Chapter 5
Trustees’ duties

Retaining information


R5 The new Trusts Act should provide that:
(1) In exercising the mandatory duties of a trustee, a current trustee is required, so far as is reasonable, to retain the following:
(a) the trust deed;  
(b) any variations made to the trust deed or terms of the trust, including variations made to the beneficiaries of the trust;  
(c) a list of all of the assets currently held as trust property and liabilities of the trust;  
(d) any records of trustee resolutions made during that trustee’s trusteeship;  
(e) any written contracts entered into during that trustee’s trusteeship;  
(f) any accounting records and financial statements prepared during that trustee’s trusteeship;  
(g) deeds of appointment and retirement of trustees;  
(h) any expression of the intention or wishes of the settlor; and  
(i) any of the above documents retained by a former trustee during that trustee’s trusteeship and passed on to the current trustee.
(2) Where there is more than one trustee, it is not necessary for every trustee to hold a copy of the documents, except for the documents in R5(1)(a) and (b). One trustee may hold the documents on behalf of the other trustees as long as the documents are available to the other trustees on request.
(3) A trustee is required, so far as is reasonable, to retain the documents for the duration of his or her trusteeship of the trust and, if the trust continues, to pass on the documents to at least one replacement or continuing trustee when he or she retires or is removed.

Retention of documents by trustees

5.38The intention of this recommendation is to make it clear to trustees that trusteeship requires the exercise of responsibility for significant records. Including a provision regarding the retention of documents by trustees was well supported by submitters. Several submitters suggested the list of documents that should be retained should expand. The list has been adjusted as a result to include documents not already covered that are of significance to the management of a trust (see draft clauses 33 to 37 below).

5.39It has also been suggested by a few submitters that the provision should place a limit on the period of time that a trustee is required to retain the documents because retention of all documents for the full duration of the trust may be unduly burdensome. Seven years and 20 years were suggested durations. However, both are potentially too short given the duration of trusts and the likely timeframe over which decisions are made. The proposal has been altered to make it clear that documents should be retained for the duration of the trust.

5.40It was noted in submissions that the proposal did not create an obligation for retiring or removed trustees to pass on documents to new trustees or for new trustees to retain them. This gap could lead to an incorrect understanding that when a trustee leaves the office the trust documents may be discarded.

5.41We were also urged to address the issue of whether one trustee can hold documents on behalf of other trustees. We consider that it is reasonable for one trustee to be able to hold the trust documents on behalf of others, although this would not be necessary. However, every trustee should hold a copy of the trust deed and any variations to it.

5.42We want to address the concern that some trustees may see this list as all the documents they will ever need to retain. We want to make the intention clear that this list represents the minimum number and type of documents that may need to be retained depending on the nature of the trust.

5.43Inland Revenue has submitted that it would be useful to include a provision indicating that trustees may have record-keeping requirements under other legislation. We have included this in the indicative draft clauses.

Letters or memoranda of wishes

5.44Letters or memoranda of wishes have been included in the list of documents that a trustee needs to retain because they are relevant documents that a trustee will usually have to consider when making decisions, particularly in relation to distribution. We recognise that the courts have found different memoranda or letters of wishes can have differing legal status depending on whether they are intended to be binding or not.179 We want to leave it open to the trustees (and the courts) to determine in the circumstances whether such a statement of the settlor’s wishes is a part of the terms of the trust and its legal or moral effect. This recommendation is not intended to alter the law in this regard.

Application to existing trustsTop

5.45These provisions should apply to all trusts including those created before the introduction of the new Act. The requirements in this recommendation should represent what trustees are already required to do. Because the retention of documents obligation is subject to a reasonableness requirement we do not envisage that this will create hardship for trustees.

179Jeff Kenny and Jared Ormsby “What’s so special about a letter of wishes and what documents should a beneficiary be entitled to see?” (paper presented to Cradle to Grave: The Interface between Property and Family Law, Auckland District Law Society, Christchurch, March 2013).