Residential Tenancy Act – Law Changes
JANICE COWDY / Director, Sales and Property Management
From 11 February 2021, multiple changes to tenancy legislation came into effect. The changes will cover:
- Security of rental tenure – Landlords will not be able to end a periodic tenancy without cause by providing 90 days’ notice. New termination grounds will be available to landlords under a periodic tenancy and the required notice periods will change.
- Changes for fixed-term tenancies – All fixed-term tenancy agreements will convert to periodic tenancies at the end of the fixed term unless the parties agree otherwise, the tenant gives a 28-day notice, or the landlord gives notice in accordance with the termination grounds for periodic tenancies.
- Making minor changes – Tenants can ask to make changes to the property and Landlords must not decline if the change is minor. Landlords must respond to a tenant’s request to make a change within 21 days.
- Prohibitions on rental bidding – Rental properties cannot be advertised without a rental price listed, and landlords cannot invite or encourage tenants to bid on the rental (pay more than the advertised rent amount).
- Fibre broadband – Tenants can request to install fibre broadband, and Landlords must agree if it can be installed at no cost to them, unless specific exemptions apply.
- Privacy and access to justice – A suppression order can remove names and identifying details from published Tenancy Tribunal decisions if a party who has applied for a suppression order is wholly or substantially successful, or if this is in the interests of the parties and the public interest.
- Assignment of tenancies – All requests to assign a tenancy must be considered. Landlords cannot decline unreasonably. If a residential tenancy agreement prohibits assignment, it is of no effect.
- Landlord records – Not providing a tenancy agreement in writing will be an unlawful act and Landlords will need to retain and provide new types of information.
- Enforcement measures being strengthened – The Regulator (the Ministry of Business, Innovation and Employment) will have new measures to take action against parties who are not meeting their obligations.
- Changes to Tenancy Tribunal jurisdiction – The Tenancy Tribunal can hear cases and make awards up to $100,000. This is a change from $50,000.
More information about the reform of the Residential Tenancies Act 1986 (Ministry of Housing and Urban Development) can be found here.
Residential Tenancies Amendment Act 2020 (New Zealand Legislation) can be found here.
Redcliffs Pop-Up Office
NICK COWDY / Residential Sales Consultant
In late 2020 we were offered the opportunity to take a short-term lease on a unit in a block of shops on Main Road in Redcliffs Village.
Being a resident in Redcliffs myself, I’d always wondered why there wasn’t a real estate company among our fabulous local shops, so it was a no-brainer for us to fill this space with a pop-up Cowdy office. It’s been incredible seeing the number of people who stop by to check out what’s available in the window.
Cowdy as a company has been around for over 40 years, yet we have never had a second branch. So when this opportunity presented itself, we thought why not jump in and see how it goes? We’re really pleased to be part of the local community, if only for a limited time.
The pop-up office isn’t permanently staffed, our agents are just busy out and about doing what they do best! It’s been a great opportunity to raise awareness of our brand among the tight knit community of Redcliffs and the surrounding areas of Sumner and Mount Pleasant, and it’s nice to show people that we do work outside of the north-west.
Next time you’re heading through Redcliffs Village, be sure to make a stop at 95 Main Road and if the lights are on then come on in – we’d love to have a chat.
Healthy Homes Standards Claim Deductions
JANICE COWDY / Director, Sales and Property Management
As a landlord there are numerous responsibilities to take on, one of which being submitting taxes related to your rental property or properties. For specifics on tax-deductions it is important to always speak with IRD directly or your tax consultant, but using the IRD website as a reliable source we have created a guideline on what you should consider when completing your next tax returns.
GST & Residential Rent
GST is not charged on residential rent. This means you do not include residential rental income in your GST return even if you’re registered for GST. When you deduct residential rental expenses in your tax return, use the GST inclusive amount.
