If you are a trustee of a family trust, you will need to familiarise yourself with the new Trusts Act 2019 which comes into effect on 30 January 2021.  It introduces significant changes to trust law, and in particular places an increased focus on the responsibilities of trustees.

As a trustee you will be required to hold a copy of the Trust deed and any variations to it.  At least one trustee will also be required to hold records of Trust property, records of decisions, copies of contracts, financial accounts, removal and appointment of trustee documents, letters of wishes and any other documents necessary to administer the Trust.

Trustees are expected to provide every beneficiary with the following basic information:

  • the fact that a person is a beneficiary of the Trust
  • the name and contact details of the trustees
  • the details of each change of trustee as it occurs
  • the right of the beneficiary to request a copy of the terms of the Trust and information on the terms of the trust, its administration and the trust property

Please contact our Customer Services Manager Sean Roberts on 06 360 6368 if you need to add, remove or change the details of your trustees.

The Act will impose five mandatory duties on you as a trustee.  These cannot be modified or excluded in the Trust deed. The mandatory duties placed on trustees are:

  1. Know the terms of the Trust
  2. Act in accordance with the terms of the Trust
  3. Act honestly and in good faith
  4. Act for the benefit of beneficiaries
  5. Exercise your trustee powers for a proper purpose

The Act also imposes ten default duties that must be performed by trustees. These can be modified or excluded in the Trust deed. The default duties are:

  1. A duty of care
  2. Invest prudently
  3. Do not exercise powers for your own benefit
  4. Actively and regularly consider the exercise of the trustee’s powers
  5. Do not bind or commit trustees to a future exercise or non-exercise of discretion
  6. Avoid all conflicts of interest between the trustee and the beneficiaries
  7. Act impartially with regard to beneficiaries (however it should be noted that impartiality does not necessarily mean equality as between beneficiaries)
  8. You cannot personally profit from the Trust
  9. You cannot act for personal reward
  10. All trustees must act unanimously

You should review your existing Trust deed to see whether further modification is needed to vary or negate these default duties.  Trust law is complex and you should seek legal advice if you are unsure about anything.

Finally, if you plan to transfer shares in your forestry investment you should consider the tax implications.  Some investors are transferring out of a family trust because of the changes brought about by the new Trusts Act 2019.  Some investors may wish to transfer shares into a family trust because of the new top personal tax rate to be introduced on 1 April 2021.

Either way, the sale or transfer of forestry shares in partnership investments are caught by section HG5 of the Income Tax Act 2007.  This means if treecrop value in your shares exceeds $50,000, tax is payable.   As the Act has a threshold of $50,000 then transfers can occur in tranches* with the treecrop value below this threshold, with each transfer separated by 12 calendar months.

If you are considering a sale or transfer of shares, please contact our Customer Services Manager Sean Roberts on 06 360 6368 to discuss this.

*A fee of $150 per transfer applies