Methods of managing Māori land: Trusts, incorporations and reservations
Māori land trusts
What is a Māori land trust?
Māori land trusts are today a popular means by which multiple owners of Māori land can manage the land. Under any trust, whether a Māori land trust or a private family trust, one or more people – the “trustees” – are the legal owners of the land or other property, but they have a special obligation to look after this property on behalf of, and for the benefit of, some other person or people, called the “beneficiaries”. With a Māori land trust, the trustees must manage the land for the benefit of all the owners of the land.
If the owners of Māori land decide to place their land into a trust, the trust needs to be formally approved and established by a “trust order” from the Māori Land Court.
Types of Māori land trusts
Te Ture Whenua Māori Act 1993, ss 212–217
There are five types of Māori land trusts specified in Te Ture Whenua Māori Act:
- Ahu whenua trust – This is the most common type of Māori land trust. It’s used to promote the use and administration of any Māori or General land – often for commercial purposes – in the interest of the beneficiaries of the trust. The beneficiaries hold shares in the trust and can pass them on to others.
- Whānau trust – A whānau trust combines the shares of a related group of owners into one; it provides a means of preserving ancestral land by preventing individual whānau members dealing with their shares separately. A whānau trust can be created to hold interests in Māori land, General land owned by Māori, and in some cases, shares in a Māori incorporation. Under a whānau trust, trustees make decisions on behalf of the whānau, who together own shares within land blocks. The beneficiaries of a whānau trust are the tīpuna/tūpuna (ancestors) named in the whānau trust order and their descendants, including children, grandchildren, great-grandchildren and so on. Beneficiaries of a whānau trust don’t hold individual shares and can’t pass on their interest to someone else.
All descendants of the relevant tīpuna/tūpuna are automatically beneficiaries of a whānau trust. The trust doesn’t need to be updated to name new descendants.
- Whenua tōpū trust – This is an iwi-based or hapū-based trust. It’s designed to allow the land to be used and managed in the interest of certain iwi or hapū. Rarely, it can also be used for receiving Crown land as part of a settlement. Beneficiaries don’t have shares, and can’t pass on their interest to someone else.
- Kaitiaki trust – This is a trust that relates solely to an individual who is a minor or who has a disability and is unable to manage their affairs. Generally the kaitiaki trustee is just one person who has legal ownership and must act in the best interests of the person who can’t otherwise manage their affairs. A kaitiaki trust over a minor ends when the person turns 20.
- Pūtea trust – This is a rarely used kind of trust that allows the landowners of small and uneconomical interests in land to pool their interests together.
Court registrars can deal with simple trust matters
Te Ture Whenua Māori Act 1993, s 235A
The Māori Land Court Registrar can take care of simple trust matters, without the need to go to court.
Registrars can decide trust matters that are “simple and uncontested”, meaning that they aren’t complicated, and no one has objected to what’s proposed. Some “simple and uncontested” situations include:
- having a whānau trust constituted to hold only the applicant’s beneficial interests or shares
- ending a kaitiaki trust because a minor has turned 20
- adding a trustee to a whānau trust.
To go through this quicker process, you apply in the usual way, and should include plenty of detail to show that your situation is simple and uncontested, and notify anyone else who is affected, or named in the application.
Setting up a Māori land trust
Te Ture Whenua Māori Act 1993, Part 12
How do we set up a Māori land trust?
The landowners will need to first hold a meeting, nominate the people they want to be the trustees of the trust, and then apply to the Māori Land Court for an order establishing the trust.
You can contact the Māori Land Court directly for support at any stage of the process of setting up a trust www.maorilandcourt.govt.nz/contact-us. You can also visit www.maorilandcourt.govt.nz/your-maori-land to access free resources and guides.
Holding a landowners’ meeting
Before a trust can be set up the owners need to have a meeting to provide all the owners with the opportunity to discuss and make decisions about the proposed trust.
Owners must be given sufficient notice that the meeting is to be held.
The meeting will need to discuss and decide:
- to set up the trust
- which blocks or shares will be included in the trust
- who will be the trustees of the trust
- the terms of a draft trust order, setting out the powers, rights and obligations of the trustees
- what the name of the trust will be (some trusts are named after a common tipuna/tupuna of the owners who are putting their shares into the trust).
The people attending the meeting should choose someone to take accurate minutes, so that all decisions made at the meeting are clearly recorded.
Does everyone have to agree?
Te Ture Whenua Māori Act 1993, ss 212–217
Different kinds of trust need to have different levels of agreement among all the owners. For example:
- when setting up a whānau trust, all owners need to agree
- when setting up an ahu whenua trust, there needs to be “no meritorious objection” from any of the owners.
Note: To avoid confusion with other trusts, you should be precise when using a tipuna/tupuna (ancestor) as a trust name.
Who can apply to set up a trust?
