As we’ve recently discussed, New Zealand’s trust laws are likely to undergo a major shake-up. Trusts that were already tricky to manage will become even trickier. Solid management of your trust will help you handle the transition, and we’re happy to talk about that with you. We’re also keen to chat about another sticky issue: what to do with an ageing trustee?
New Zealand’s population is getting older. By 2051, there will be over 1.14 million people aged 65 years and over in New Zealand. This represents an increase of 715,000, or 166% over the base population in 1996. Our ageing population means more and more trustees too will be ageing and their capacity and decision making will be affected.
Recent cases have confirmed that an Enduring Power of Attorney does not give the attorney the power to carry out any trustee duties. With this in mind, it’s important to be proactive and employ some forward thinking. With your trust, you need to discuss when trustees should retire and who will replace them. Obviously, these discussions might be a little sensitive. However, they are necessary as part of your long-term trust management.
Why are these discussions so important?
For a start, trustee decisions generally need to be unanimous so you simply can’t leave a trustee out of the decision-making process. Secondly, trustees need to have capacity when dealing with any land – such as buying or selling property. If a trustee has lost capacity, you may need to apply to the High Court to have the trustee removed. Applications to the High Court can be expensive and difficult to pay for when the trust’s only asset is the family home. If you act early, a trustee can agree to retire and can sign documents to remove themselves from the title to any trust property while they have sufficient capacity.
Here’s what you can do right now:
- Schedule a discussion about a succession plan for trustees. Use this discussion to formulate a plan so you can act with certainty if trustees need to be replaced or wish to retire.
- Consider asking a trustee to resign if there is any cause for concern about their decision-making ability.
- Check if your trust deed has a clause stating who has the power to appoint and remove trustees.
- Seek professional advice if a trustee or the person who has the power to appoint and remove trustees is elderly or if you are concerned about capacity.
- Come to us for a chat about ageing trustees. Last on the list but a good place to start!