LawBrief October 2020

Gault Mitchell is on the move…temporarily

After more than 20 years in our current premises, from mid-November 2020, Gault Mitchell Law will be temporarily relocating to Level 2, 318 Lambton Quay (also known as the Westpac Building). The move allows for earthquake strengthening work to the building at 22 The Terrace, as well as the refurbishment of our office space on Level 4.

One of the attractions of 318 Lambton Quay is the available support of the Urban Hub team and access to their meeting rooms and other shared spaces. A café serving barista-made coffee and a fully licenced bar are included. 

We are in the process of arranging car-park access, and we will post those details on our website in due course –

Our contact details will remain unchanged throughout the time of our relocation, so you can still call or email us in the usual way. 

We hope to be back at 22 The Terrace in early-to-mid 2021, and we look forward to showing you around our refurbished premises then. In the meantime, we are excited about the move to 318 Lambton Quay and meeting up with you there.

Costas Matsis
Managing Partner

Welcome to Tamsin Black – Law Clerk

Gault Mitchell would like to welcome Tamsin Black who joined our team as a Law Clerk at the start of October.

Tamsin grew up in Wellington and studied at Victoria University, where she completed a Bachelor of Laws (Hons) and a Bachelor of Commerce majoring in Economics and minoring in German. She is now studying towards admission to the bar. Tamsin is excited to be at Gault Mitchell and to finally be practising law. She will primarily be working in property, trusts and family law.

Outside of work, Tamsin enjoys baking, yoga, and spending time with friends and family. Pre Covid-19, she enjoyed travelling and is excited to see more of the world when it is safe to travel again.

Lawyers in the Family Court

The rights of parents to be represented by lawyers at all stages of the Care of Children Act proceedings, for parenting or guardianship orders, has been restored.

Restrictions on the use of lawyers were put in place in April 2014 as part of the introduction of the Family Justice System. The aim was to help parents, guardians and caregivers resolve such disputes themselves, rather than through the court system, thereby reducing costs, delays, and conflict. 

However, in many instances, parents felt overwhelmed and unsupported trying to resolve difficult issues to do with their children without legal assistance. This led to more stress and anxiety for parents. It also led to significant delays in progressing these types of proceedings.

Under the new changes that took effect in July 2020, lawyers can:

  • Draft the court documents required to initiate or defend applications for parenting orders and guardianship orders
  • File those documents in the appropriate court on your behalf
  • Go to Court with you

We are available to help you with all these requirements.  We can also advise you on mediation and other settlement processes and on what to expect from the court process if you can’t reach a settlement.

If you need advice or assistance with any of these matters, please contact us today.

Changes to Trust Law – Reviewing your Trust

On 31 January 2021, the new Trusts Act 2019 will come into force. The Act clarifies and updates existing Trust law to make it easier for trustees to understand their obligations.

The new Act also gives beneficiaries greater access to information about the trust so that they can hold trustees accountable for their decisions.

For those with assets in a Family Trust, now is the time to consider whether that trust is still fit for purpose, or whether there are changes that should be made to ensure it complies with the upcoming changes, functions well and does what it was set up to do.

What are some of the reasons for having a Family Trust?

Despite what some may consider their increasing complexity, there are still good reasons for having a Family Trust. A Family Trust primarily protects assets from risk and provides flexibility for people who may have dependents with different needs.

Creditor protection

Despite the limited liability structure of a company, there are still circumstances where a director’s personal assets can be exposed to claims. Directors of a company may wish to protect their personal assets from creditors who could pursue them for perceived breaches of their directors’ duties under the Companies Act and other associated legislation. For those that operate as sole traders or are otherwise in business on their own account, the trust structure provides important protection against a wider array of claims from creditors or third parties.

Protecting dependents

A caregiver may not want their child to have immediate and unfettered access to a large sum of money and may want to place additional restrictions on when that child can access certain support. Family Trusts can be a useful tool for protecting dependents after a caregiver’s death or during any period where the caregiver could not otherwise provide financial or other support.

Succession planning

Parents who have already provided for their own children may wish to provide ongoing support to future family members or give greater support to one or more of their children or grandchildren who face specific challenges.

Relationship property

In conjunction with a robust Relationship Property Agreement, a Family Trust can be a useful way of keeping assets clearly separate and protected in the event of a separation, divorce, or death of one or both partners in a relationship.

Other reasons

If you established a Family Trust many years ago and the original purpose of that trust no longer exists, there may still be good reasons for keeping the trust going.

Parents who may have established their own Family Trust for creditor protection reasons may find that the trust offers their beneficiary adult children a measure of protection from relationship property claims on separation or divorce. There may also be some limited protection available for assets transferred to a trust a long time ago if the settlors of the trust require the Residential Care Subsidy although, as the subsidy application criteria are strict, and eligibility carefully scrutinized, the availability of this benefit is also rapidly diminishing.

What are the changes to Trust law and how do they affect me?

For the most part, the rules that come into force on 31 January 2021 do not depart significantly from the previous Trust law. The main change is simply that all the existing rules and expectations are now organised in one place.

