Talking Trusts: Marie and Richard
By Tammy McLeod
Marie and Richard lived in a beautiful home close to Takapuna beach. They had two adult children each and had been married for 20 years. Their “blended” family hadn’t been without challenges over the years and one of Richard’s daughters, Sally, did not talk to Marie. When Richard and his first wife had separated when Sally was 13, she had very much taken her mother’s side and still saw Marie as the enemy.
On the advice of their lawyer Marie and Richard had set up a trust not long after they married. Their family home was in it as well as an investment portfolio they had been adding to over the years which was now worth a substantial sum. They had set the trust up as a way to protect the other of them in the event that one of them died. Their concern was that the other’s children would make it difficult for the survivor and neither of them wanted to be “kicked out of their home” if the other died.
Marie and Richard had never told their respective children about the trust. Their view was that it was none of their children’s business what assets they had in their trust, as their hope was that they would dissipate most of their investments before they died and the only asset that would pass to their children would be their house. They were particularly concerned that Sally didn’t know what assets they had, given how difficult she was.
The new Trusts Act which has just been passed raises some concerns for Marie and Richard. Under the new Act which comes into effect on 30 January 2021, there is a mandatory obligation to trustees to advise anyone over the age of 18 if they are a beneficiary of a trust, unless there is good reason not to. The trustees must also provide certain information to the beneficiaries if requested. This includes the assets and liabilities of a trust and how much income the trust is earning.
In light of the new Act, all trusts need to be reviewed. However, Marie and Richard in particular should be reviewing the terms of their trust to see if they can tighten up their wishes for how the trust is managed and limit what information Sally and their other children can glean. While Marie and Richard don’t think that it is their children’s business what their trust owns, the new law says that it is.
If you are unsure as to the impacts of the new Act on your trust, you should get specialist trust advice.