by Susan Edmunds
The Trusts Bill, a rewrite of the law governing the half-a-million trusts operating in this country, has been introduced into Parliament.
Changes include a description of trusts, trustee duties, the introduction of clear requirements for managing trust information, and more flexible trustee powers.
The reforms are based on recommendations made by the Law Commission in 2013. It said at the time that the law needed to be made more accessible.
Richard Broad, of Perpetual Guardian, said the new bill made the law simpler but preserved the flexibility of common law which is present under the current system.
It had been hard for laypeople to navigate the laws around trusts, he said, because of the heavy reliance on case law. "It's been hard for the public to know what is the law - 'can I do this?' - without seeing a lawyer and paying a fortune.
"The goal is to make it simpler and clearer but remain flexible."
Trustees' duties are more clearly laid out, which has prompted speculation that it could lead to more focus on how trustees comply with those requirements.
Law firm MinterEllisonRuddWatts earlier flagged concerns about commercial trusts that are also subject to the Financial Markets Conduct Act and the Financial Advisers Act.
People administering those trusts, such as advisers with client money, already have obligations under those laws.
Special counsel Shane Johnstone said some of his firm's concerns seemed to have been heard.
Its submission had tried to make the point that it was ridiculous to add another layer of legislation on top of the FMCA, which was already a well pored-over piece of legislation, he said.
The bill says that, when the Financial Advisers Act applies, the Trust Bill's provisions relating to duty of care, documents to be kept by trustees, the general powers of the trustee, the trustee's liability for acts of the delegate, trustee indemnity and alternative dispute resolution do not apply.
Johnstone said it meant a clearer path for advisers to navigate. "If you're holding money on trust under the Financial Advisers Act, you can see which parts of the Trust Bill are going to apply."
It would be up to the industry to consider whether the remaining obligations were too onerous, he said, and make submissions if necessary.
He said there were more carveouts applied for managed investment schemes caught by the FMCA.
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