The most important aspects of the new Trusts Act are:

  • Clarified obligations on trustees to disclose certain (limited) information about the Trust to beneficiaries
  • More straightforward powers for the replacement of trustees in certain circumstances
  • Clarification of trustees’ legal duties
  • A longer maximum duration period for trusts

Disclosure to beneficiaries

From 31 January 2021, there is a presumption that trustees will regularly consider whether to disclose certain ‘basic information’ about the Trust to each beneficiary. That ‘basic information’ is limited and specifically refers to:

(a)   The fact that the person is a beneficiary of the Trust

(b)   The name and contact details of the trustees

(c)   Any changes to the trustees of the Trust

(d)   The right of the beneficiary to request a copy of the Trust Deed or the trust information.

Trustees are not legally obliged to provide this information (or any other Trust information) to all beneficiaries, or to any beneficiary just because that beneficiary asks for it. Trustees are only required to consider whether to do so on a reasonably regular basis and record their decision in writing.

For many Family Trusts, this will not require any changes to the ongoing management or existence of the Trust structure. If key beneficiaries are already aware of the Trust and understand and accept what it was set up to do, these new statutory provisions may already be complied with.

However, there is sometimes good reason not to inform one or more beneficiaries about the existence of a Family Trust. The new Trusts Act reflects this and lists acceptable reasons why trustees may choose not to disclose certain Trust information to one or more beneficiaries. This includes the Settlor’s original expectations of which beneficiaries would benefit, and how.

Ultimately, if trustees decide that no beneficiary should receive basic information about the Trust, those trustees may be required to apply to the Court for directions as to whether that decision is reasonable and what alternative means are available for holding the trustees to account.

A beneficiary who wants to know more about a trust they think they may be involved in should approach the trustees in the first instance to discuss their request. If a beneficiary requests Trust information that is not provided, that beneficiary may apply to the High Court to try to gain access to the information – although there is no guarantee that the beneficiary’s application would be successful.   

Trustee replacement

The new Act updates and simplifies the way that trustees can be removed or replaced, especially in certain difficult circumstances.

As the law currently stands, a trustee who loses mental capacity is unable to sign the necessary legal documents allowing the transfer of residential or other land, preventing the Trust from selling assets — at what may be a crucial time for the family. Trustees must apply to the High Court for the removal of that trustee, which can be an expensive and time-consuming exercise.

From 31 January 2021, a trustee who loses mental capacity will simply be removed by the person who holds the power of appointment or removal of trustees. If there is no-one who holds that power, then the person’s Property Attorney or court-appointed Property Manager can remove them.

This is a welcome solution to what was an expensive legal anomaly.

Trustee duties

Trustees have always had to comply with legal duties governing their role and responsibilities. Those duties are for the protection of the beneficiaries and to prevent trustees from using trust funds irresponsibly or dishonestly.

The new Act does not change those legal duties – it just clarifies them and draws them into one place as ‘mandatory duties’ and ‘default duties.’

Trustees will continue to be obliged to carry out mandatory duties to:

  • know the terms of the Trust.
  • act in accordance with the terms of the Trust.
  • act honestly and in good faith.
  • act for the benefit of beneficiaries or for permitted purposes.
  • exercise powers for a proper purpose.

 These mandatory duties cannot be changed or removed.

 Trustees also continue to have additional default duties, including:

  • to invest and manage trust funds prudently
  • to exercise a reasonable degree of skill and care in carrying out their responsibilities
  • to act impartially
  • not to profit from their role as trustee
  • to act unanimously

These default duties are not exhaustive and can to a certain extent, be modified in the Trust Deed.

If a Family Trust was established many years ago, that Trust Deed may no longer cover all aspects of the legal duties and proper management of a trust going forward. Some much older Trust Deeds prepared outside of this Firm may not contain the necessary powers and flexibility for trustees to make appropriate decisions on behalf of the beneficiaries.

The clarified trustee duties are a useful reminder that a Trust Deed should be reviewed on a reasonably regular basis and, where necessary, variations to that Deed should be prepared to enable the trust to function well.

Maximum duration

The lifetime of a Family Trust is currently limited to 80 years. At the end of that 80-year period, the trust must be distributed to the Final Beneficiaries provided for in the Trust Deed.

From 31 January 2021, the maximum lifetime of a trust will be extended to 125 years. Trustees of existing Family Trusts should review the final beneficiaries specified in their Trust Deed and consider whether changes can or should be made considering this extended period.

The new 125-year maximum duration enables a settlor to potentially benefit more remote future family members for a longer time, provided the future trustees of the trust do not decide to wind the trust up earlier.

There is no legal obligation on trustees to wait until the expiry of the current 80-year maximum duration period, nor will there be any obligation to wait out the 125-year maximum duration period. Typically, trustees have the power to at any time nominate certain beneficiaries to receive some or all the trust fund well in advance of the 80-year or 125-year expiry.

We do not anticipate any significant adjustment will be required to the majority of Family Trusts to accommodate the longer maximum duration, however, a simple variation to the existing Trust Deed is an option if the trustees choose to do so.


Family Trusts continue to be a useful vehicle for asset protection and for estate and succession planning.

The new Trusts Act may create an additional layer of administrative complexity for some trusts. However, provided trustees are willing and able to review matters relating to the trust regularly and give careful thought to the future of the trust and its beneficiaries, we anticipate little will change.

If the reasons for setting up your Family Trust no longer exist, or if you are uncertain about the purpose of the Trust or have other questions or concerns, please contact us to discuss the way forward.