Expenses you can deduct
The expenses you can deduct from your rental income are:
- The cost of insuring your rental property
- The rates for the property
- Payments to agents who collect rent, maintain your rental, or find tenants for you
- Fees paid to an accountant for managing accounts, preparing tax returns and advice
- Repair and maintenance costs
- Fees for arranging a mortgage to finance the rental property
- Fees for drawing up a tenancy agreement
- The cost of getting a valuation required to get a mortgage, but not insurance valuations
- The costs of taking legal action to recover unpaid rent
- The costs for evicting a tenant
- Mortgage repayment insurance
- Depreciation on capital assets
Assets under a cost of $1,000 can be deducted immediately ($5,000 for the period 17/3/2020 to 16/3/2021)
- Travel expenses for travelling to inspect your property or to do repairs
- Legal fees involved in buying or selling a rental property, as long as the total expense is $10,000 or less per annum
Note: You can also deduct interest on money you have borrowed to buy your rental property. But you cannot deduct this if you have used some of the money:
- For something else
- To top up the mortgage for another purpose
- Even if the rental property is used as security for bank borrowing, if the actual funds are used for something else, you are not permitted a deduction for the interest.
Expenses you cannot deduct
Expenses you cannot deduct from your rental income are:
- Capital expenses
- The purchase price of a rental property
- The principal portion of mortgage repayments
- Costs of making any additions or improvements to the property
- Cost of repairing or replacing damaged property, if the work increases property value
- Real estate agent fees charged as part of buying or selling the property
- Depreciation on the rental’s land or buildings
- Your time when you do repairs and maintenance work
- Legal fees involved with selling the rental property (unless you’re in the business of providing residential rental accommodation)
Note: The difference between repairs and improvements can be complex. If you are unsure about whether work done on your property is repairs or improvements, talk to a tax agent or your accountant.
Additional Resources:
Check out this more detailed overview of Tax rules for people who rent out residential property and holiday homes.
What about deductions for costs incurred to meet Healthy Homes standards?
IRD have created a draft document addressing this question and providing the answer, including a breakdown of the following in relation to it:
- Revenue related deductible costs, capital costs and items able to be depreciated.
- Tax treatment including applying the three-step test in the context of Healthy Homes expenditure with attributing information on revenue, capital, depreciation and deductible costs
This draft document also addresses Healthy Homes standards, including:
- Smoke alarm standard
- Insulation standard
- Heating standard
- Ventilation standard
- Moisture ingress and drainage standards
- Draught stopping standard
- Record keeping and provision of compliance information in tenancy agreements requirements
Summer in Canterbury
Summer has been making an on-again off-again appearance, but there’s no doubt we’re still getting some beautiful weather.
While the sun is still shining into the evenings, why not take the opportunity to explore some of the lovely walks and incredible waterfalls within easy reach of the Garden City?
It’s no secret we live in one of the most beautiful countries in the world, and with overseas travel restrictions there’s never been a better time to see more of the amazing place we get to call home. Take the time this summer to get out and explore more of our wonderful region and the beauty it has to offer! We’ve curated a few of our teams’ favourites below.
Walks around Christchurch:
Godley Head Costal Walk –
This 7km walk starts at the Taylors Mistake car park and offers changing views as you pass the surfing action of Taylors Mistake, the rugged Whitewash Head, and panoramic views of Pegasus Bay which stretch to the Kaikoura mountains and the hills of North Canterbury.
You may be lucky enough to spot the dolphins and whales that occasionally visit these sheltered waters.
Kennedys Bush –
On the other side of town, this 1-2km walk takes you through 130ha of bush. There are several loop tracks to choose from, all of which go through delightful native bush where you may be treated to some of Christchurch’s native wildlife.
With an abundance of bellbird and kererū, there are also many other birds filling this bush such as grey warblers and fantails. On a fine day, you’ll find yourself treated to the delightful song of the bellbirds.
Riccarton House & Bush –
This easy 20-minute walk is an oasis within the inner city. The sole remnant of the ancient kahikatea forests which once covered much of the Canterbury Plains, this protected native forest is undisturbed and provides an interesting window into how Christchurch would have looked to the first settlers.
