The Law Commission wants to crack down on the "injustice"
that allows the use of trusts to protect property during
matrimonial or other relationship disputes in its package of
proposed changes to trust law released today.
As part of its long-running review of trust law, the
commission today released a series of proposals to modernise
and clarify legislation governing the use of the structures.
Use of trusts in New Zealand is widespread for a wide range
of purposes including minimising tax, protecting property
during matrimonial disputes, and shielding income and assets
in order to qualify for social assistance.
However, Law Commission president Sir Grant Hammond said the
proposals published today focused on "core trust law rather
than other areas of law and policy that intersect with trust
law, such as insolvency and social assistance".
"The commission has generally taken the position that
resolving the problems that may arise in these areas due to
the existence of trusts as a particular form of property
holding falls beyond the scope of this review."
However, Sir Grant said one area of interaction which the
commission had looked at further was relationship property.
"This is because of significant concern about the potential
for injustice due to the use of trusts."
The commission raised several options for comment involving
the amendment of relationship property legislation in order
to alleviate the impact of trusts.
Other proposed reforms the commission is seeking public
feedback on include:
# Giving trustees - who manage trusts on behalf of those who
benefit from them - a clearer set of duties.
# Giving trustees greater flexibility in how they can invest
# Relaxing the restriction that requires cases under the
Trustee Act to be heard exclusively by the High Court and
allowing the District Court to hear them also.
- Adam Bennett, New Zealand Herald