The application can be made by any of the owners of the land or by someone nominated for this at the owners’ meeting.
How do we apply to set up the trust?
Māori Land Court Rules 2011, rules 12.1–12.6
The application process in the Māori Land Court is explained elsewhere in this chapter (see “Applying to the Māori Land Court for an order” in this chapter).
Applications to establish a Māori land trust also need to include the following:
- a copy of the minutes of the owners’ meeting, and a list of who attended
- details of how advance notice of the meeting was given to the owners
- a schedule of the land and ownership interests to be included in the trust
- a draft trust order approved by the owners (a template for this is available from the court)
- the names of the proposed trustees and how they were selected
- the proposed trustees’ written consent to being appointed as trustees
- the grounds on which the application is made, and
- a list of any people who voted against the proposal to set up a trust.
Note: The requirements for applying for a kaitiaki trust are different from the requirements for the other types of Māori land trust.
Te Ture Whenua Māori Act 1993, ss 219, 220
The trust is established by the making of a trust order by the Māori Land Court. The trust order states the objectives of the trust, the rights and obligations of the trustees, and the rights of the beneficiaries.
A trust order – often also called a “trust deed” – is a document that sets out the rules that will govern the trust. The trustees must follow those rules.
There are some trust deed templates on the Māori Land Court website that you can customise.
Can the terms of the trust be changed?
Yes. The trust order can later be amended if necessary if the needs of the trust change. The owners will need to meet together to decide what the new terms of the trust should be, and then apply to the Māori Land Court for it to amend the original trust order.
Financial issues: Bank accounts and tax obligations
A separate bank account should be set up to receive any money from the land or interests that are part of the trust.
The trustees must register the trust with Inland Revenue and receive an IRD number. Trustees must file an IR6 income tax return for the trust each year, whether or not the trust has received money (see further below, “Trustees’ duties”). All financial records must be kept by the trustees for seven years. Inland Revenue must be notified if any trustees are changed or the trust is dissolved.
For information about Inland Revenue’s Kaitakawaenga Māori service, see “Where to go for more support” at the end of this chapter.
Note: Beneficiaries must also specify in their yearly tax returns that they have received money from a trust.
Trustees and their duties
Who can be a trustee?
Te Ture Whenua Māori Act 1993, s 222
The court takes these things into account when deciding who can be a trustee:
- their knowledge, experience, and skills
- whether the beneficiaries will accept them as a trustee.
The person can’t be appointed without agreeing to be a trustee.
Types of trustees
Te Ture Whenua Māori Act 1993, ss 223–225
There are three types of trustees for Māori land trusts. When it establishes the trust the Māori Land Court must appoint one or more “responsible trustees”, and it can also appoint one or more “custodian trustees” and one or more “advisory trustees”:
- Responsible trustees are responsible for:
- carrying out the terms of the trust order
- administering and managing the trust business
- preserving the trust assets, and
- collecting and distributing the trust income.
- Custodian trustees are responsible for:
- gathering together and holding the trust assets
- investing funds
- disposing of assets, and
- signing documents as directed by the responsible trustees.
- Advisory trustees give advice to the responsible trustees.
The powers, rights and duties of the trustees are set out in the trust order by the Māori Land Court. The trustees must also comply with Te Ture Whenua Māori Act and the Trusts Act 2019.
The trustees’ key duty is to maximise the assets and minimise the liabilities of the trust to the best of their ability.
Becoming a trustee is a serious responsibility, and the Māori Land Court has excellent resources to help you. Visit www.maorilandcourt.govt.nz/your-maori-land/ to access their free resources and guides.
Trustees’ meetings and decision-making
First meeting: Election of chair, secretary and treasurer
At the first meeting of the trustees they elect a chairperson, a secretary and a treasurer.
The secretary doesn’t have to be a trustee.
The chairperson is responsible for:
- organising meetings (together with the secretary)
- making sure that proper processes are followed and all matters are dealt with
- endorsing minutes of trustee meetings, and
- making sure that each trustee who wants to speak is a given a fair hearing.
The secretary is responsible for:
- recording, endorsing and distributing the meeting minutes
- keeping a current record of the trustees’ details and making sure the Māori Land Court has an up-to-date version of these details
- receiving and sending the trust’s correspondences, and
- keeping information in order and readily accessible for the trustees and beneficiaries.
The treasurer is responsible for keeping detailed records of the trust’s financial transactions. They should make sure that:
- the signatories to the trust’s bank account are in order
- financial information is accessible so that it can be used in the annual report
- the trustees don’t exceed their financial limits
- all records of the trust’s spending are in order
- all trust funds are accounted for
- the financial reports are presented at each meeting, and
- all information is kept in order and made available to trustees and beneficiaries.
How often do trustees have to meet?
This will depend on the business needs of the trust. However, the trustees should expect to have to meet frequently when the trust is being formed.