The sound of birds in this pocket of forest is often incredible.
Aside from the incredible bush walk, there is also Riccarton House and Dean’s Cottage to wander through with lots of grass areas perfect for kids to play, as well as the buzzing Saturday farmers’ market.
Waterfalls in Canterbury:
Ryde Falls – Oxford
Hidden in the heart of Oxford forest, these falls can be accessed from a number of walking tracks in the area including the Wharfedale Track, View Hill and Coopers Creek.
A 50 minute drive from Christchurch, there are both walking and mountain biking tracks. Dogs are allowed, as long as they are kept under control.
Devil’s Punchbowl – Arthur’s Pass
Climb to the base lookout and marvel at the unforgettable views of this 112-metre waterfall. This moderate grade track is a one-hour return walk, and located a two-hour drive from Christchurch.
Avalanche Creek Falls – Arthur’s Pass
See one, two, or all three waterfalls totalling 80 metres in height at Avalanche Creek Falls, located in Arthur’s Pass National Park. The lower falls are visible from the bridge, while the lookout platform at the end of the track offers a view of the middle falls.
For the top waterfall, and all three together, simply cross the road and follow the Devil’s Punchbowl Waterfall track for a few minutes, then look back.
This is a short walk located a two hour drive out of Christchurch.
Anne’s Falls – Port Hills
A 45-minute drive from Christchurch, nestled in the Port Hills and off the beaten track is where you’ll find Anne’s Falls. Following the Rhodes Track, once you reach the stream it’s only a quick three-minute walk to the base of the falls.
This moderate walk is two hours return, and is steep in some places so sensible footwear is recommended.
Washpen Falls
In the midst of a working sheep, cattle and deer farm, Washpen Falls offers breath-taking views of the Canterbury Plains. A fee of $10 per adult and $5 per child (under 15) is charged to visit the falls, and includes a track guide and use of walking sticks.
Starting at the Old Washpen Woolshed, you will pass through an ancient volcanic canyon filled with lush native bush before emerging at the spectacular falls.
A one hour drive from Christchurch, moderate fitness is recommended to walk this two hour return track.
Online Property Valuations
NICK COWDY / Residential Sales Consultant
In the current market, there is an increasing number of properties being marketed without a price. For home buyers trying to decide how much to offer, this presents the challenge of figuring out what a home is worth.
While many turn to online property valuations as a guide for pricing, it’s important to remember these aren’t a definitive estimate. These reports often do contain useful information; however, they are only one piece of the fair market value puzzle.
You may be wondering where the issue lies with taking the word of an online property valuation, so we’ve addressed a few points below to make sure you’re in the best possible position when it comes to buying or selling your property for the right price.
With an online valuation, nobody has actually looked at the property to determine its value – this has been generated by a computer program. Computer created algorithms aren’t capable of taking into account factors that influence value such as access, sun aspect, condition of the property, or the general feel of the home.
Comparing properties to determine an estimated value seems simple enough when comparing apartments or terraced houses with similar homes. However, if you are looking at a property in an area which has a number of standalone properties of varying ages, this is where things get more difficult. It’s possible extensive renovations could have been carried out over the years, and bathrooms and bedrooms may have been added. In addition to this, things such as school zones and driveway access result in a wide possible variance in value.
Property valuations online are based on settled sales that are often months old. Given how fast the market changes, especially at the moment, it’s easy for these numbers to become outdated quickly. This doesn’t mean you shouldn’t take notice, however attending property auctions when you can will help give you an idea of what properties are selling for in today’s market.
It’s understandable to want guidance when making such a big life decision, so it’s best to have as much information to hand as possible. Visit lots of properties and talk to real estate agents, and find out what houses you have viewed sold for. If you have the ability to obtain a free property valuation then take advantage of that, but this also should be weighed up against all your other information sources.
