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Trusts Act 2019

Trustees’ powers and indemnities - Powers of trustee - Other powers and rights of trustee

77: Application of insurance money for loss or damage of trust property

You could also call this:

"What happens to insurance money when trust property is lost or damaged?"

Illustration for Trusts Act 2019

If you are a trustee or a beneficiary and you receive money from an insurance contract because trust property was lost or damaged, this section applies to you. You get this money, called insurance money, because the property was insured. The insurance contract might have been arranged as part of a trust, or because of a law or an agreement.

If you are a beneficiary and you are supposed to get insurance money, you must try to get the money and then pay it to the trustee, minus any costs you had to pay to get it. If there is no trustee, you pay the money to the Crown under section 149. The trustee then holds the insurance money in trust, which means they look after it according to the same rules as the original property.

The trustee can use the insurance money to rebuild, replace, or repair the lost or damaged property. If the Crown is holding the insurance money, a court can tell them to use the money to rebuild, replace, or repair the property. This section does not change anyone's right to ask for the insurance money to be used to fix or replace the property.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7382979.

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Part 4Trustees’ powers and indemnities
Powers of trustee: Other powers and rights of trustee

77Application of insurance money for loss or damage of trust property

  1. This section applies if—

  2. a trustee or a beneficiary receives or is entitled to receive money under an insurance contract against the loss of or damage to trust property (insurance money); and
    1. the insurance contract has been arranged—
      1. under the terms of a trust; or
        1. under a statutory or other power; or
          1. in performance of an agreement, or of a statutory or other obligation; or
            1. by a life tenant who would be liable for damage or loss to the property.

            2. If a beneficiary is entitled to receive insurance money, the beneficiary must—

            3. take reasonable steps to recover and receive the money; and
              1. pay the money received less any recovery costs to the trustee or, if there is no trustee capable of giving a discharge for the money, to the Crown under section 149.

                1. The trustee must hold the insurance money in trust on the same terms and subject to the same powers and provisions as (or those corresponding as nearly as possible to) those to which the lost or damaged property is subject.

                2. The trustee may apply the insurance money (or part of it) to rebuilding, reinstating, replacing, or repairing the lost or damaged property.

                3. If the insurance money is held by the Crown, the court may direct that the money (or part of it) be applied to rebuilding, reinstating, replacing, or repairing the lost or damaged property.

                4. This section does not affect any right a person may have to require the insurance money (or part of it) to be applied to rebuilding, reinstating, replacing, or repairing the lost or damaged property.

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