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Trusts Act 2019

Appointment and discharge of trustees - Divesting and vesting of trust property

116: Divesting and vesting of trust property on change of trustees

You could also call this:

"What happens to trust property when trustees change"

Illustration for Trusts Act 2019

When a new trustee is appointed or an old one retires or is removed, this section applies to you. You need to know what happens to the trust property in this situation. The trust property is transferred to the new trustees without any extra paperwork.

If you are a trustee, the document that appoints, removes, or discharges you will take the trust property away from the old trustees and give it to the new ones. This means the new trustees will own the property together, but they will still be responsible for any debts or liabilities attached to it.

You should be aware that this section does not change any rights a trustee may have to keep some of the trust property. The rules in this section are also subject to section 117. If a court orders a change in trustees, this can be used as a document to transfer the trust property, and it can also be used for section 89 of the Land Transfer Act 2017, unless the court says otherwise.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7383034.

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Part 5Appointment and discharge of trustees
Divesting and vesting of trust property

116Divesting and vesting of trust property on change of trustees

  1. This section applies if—

  2. a new trustee of a trust is appointed; or
    1. a trustee of a trust retires or is removed.

      1. The execution of the document of appointment, removal, or discharge—

      2. divests the trust property from the persons who were the trustees immediately before the document was executed; and
        1. vests the property in the persons who become and are the trustees as joint tenants without any conveyance, transfer, or assignment (but subject to any liabilities attaching to the property).

          1. This section does not affect any lien to which a trustee may otherwise be entitled.

          2. Subsection (2) is subject to section 117.

          3. In this section and in section 117, a court order appointing a trustee or removing a trustee without replacement—

          4. is a document of appointment, removal, or discharge (unless the court otherwise orders); and
            1. is, for the purposes of section 89 of the Land Transfer Act 2017, a vesting order vesting the trust property in the persons who become and are the trustees (unless the court otherwise orders).