Residential Market Forecasts for 2021
NICK COWDY / Residential Sales Consultant
Economists at Westpac, ASB, BNZ and Kiwibank say low interest rates and high demand will continue to have an impact on the housing market in 2021. While their predictions vary, they are all in agreement that 2021’s housing market will build on the records that were set last year.
2020 saw numerous housing records smashed, with REINZ data showing median house prices in Auckland hitting $1 million for the first time. The national median rose by 19.8 per cent from $605,000 the previous year to $725,000, and November 2020 saw the highest number of houses sold since March 2007.
Property analyst CoreLogic’s house price index shows Christchurch’s average home value rose 6.2 per cent during 2020, which included a 3.4 per cent rise from the start of October to the end of December. Nick Goodall, head of research at CoreLogic attributed the heated market in New Zealand to record low mortgage rates and demand outweighing supply.
“It is clear that New Zealanders are looking towards property as a safe investment and the most attractive asset for wealth accumulation.”
Towards the end of last year, the Reserve Bank announced the return of LVR restrictions from March 2021. Some banks also reacted to the runaway housing market by increasing deposit requirements for investors to 30 per cent, and in the case of ANZ, 40 per cent.
“The Reserve Bank is to reinstate LVR restrictions in March, and banks will rein in lending from now,” Kiwibank’s chief economist Jarod Kerr said.
“If required, the Reserve Bank could lower LVR speed limits below where they were earlier in the year – say a 40 per cent deposit requirement for investors.
“LVR restrictions will take the investor-related froth off the top of the market. Moreover, a closed border means population growth is slowing. House price growth should slow to more modest 5 per cent to 6 per cent year on year pace from the second half of 2021. If not, we’d expect to see harsher LVR restrictions come into play to cool the housing market,” Kerr forecast in January.
Protect Your Home from Fire this Summer
In the past few months alone we’ve seen fire threaten and destroy homes and livelihoods across Canterbury. The Port Hills have received more than their fair share, with fires blazing in Redcliffs, Cass Bay and Loburn to name a few.
While certain areas are at a higher risk of wildfires, there are plenty of things you can do wherever you are to protect your home from wildfires.
The team at Fire and Emergency New Zealand urge people who live rurally and semi-rurally to take fire prevention action to protect their homes.
“We’re also talking about people living on the edges of towns where trees or scrub are close to housing. All these properties are at greater risk of fire because they are surrounded by a lot more vegetation and the local fire station is further away,” wildfire specialist Graeme Still says.
Still’s tips to protect your home from fire include:
Have a household escape plan. Wildfires can start quickly and threaten lives and homes in a matter of minutes. Don’t rely on receiving an official warning to leave. Have a plan in place with two escape routes.
Plan what you will do with pets and/or livestock.
Clear your roof. Clear off the roofing, gutters and spouting of any dead leaves, debris and pine needles.
Move flammable material. Anything that could burn; such as mulch, flammable plants, leaves, needles and firewood piles, should be moved away from wall exteriors, decks and porches.
Use fire-resistant material. Enclose space under homes or decks with fire-resistant materials. Reduce the threat of embers passing through vents in eaves by installing 3mm metal mesh screening.
“The greatest risk to your home is when embers from a wildfire are carried by the wind. Embers can travel a long way from a fire,” Still says.
Carry out regular maintenance.
Keep your grass watered. The greener the grass, the less likely it is to burn in a fire.
Choose fire-resistant plants. While fire-resistant plants aren’t fireproof, they are less likely to combust. Generally, they will have moist, supple leaves, low sap or resin levels, and watery sap without much of a smell. They will also have little dead wood or material inside the plant. Mānuka, kanuka, lavender and eucalyptus are all highly flammable, so it’s best not to plant these around your home.
