The Trusts Act 2019 – what it means for New Zealanders

Written by Chris Pickering

The Trusts Act 2019 is the first major overhaul of NZ trust law in generations, replacing the 1956 Act. The stated purpose of the Act is to restate and reform New Zealand trust law by—

(a) setting out the core principles of the law relating to express trusts;
(b) providing for default administrative rules for express trusts;
(c) providing for mechanisms to resolve trust-related disputes;
(d) making the law of trusts more accessible.

From Fair Way’s perspective, one of the most significant developments is the inclusion of dispute resolution for internal and external trust disputes.  Prior to this Act, it was generally accepted that disputes relating to trusts were not capable of resolution through mediation or arbitration because many beneficiaries of trusts were discretionary and therefore their interests could not be safeguarded or considered.

Alternative Dispute Resolution (ADR) is now given formal standing in the new Act - dispute resolution is provided for in Part 7 of the Act, with ADR covered in sections 142 to 148. A trustee will be able to refer a matter to ADR with the agreement of each party to a matter. Where beneficiaries lack capacity, a Court may appoint representatives for those beneficiaries, with any ADR settlement (but not arbitral award) then needing to be approved by the Court. The Court may also refer any trust dispute to ADR at the request of a trustee or beneficiary. In doing so, the Court may order participation from specified parties, order that the costs are paid from trust property and even order the appointment of a specific mediator, arbitrator or facilitator of the ADR process.

The Act states that options such as arbitration or mediation are usually available for trust disputes, even where the trust deed is silent on the point.  This is designed to keep disputes out of the Courts wherever possible. Trustees may want to consider amending their trust deeds to include dispute resolution clauses that specify their preferred method of resolving disputes.  Where a trust deed is silent on dispute resolution, the court will have the power to order various ADR options to resolve disputes and therefore manage the resolution process, short of a full hearing or avoid litigation altogether.

The Family Court’s powers to make directions and/or orders involving trusts are also widened. The purpose being to promote efficiencies such as when trusts arise in the context of relationship property disputes rather than having to seek recourse from the High Court. It could have been an opportunity to require either attendance at dispute resolution or an obligation to get an exemption as is required by the Family Dispute Resolution Act 2013, however this was not included. That said both the High Court Rules 2016 and the District Court Rules 2014 make provision for parties to confirm that they have attempted or considered dispute resolution cases to be referred to Alternative Dispute Resolution.

There is the possibility that these changes may lead to an increase in trust litigation. The advent of codified duties, mandatory disclosure and wider powers being granted to the Family Courts combined with the overarching vibe of social justice means that it may be easier for aggressive and/or aggrieved beneficiaries to try their luck with the courts.  In these cases, dispute resolution may be particularly helpful to restore family relationships or relationships between beneficiaries and thereby avoid disputes resonating through future generations

The Act received Royal assent on 30 July 2019 and comes into effect 18 months after that date (31 January 2021). While this might still seem like a long time ahead, there is a lot that trustees need to sort out.  Generally, the reforms clarify core trust concepts, make trust legislation more useful, fix practical problems and are directed at reducing costs. It also aims to modernise outdated language and concepts.

The new Act will impact many New Zealanders as estimates are that there are between 300,000 and 500,000 trusts in New Zealand. The new rules will apply both to new trusts and existing trusts, and it will be advisable for existing trusts to be reviewed and in some cases possibly varied or wound up. The Act also provides:

  • a description of the key features of a trust to help people understand their rights and obligations
  • mandatory and default trustee duties to help trustees understand their obligations
  • requirements for managing trust information and disclosing it to beneficiaries (where appropriate), so they are aware of their position
  • flexible trustee powers, allowing trustees to manage and invest trust property in the most appropriate way
  • provisions to support cost-effective establishment and administration of trusts (such as clear rules on the variation and termination of trusts)
  • options for removing and appointing trustees without having to go to court to do so.

At the very heart of trusts is the desire to provide assurance for future generations of beneficiaries and it makes complete sense to have a regime which promotes that purpose.  For people contemplating the establishment of a trust or considering changes, they might like to have a conversation about including dispute resolution processes such as offered by Fair Way which promote the ongoing development and strengthening of relationships which are essential for trustees to work together and prevent disputes between future beneficiaries.

If you would like to discuss dispute resolution for your trust or assistance facilitating those conversations with trustees, please contact

About the author

Chris Pickering is Client Manager for Commercial Services at Fair Way and is based in Auckland. Chris comes from a legal background specialising in litigation and dispute resolution (with an emphasis on employment).

Having grown up on a farm near Cambridge, Chris moved to Wellington to study law & arts before beginning his professional career at Police National Headquarters, and following admission as a barrister and solicitor, a litigation role at a law firm in Auckland.

Chris spent more than ten years working in the UK, with varied roles across central and local government and the Commission for Racial Equality (a non-government organisation). On returning to NZ, he first worked for a QC, then at an employment specialist law firm before joining Fair Way in late 2017.

Chris has been admitted as a solicitor in New Zealand and England, and is an Associate Member of the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ).