The Trusts Act 2019 came into effect on 30 January 2021 and, it’s fair to say, has caused a lot of confusion.
Although the Act only came into effect this year, it impacts on trusts that existed prior to 30 January 2021 because all trusts must now be managed within the scope of the new rules.
The changes promote trustee accountability and transparency to beneficiaries. This is achieved by the requirement to provide trust information to beneficiaries of trusts, as well as trustees meeting their obligations as set out in the trust deed.
We’ve highlighted some of the common areas causing misunderstanding:
1. A duty to disclose trust information.
This can best be described as a presumption to provide 'basic information'. For instance, informing a beneficiary that they are a beneficiary; providing trustee details; informing beneficiaries they have a right to trust information; or providing a beneficiary with a copy of the trust deed. Before providing information, trustees are expected to proactively consider a range of factors to test whether providing information is the best thing to do. The factors appear to have the purpose of considering issues within family relationships or managing expectations. If you are a trustee, have you done this? If not, you are likely to be in breach of your obligations under the new rules.
2. Disclosure need only be made once.
The disclosure of information to beneficiaries is an ongoing responsibility. Consideration needs to be given at regular intervals as to whether basic trust information should be made available. For example, ensuring disclosure to beneficiaries of every appointment, removal or retirement of a trustee as it occurs or a reconsideration of the factors that were applied previously.
3. You can increase the trust period by resettlement.
This is true, in part. The Trust Act states that the maximum duration of a trust is increased to 125 years from 80 years – however, this is calculated from the date of the original trust deed – not any resettlement date of the trust.
4. If a trust adviser is not a trustee, they do not have to meet certain obligations.
Advisers have obligations regardless of whether they are named a trustee in the trust deed or later appointed as a trustee.
The law is constantly changing and eroding the protection that a trust has traditionally afforded, so it’s important to regularly review the purpose of your trust and ask yourself if it is still relevant for today and carry out the purpose it was intended for.
Be sure to read our sister article on how a trust works: a trust is like setting up a club
If you’d like us to help you review your trust, get in touch, we’re here to help.