Plants with a low flammability include:
- fuchsia excorticata (tree fuchsia, New Zealand fuchsia or kōtukutuku)
- pseudopanax crassifolius (horoeka or lancewood)
- pseudopanax arboreus (five finger, puahou or whauwhaupaku)
- coprosma robusta (karamu)
- coprosma grandifolia (kanono or raurēkau)
- geniostoma ligustrifolium (hangehange)
- coprosma australis (kanono or raurēkau)
- coprosma repens (tree bedstraw, taupata, mirror bush, looking-glass bush, New Zealand laurel or shiny leaf)
- carpodetus serratus (putaputawētā, marbleleaf or bucket-of-water-tree
- corynocarpus laevigatus (karaka or New Zealand laurel)
- griselinia littoralis (kapuka, New Zealand broadleaf or papauma)
- griselinia lucida (puka, akapuka or shining broadleaf)
- piper excelsum (pepper tree or kawakawa)
- solanum aviculare (New Zealand nightshade or poroporo)
Create a ‘clear zone’. Remove long grass, shrubs, twigs and any other fuels that are within 10m of your home. Once you have a clear area around your home of 10m, create space between any trees within 30m of your home and prune shrubs and trees from the ground up. This will reduce how far and fast a fire can spread, and stop fire and embers spreading between treetops. Then repeat this process with vegetation and structures up to 60m from your house. Anything that is within 60m of your house can present a risk in the event of a wildfire.
Ensure easy access. It’s important that firefighters are able to easily access your property in the event of fire. Fire trucks need at least four square metres of space, so where possible try to ensure your driveway has enough clearance for emergency vehicles. Also, make sure your house number or RAPID number is easily seen from the road.
More tips on how to keep your home fire safe are available at checkitsalright.nz.
Understanding Changes to the Residential Tenancy Act
JANICE COWDY / Director, Sales and Property Management
There have been numerous changes made to the RTA that landlords will need to become familiar with. Key changes include new rules for how much notice must be provided by landlords should they want to sell their property, steps for the eviction of tenants who demonstrate anti-social behaviour, rules surrounding minor alterations, fibre connections, and fixed-term tenancy agreements.
Legislative compliance will bring many headaches for landlords who ignore the changes, and there can be expensive fines for non-compliance. This is where having a Property Manager is increasingly important and we would love to discuss this with you. Our team at Cowdy are qualified, experienced, well informed and motivated.
There is a lot to delve into, so we’ve provided a comprehensive explanation of all of these changes here.
What are the key changes landlords should be aware of?
- Landlords will not be able to end a periodic tenancy without a reason.
- Fibre Connections: Tenants can request for fibre broadband to be installed, and landlords must facilitate the installation as long as it can be done at no cost to the landlord.
- Assignment: Landlords will have to allow tenants to transfer their “interests and responsibilities” to a new tenant, unless the landlord has a “reasonable” reason to decline the transfer. Fixed-term tenancy agreements can’t prohibit assignment.
- Minor Alterations: These include brackets to secure furniture and appliances against earthquake risk, baby proofing the property, installation of visual fire alarms and doorbells and items to hang pictures. Landlords will not be able to withhold consent to minor changes and repairs or work that doesn’t require consent, damage the property, or have an “unreasonable negative effect on any person’s enjoyment or use of any property outside the premises.” The landlord can impose reasonable conditions around the way the minor change is carried out at the property, and tenants have to remove minor changes and remediate the property by the end of the tenancy.
- Healthy Homes: If a tenant requests it, landlords will have to provide details within 21 days of how the property meets the Government’s Healthy Homes Standards.
- Recovery of Costs Relating to Assignment, Subletting, or Early Release from a Fixed-Term: As per the current law, these costs are able to be recovered as long as they are reasonable, and the situations in which a landlord can recover is now extended to include subletting. Now a breakdown of cost will need to be given.
What penalties have been introduced?
Fines and maximum penalties for a range of offences or unlawful acts have been brought in under the new law. These fines and penalties range in value from $350 for a landlord demanding rent in excess of a market rent to $7,200 for a home failing to meet its obligatory level of cleanliness, maintenance, smoke alarms, and reaching the Healthy Homes Standard.
