The new Trusts Act – What does it mean for registered charities?

Published 29 January 2021

[ 5 minutes to read] 

The Trusts Act 2019 is in effect from 30 January 2021 and if your charity is a trust then the Act applies to you. 

If you are not sure whether you are a trust, search the Charities Register(external link) and check your rules document. If it states you are a trust, then the Act applies. It is important trustees are aware of the Act and understand how it may impact on your activities and decisions. [1]

The changes to the Act aim to make it easier to understand your duties as a trustee. In this blog we explain the changes that affect charitable trusts, including:

  • what you need to know about the Act
  • what you need to do now.

What you need to know

  • the Act aims to improve the governance of trusts, so if your rules don’t deal with a particular issue, the Act may apply
  • the Act clarifies your duties as a trustee
  • some parts of the Act apply all the time, and some can be changed by your rules document.

What duties do trustees of charities have?

The Act sets out the duties of all trustees. These guide what is required of you as a trustee, particularly in making decisions. Duties already existed in the law defined in the courts, but are now included in the Act. The Act separates trustee duties into two types – either ‘mandatory’ or ‘default’. 

Mandatory duties: to know the terms of the trust, to act in accordance with the terms of the trust, act honestly and in good faith, exercise your powers for a proper purpose, further the purpose of the trust.

Mandatory duties can’t be changed by the terms of the trust. The most important mandatory duty is to further your charitable purpose – everything you do as a trustee should be directed to achieve your charitable purpose.

Defult duties: general duty of care, not to profit, to act unanimously, impartiality, to consider exercise of power.

Default duties include the ones above and must be performed by the trustee unless they are expressly changed by the words of your rules document. For a full list see the Ministry of Justice website(external link).

What else is changing?

The Act also lays out other rules about how trusts must be managed. Similar to the mandatory and default duties, some can be modified by changing the trust rules and some cannot. See the key provisions below (this is not an exhaustive list):

 Rules that can't be changed Rules that can be changed
All trustees must keep a copy of trust rules and amendments General trustee powers, including power to invest 
One trustee must also keep other key documents A trustee’s power to appoint people to carry out the purposes of the trust – with certain limitations
Trust deeds can’t prevent a trustee being liable for any breach of trust arising from dishonesty, wilful misconduct or gross negligence A trust’s powers to remove and appoint trustees, and what happens on a trustee’s death


We recommend you review these duties and consider how they relate to you.

What you need to do now

Know your trust rules and keep a copy of key documents

The duties show how important it is to read and know your trust’s rules, and the Act reflects this by requiring all trustees to hold a copy of the rules and any variations to them. There are other documents that trustees need to keep(external link) (e.g. records of decisions, contracts, financial statements), but these can be held by one trustee on behalf of all trustees. It’s important all trustees have access to these records and we recommend they are kept electronically.

Consider whether you need to change your rules

The Act will potentially change how your trust works. You may want to change your rules to make it clear exactly what your duties now are. Focus on the following, as they are some of the key areas the Act addresses:

  • How are decisions made? The Act says that all decisions must be made by unanimous consensus (agreement by all). If you want to be able to change this to make majority decisions, your rules will need to say so specifically.
  • Do you appoint others to act on your behalf? Most trusts will employ people (or have other volunteers involved), but there are certain things you cannot delegate under the Act (e.g. appointing new trustees).
  • Do you pay your trustees? A default duty is that the trustee must not take any reward for acting as a trustee. If you pay trustees for their time, you should have a clause in your rules saying this.
  • How do you appoint and retire trustees? Although the Act now makes it easier to appoint and retire trustees without the direction of the Court, make sure your rules are adaptable and fit the needs of your trust. If your trust is incorporated as a board under the Charitable Trusts Act, there is a template for appointing and retiring trustees(external link) you can use.
  • What do your rules say about making investments for your trust? The Act provides a useful list of matters to consider when making investments(external link), including thinking about the charitable purpose of the trust. Most of these can be amended – but the charitable purpose of your trust will always need to be considered, as that is a default duty.

If your trust carries out business activities or manages complex activities and you have concerns about how the Act will impact on your operations, we strongly suggest you seek independent legal advice.

Changing your rules

If you decide to update your rules because of the Act, you’ll need to check if your rules outline how they can be changed. Some older trusts can’t be changed so easily – if your rules don’t provide for how they can be changed, we recommend you seek legal advice. For most trusts, you can make a change with a "deed of variation" and changes can be processed very quickly. 

This is a great opportunity to review your current rules, and make sure they are clear and comprehensive. If you are going to make changes, we recommend uploading a complete copy of the most current version of your rules rather than updating the Charities Register with many “variations”. For information on how to update your rules with Charities Services visit our webpage: Update charity details(external link).

You can find a simple template for a trust deed on the CommunityNet Aotearoa website(external link).

If you are registered under the Charitable Trusts Act 1957, the Companies Office has more information on making changes to a trust or a board's rules(external link).

Where to go for more information

The Ministry of Justice is responsible for the Trusts Act 2019, and you can find more information about Trust law reform(external link) on their website. 

[1] You can read more about the different structures your charity can have in a previous blog: What to be or not to be - Incorporated Societies and Charitable Trusts(external link).

Picture of a man in a cricket uniform. Text: Adrian is a senior analyst in the regulatory team, and has been working under the Charities Act almost since enactment. Adrian has worked as a solicitor and has long experience as a public servant, including working extensively in Te Ao Maori with Te Puni Kokiri. Outside of Charities Services Adrian volunteers in governance for two charities, advises other charities and groups in Porirua, plays cricket terribly and tries keeping up with his beautiful three year old mokopuna.

Thanks also to Steven Moe of Parry Field Lawyers and Juliet Chevalier-Watts of the University of Waikato for their input into this blog.