An Overview of the Trusts Act 2019 - Revolutionary Changes or Much of the Same?

AuthorRebekah McCrae and Robin Palmer
PositionLecturer at the School of Law at the University of Canterbury/Professor at the School of Law at the University of Canterbury
Rebekah McCrae* and Robin Palmer**
e Trusts Act 2019 (the Act) is now fully i n force. e Act repeal s and replaces the
former Trustee Act 1956 . e Act has modernis ed the law of trusts and ma de the law more
accessible . It restates many common law pr inciples as well as modif ying some of the pre-
Act common law. Fe w provision s depart enti rely from the forme r Trustee Act 1956 and
the common law a pplicable prior to th e Act. ese changes com bined make for interesti ng
discussio n, partic ularly to what exten t the common law c ontinues to be re levant, and
whether the new p rovisions are revolut ionary or are better d escribed as improve ments to
the pre-Act positi on. e Paper f‌i nds that overal l, very lit tle has changed s ubstantively
under the Act. Wh ere the Act restates the common la w, the common law may contin ue to
provide conte xt and interpret ational ass istance. Where t he Act provisio n modif‌ies the
common law, th e common law will remain rele vant to the extent it is consist ent with the
provision . ose provisions wh ich entirely depart fro m pre-Act principles are few.  ere
is little in the Ac t that will require major adj ustments to trust deed s or the way trusts are
I. Introduction
The Trust s Act 2019 (the Act) i s the f‌irs t major reform of tr usts law i n over 60
years. The Act r epeals and replaces t he Trustee Act 1 956. The Act also cod if‌ies some
of the common law re lating t o trust s to create a c oncise piece of legi slation th at
improves accessi bility of the law.
Prior to t he Trust s Act 2019, much of law rel ating to t rust s was set out in
the common law (for ex ample, most of th e duties of tru stees were der ived from
the common law a nd did not appea r in the Tr ustee Act 1 956). This resu lted in a
* Lectu rer at the School of Law a t the Universit y of Canterbu ry.
** Professor at t he School of Law at the Un iversity of Ca nterbury.
134 [Vol 28, 2021]
multifa ceted legal regi me where trustee s would need to navigat e often lengthy and
less accessible com mon law judgments to k now their obligation s.
Durin g the reform, t he former Trus tee Act 1956 w as considered t o be outdated a nd
no longer f‌it-for-purp ose. The Trust ee Act 1956 did not cont ain many of t he trustees’
legal obli gations. The rules of common l aw and equity therefore s upplemented the
former stat ute to f‌ill these ga ps. There was confusion a bout the role of settlors, t he
duties of tr ustees a nd the righ ts of benef‌iciar ies that threatened t he institution of
the tru st.1 It was import ant that the new Act a ddressed these shor tcomings.
The Act is a resu lt of many yea rs of researc h, consult ation, a nd debate.2 It
improves accessi bilit y, by including the o bligation s of trust ees into t he Act. Man y
common law pri nciples have been cod if‌ied in t he Act, thereb y providin g clarit y of
what is requ ired of trustees, a nd enabling benef‌icia ries to better unders tand their
The Act makes some n otable changes to t he pre-Act regime includ ing:
the abolition of the r ule agains t perpetuitie s;
the inclusion of mand atory and default du ties for trustees;
the inclusion of inform ation retent ion and disclos ure obligat ions imposed
on trust ees;
the prohibition of exemption s or indemni ties for dishones ty, wilf ul
misconduct , or gross negligence i n trust term s;
providing tr ustees w ith power to det ermine whe ther a retu rn on an
investment i s income or capita l and to app ortion receip ts and outg oings
between incom e and capital;
the appointment of speci al trust adv isors;
modernising t he rules for the appoint ment and removal of tru stees; and
the introduction of a lternative dis pute resolution provision s.
This Paper prov ides a high-level overview of t he Act. The focus of t his Paper is
to contra st the pre-Act po sition and t he position under t he Act, and also to a ssess
to what ext ent the chan ges ref‌lect, co dify, or depar t from common law principles.
It does not attempt t o provide an ex haustive comparison b etween the Ac t and the
former trus ts regime, nor does it prov ide a detailed ana lysis of the Act, but in stead
identif‌ies t hose changes t hat would likely be of most int erest to set tlors, tr ustees,
1 The Law Comm ission’s comprehensive rev iew took place b etween 2009 and 2013. F ive issues
papers were pub lished and consult ed on which resulte d in the f‌inal Law Com mission Paper:
Law Commission  e Law of Trusts – A Trusts Act for New Zealand ( NZLC R130, 2013) [“Repor t
130”], see “Foreword”.
2 Report 130 , above n 1.

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