The number of properties a landlord owns will affect the penalty they receive, with larger penalties for landlords with six properties or more.
The landlord can impose reasonable conditions around the way the minor change is carried out at the property, and tenants have to remove minor changes and remediate the property by the end of the tenancy.
Putting Your House on the Market? This is What You Need to Know:
Penalties –
Under the new law there will be significant penalties for landlords who fail to provide tenants with written notice that a property has been put on the market, or not advising any prospective tenants about the fact.
For a failure to notify tenants that a property is on the market, up to $1,800 exemplary damages can be awarded, and a fine of between $500 to $3,000 for not notifying prospective tenants about the fact (depending on how many properties the landlord owns.)
Notice Periods –
A key change is that at least 90 days’ notice is required for a periodic tenancy if:
- Under an unconditional sale agreement, the owner is required to give vacant possession (increased from 42 days)
- The owner is putting the property on the market within 90 days after the termination date
How does that work in practice?
If the owner intends to sell with vacant possession but wants to market the property while tenants are occupying the property, the owner must first notify the tenants that the property is going to market (this existing legal obligation remains under the new law). Once the owner gets an unconditional sale, they are required to give 90 days’ notice to the tenants that vacant possession is required.
For example, if the owner were to market the property on 1st March 2021 (notifying the tenants of the fact) and then secure an unconditional sale on 1st April 2021, they would need to then provide a 90 days’ notice to the tenants stating the reason for the end of tenancy is vacant possession. With this notice given it would mean the settlement date would be around 1st July 2021 to allow the full notice period of 90 days’ and any additional service days.
This process is the same as the existing law, however the notice period has increased from the previous 42 days to 90 days’ notice.
What else do owners need to know about putting their property on the market?
Owners are still required to give 90 days’ notice if they intend to market and sell the property after the tenants have vacated. In this case, the owner is expected to give 90 days’ notice to the tenants and wait until the notice period ends and the tenants vacate before marketing the property.
Once the tenants have vacated, the owner should market the property within 90 days of the tenant vacating.
With tenants vacated from the property, vendors gain flexibility with settlement dates and access to the property to complete renovations or make improvements to its market value.
For a periodic tenancy, tenants are able to give 28 days’ notice in response to being given 90 days’ notice from the landlord (an increase from 21 days). In the case of an unconditional sale, if this happens there could be the possibility for settlement to be brought forward.
Are there any other instances when 90 days’ notice needs to be given?
90 days’ notice must also be given if:
- The premises have been acquired by the landlord /owner to facilitate the use of nearby land for a business activity requiring vacant premises;
- The premises are to be converted into commercial premises;
- The landlord /owner intends to carry out extensive alterations, refurbishment, repairs, or redevelopment of the premises, and: it is not reasonably practicable for the tenant to remain in occupation while the work is undertaken and work is to begin or material steps towards it are to be taken within 90 days after the termination date;
- The premises are to be demolished (and demolition will begin or material steps towards it will be taken within 90 days of the termination date);
- The landlord is not the owner and their interest in the premises is due to end.
These situations will be relevant where purchasers have development plans and need to give notice to tenants after settlement.
Are there any other notice periods to be considered?
- If landlords or their family members intend to live in the premises, or the landlord has acquired the premises for their employees’ use, at least 63 days’ notice must be given (an increase from 42 days).
- If the tenant has physically assaulted the landlord or their family and the police have laid a charge, 14 days’ notice can be given.
- A tenant can give a minimum of 2 days’ notice to withdraw from a tenancy if they have been a victim of family violence.
What about termination for reasons not by notice?
Periodic tenancies can only be ended by the landlord for one of the following reasons without notice:
- The landlord issued a tenant three notices for separate antisocial acts in a 90-day period. Antisocial acts can be defined as harassment; or any other act or omission (whether intentional or not), if the act or omission reasonably causes alarm, distress, or nuisance that is more than minor.
