It was often joked that Hawke's Bay had more trusts per capita than any other region of the country, perhaps due to the agricultural and horticultural background of the region, but that's never been proven, because there's no central database.
Contrary to popular belief, trusts are not new - they're as old as the Christian faith. The Romans were the first to use trusts and our Anglo-Saxon culture saw the adoption of trusts during the 10th century Crusades. They were going on a long expedition and wanted their wives, families and kinsmen to be looked after.
But it's important to note that trusts were used by people who had substantial means, the plutocracy or ruling class.
In New Zealand today, we've boiled trusts down to a much smaller scale, not always an economic one. Many of those involved with trusts have started to question the benefits when weighed against the costs and responsibilities.
In a 2009 review, the Law Commission sounded a warning that the growth in the number of trusts had led to trust law coming before the courts more frequently. More and more non-experts were playing roles within trusts without being aware of their obligations. The proposed legislation changes will only exacerbate this further.
The proposed law changes will put some serious responsibility on those non-experts who are carrying out roles on trusts. All trustees will be held to the same standards of expectation as an expert would.
Some of the proposed changes to the law include setting up a disputes tribunal service, so beneficiaries of trusts can hold trustees accountable, and a public record of trusts, including trustees and beneficiaries. Currently, many people will not necessarily know that they are the beneficiary of a trust because they were "unborn beneficiaries" at the time the trust was created.
Next week, I'll talk about what the ramifications of these law changes will be, particularly for trustees, and what people need to do to get their house in order in anticipation of the changes.
• Nick Stewart is an authorised financial adviser and executive director of Stewart Financial Group. Stewart Group is a Hawke's Bay-owned and operated independent financial planning firm based in Hastings. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 878 961.