digital notebook which I am enjoying. We send questionnaires via email to you to gather vital information to enable us to prepare your annual financial statements. This is a PDF document. Instead of printing the questionnaires you could save the document down into a folder of your choice then edit the PDF document and return to us. How do you edit a PDF document you ask? Once you have opened the document the Adobe online editor lets you do some things for free. The online editor works in any web browser and lets you add text, sticky notes and highlights. Click on the fill & sign button to the right of the document, then in the top toolbar click Iab text button. You can add text directly on the PDF document. Have a try next time you have a PDF document open. Xero and Farm Focus users can attach invoices directly to the transaction loaded into Xero. Then if you are looking at the rates expense in the profit and loss account or farm working account, you can drill down into the rates code and see the transactions. Then attached to each transaction is the rates invoice if you use this great functionality. All invoices can now be stored in the cloud. So why paperless? Productivity - electronic documents are instantly and simultaneously available to everyone who needs them. Reduce waiting times with less risk of loss or damage. Cost savings - you will save money on printing, postage and associated costs. You could pay less rent because you won’t need all that space for your files. Security - electronic documents are more secure than printed ones. Digital records can be password protected and rendered unreadable through encryption. Printed documents are only as secure as their proximity to a copy machine. Reduced Clutter - paperwork on desks and shelves are not only untidy it’s inefficient too. The organisation of digital files is simpler and your office will look much neater. That will help you clear your mind to focus on your business. Environmentally friendly - less printing means fewer trees cut down for pulp and less energy used to make and transport paper. Disaster recovery - if there is a fire or flood, recovery from the backup is much easier with digital storage them with paper. There are great help articles available in Xero or Farm Focus if you are not attaching invoices to payments already. To find out how click on the links below: If you would like to explore ways you can go paperless we can help.
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