A recent review of the Law of Trusts carried out by the Law Commission makes 51 recommendations including replacement of the Trustee Act 1956 with a new Act. Its recommendation for the introduction of a new Trusts Act is based on the following reasons:
1) There is confusion in the community about the role of settlors, the duties of trustees and the rights of beneficiaries “that in our view threatens the institution of the trust”;
2) The Trustee Act 1956 “is sadly in need of modernisation; in parts it is unreadable, and its provisions are inaccessible when they are most needed to aid with the administration of trusts to allow trusts to fulfil the purposes for which they were set up”;
3) The default provisions of the Trustee Act 1956 that are essential to trusts working efficiently and effectively no longer represent current good practice, and are a barrier rather than an aid to getting trusts right.
Law Commission President Sir Grant Hammond says the expanded provisions of the Trust Act would provide everyone with much clearer guidance as to what the rights, obligations and duties of settlors, trustees or beneficiaries are.
“We recommend an expanded statute that would set out expressly the duties that all trustees must always owe, and those duties that trustees owe in the absence of modification in a particular trust. We have also made important recommendations relating to the provision of information to beneficiaries.”
Among the specific recommendations are improved procedures for the appointment and removal of trustees, a “refined approach” to the power of the courts to review the actions of trustees, replacement of the rule against perpetuities and Perpetuities Act with a new rule limiting the maximum duration of a trust, and a change to the remedies available under section 44C of the Property (Relationships) Act 1976 by allowing courts to order the transfer of trust assets that, but for being placed in trust, would have been available as relationship property.
Justice Minister Judith Collins says the government will formally respond to the Law Commission’s recommendations by March 2014