- The landlord gave notice that a tenant was at least five working days late with their rent payments on three separate occasions within a 90-day period.
- The landlord will suffer greater hardship than the tenant if the tenancy continues.
- Existing provisions relating to rent arrears, damage, assault, and breaches still apply.
Trusts Act 2019
STEPHEN JEFFERY / Partner, Lane Neave
New Zealand is one of the most ‘trusted up’ countries per capita in the world with there being estimated between 300,000 and 500,000 trusts existing in New Zealand at this point in time.
The Trusts Act 2019 is the first review of the law surrounding Trusts and their operation for more than 60 years and seeks to update and improve the general law governing this area.
The Act came into force on 30 January 2021 and while it updates or restates the law that already exists, there are some changes that you need to be aware of.
A Restatement
The new act concentrates on trust principles and trustees’ duties. These are not new and have existed for many years, but a large number of trustees have no legal training and therefore it was felt that there was merit including these in the legislation. There are two types of duties, mandatory and default.
Mandatory Duties are fundamental duties owed by the trustees to the beneficiaries of the trust and cannot be modified or excluded in the trust documentation. All trustees must adhere to them at all times. There are five of them:
- A trustee must know the terms and conditions of the trust contained within the trust deeds. These are the terms and conditions which they are bound to observe.
- Trustees have a duty to act in accordance with the terms of the trust.
- A duty to act honestly and in good faith.
- A trustee must hold or deal with trust property and otherwise act for the benefit of the beneficiaries in accordance with the terms of the trust.
- A trustee must exercise a trustee’s powers for a proper purpose.
There are ten Default Duties which may be modified or excluded in a trust deed particularly those that are now being formed. We list these with no particular comments to be made in respect of each one as space limitations in this article prevent us from doing so. They are as follows:
A duty:
- Of care – exercising the care and skill which is reasonable in the circumstances;
- To invest prudently;
- Not to exercise their powers directly or indirectly for the trustees’ own benefit;
- To be actively involved in the trust’s activities;
- Not to bind or commit future trustees to act in a particular way at some stage in the future;
- To avoid conflicts of interest between themselves and the interests of beneficiaries;
- Of impartiality i.e. a duty not to take sides;
- Not to profit from a trusteeship of a trust;
- To act for no reward;
- To act unanimously.
All of these duties are a reinstatement of the law as it exists at the moment.
A Change
There is a presumption in the Act that the trustees must make available Basic Trust Information to all beneficiaries or their representatives. This Basic Trust Information includes that someone is a beneficiary of the trust, the names and contact details of the trustees, any changes to the trustees over time and right of a beneficiary to request further trust information.
The primary purpose of providing this information to beneficiaries is to ensure that the beneficiaries are able to ensure that the trustees are administering trust properties, and are meeting their mandatory duties and the default duties as they stand under the legislation or have been modified by the trust documentation.
There are a number of considerations that trustees need to turn their minds to before they decide whether or not to make the Basic Trust Information available to the beneficiaries and indeed what beneficiaries, if not all, will receive that information.
Things you should be doing now as a Trustee
As the Act is now in place, there are a number of actions that you as trustees should be taking now:
- Collating Trust Information:
- All trustees must have a copy of the trust deed and changes to the trustees.
- At least one trustee must have a copy of all core trust documentation which is available to all other trustees.
- Review Core Documentation – The Trust documentation needs to be reviewed:
- Is the trust still relevant?
- Is the beneficiary definition too wide?
- Are there out of date clauses such as incorrect income accumulation clauses, beneficiary appointment clauses, and limited rights to resettlement?
- Do the default duties need to be modified?
- Information Disclosure:
- Settlors and trustees need to meet in order to discuss their obligation to disclose Basic Trust Information to all the beneficiaries and the considerations that they need to take notice of when making that decision.
These three things are the bare minimum that the Trustees should be undertaking without delay. We suggest you contact your trust professional advisors to discuss your next steps.
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