Privacy

Privacy

In June last year there was a change in privacy legislation while we were all dealing with Covid. While no one likes legislation, ignorance is not a good excuse. The (very) short version is that if you hold customer details (be it financial/ insurance/ personal/ contact details) and you have a data breach you need to notify the affected people and in some cases are required to submit information to the Commissioner. While this seems pretty simple it doesn't take much for a breach, loss of your cell phone if it’s not password protected or your internet account is hacked. A simple way to protect yourself a little more is by enabling two-factor authentication where possible (especially your email and online storage).

Trust changes

For those living under a rock, The Trust Act 2019 was enacted last year and the new rules came into force 30 January this year.  We still have clients dragging their feet in accepting they need to review the Trust  Deeds.  Despite the enthusiasm, there are a number of problem clauses we continue to encounter: 

Beneficiaries: In a lot of trust deeds, the writer of the deed has included every one possible as beneficiaries.  Under the new Act, you are required to advise all beneficiaries that they are a beneficiary of your trust. Many people do not read their trust deed and presume it is just for them and their children. However, many deeds mention stepchildren, spouses, widows, and all not for profit organisations. Because all of these people under the new rules must be advised that they are a beneficiary of your trust and potentially they may be entitled to something. It is not hard to imagine the conversation/consequences when you tell your dear Jimmy who is a grandchild and who is in a de facto relationship with the delinquent Sara who thinks she might be entitled to some of your hard-earned assets. While the answer is probably no, the t’s need to be crossed and i’s dotted to ensure your Trust is safe from attacks.

Indemnity: Most trust deeds grant the Trustees indemnity from being sued by the beneficiaries, as long as there is no willful misconduct and the Trustee had good intentions. This is particularly important if the above Jimmy is the delinquent and Sara is too smart for her own good. Unfortunately, under the Trustees Act 2019 the Deed must also include gross negligence, or else there is no indemnity. And yes the simple result of this is that the somewhat childish “I didn't know” just doesn't cut it in the eyes of the court.

Acting for own benefit: The average family Trust has the family home in it. What it doesn’t have is a clause granting the Trustee’s the right to self-benefit. Under s31 of the Act, without something to the contrary you have no rights to use the trust to benefit yourself.

The golden rule (s23) and is number one on the list of mandatory duties for ALL Trustees.  “A trustee must know the terms of the trust.” Simple, easy to understand, not easy to do, do not just nod your head and say of “I didn’t know” just doesn’t cut it. Get a Trust advisor to help hold your hand and stop you from walking into a mess.

HAVE WE GOT YOU THINKING?

Give us a call on (04) 563 6965 or email: dennis@taxman.co.nz or shawn@taxman.co.nz

Keep an eye out for  May’s article!