Notice of trustees’ meetings
Trustees should be given adequate notice of any meeting to allow them to make proper travel and business arrangements. Two to three weeks’ notice is advisable, or whatever notice period the trust order specifies.
There should be a written notice of meeting that states the purpose and agenda items for the meeting.
How do trustees make decisions?
Te Ture Whenua Māori Act 1993, s 2271
A certain number (a quorum) of trustees must be present to make any decision. Where there are three or more responsible trustees, a majority of the trustees is enough (unless the trust order sets a different quorum requirement). Once the quorum is established each attending trustee can vote. Absent trustees can vote by proxy (that is, appoint someone to vote on their behalf) if the trust order allows this. The trust order may also specify that the chairperson will have the deciding vote if voting on an issue is evenly split.
Note: Each office of the Māori Land Court has an advisory team that can provide a free, two-hour education session for trustees about their obligations.
Can trustees change the trust order?
No, only the court can change the trust order, with the support of the beneficiaries. A meeting of the beneficiaries should be held and, if the meeting agrees with the proposed changes, an application to change the trust order can be lodged with the court (for information about the application process, see “Applying to the Māori Land Court for an order” in this chapter).
Can trustees be held responsible for making wrong decisions?
Te Ture Whenua Māori Act 1993, ss 227(6)
If the beneficiaries believe the trustees have made a wrong decision, they can lodge an application with the Māori Land Court or the High Court alleging that the trustee’s improper or negligent acts caused them loss. If the court finds the trustees were at fault, they may be required to pay for any losses they caused.
A trustee who says in writing that they don’t agree with a decision won’t be held personally liable if the decision ends up causing a loss.
Can trustees be removed?
Te Ture Whenua Māori Act 1993, s 240
The court can remove trustees if they have lost the capacity to perform the role.
The court can also remove trustees if removing them would be best for the running of the trust, and if one or more of the following things is true:
- there have been repeated failures or refusals to act as a trustee
- the trustee has become an undischarged bankrupt, or
- the trustee’s behaviour or circumstances are no longer suitable.
Getting information about the trustees
How do I find out who the trustees are?
To find out who the trustees of any trust except a whānau trust are you can search the name of the block through www.maorilandonline.govt.nz. For all kinds of trusts, the management structure details on that website will list the trustees’ names. Alternatively, you can contact the Māori Land Court directly to ask for that information.
How do I find out what the trustees have been doing?
Trustees should hold regular meetings of owners where they should report on trust activities. The trust order may say how often this needs to be.
However, if you want information you can also write to the trust asking for an update.
Note: When you become an owner of land under a Māori land trust, it’s a good idea to write to the trustees to tell them your current address details.
Beneficiaries of Māori land trusts
How can I find out who the other beneficiaries are?
The names of other landowners can be found online or by contacting the court. To find out who the other beneficiaries are, you can search the name of the block through www.maorilandonline.govt.nz, or you can visit any office of the court and ask for a copy of the beneficiaries’ details. For whānau trusts, there may not be a court record, but they are usually small enough that people know each other.
Trustees must also maintain a list of beneficiaries’ contact details.
How often do trustees have to hold meetings?
Usually the trust order will set out how often trustees have to hold meetings. Meetings of beneficiaries can also be called to discuss the election of trustees, variations to the trust order, the trust’s accounts, investments, major purchases or mortgages, and ending the trust.
In addition, trustees must keep beneficiaries informed about what is happening with the trust.
How will I know if a beneficiaries meeting has been called?
The trust order may say how beneficiaries have to be notified about meetings. It’s advisable for trustees to give beneficiaries two to three weeks’ notice of the meeting, in a way that will reach them.
Is a quorum required for the meeting?
The trust order may set a quorum for beneficiary meetings – that is, a minimum number of beneficiaries attending in order for the meeting’s decisions to be valid. If the trust order doesn’t specify a quorum, the Māori Land Court will decide whether certain requirements for a quorum were met. The court may consider, among other things, whether the owners had sufficient notice and time to discuss the issues, how much support there was for those matters, and any objections made to them.
What happens if I can’t attend the beneficiaries meeting?
In that case you can appoint someone to vote on your behalf (called a “proxy vote”), if the trust order allows this. The other person must be at least 20 years old, and you must give them written authorisation to vote on your behalf.
If the trust order doesn’t allow proxy voting, you can give a person a power of attorney so that they can vote on your behalf (see the chapter “Decision making and powers of attorney”).
When will I get paid from the trust?
If there is money left over after paying for the trust accounts and expenses, the surplus may in some cases be distributed to the beneficiaries.
Note: Income to owners is paid at the discretion of the trustees by way of dividends, unless the trust order states otherwise. The trust order may include a “community purposes” clause, which will allow for distribution of trust income for purposes such as maintenance of marae, scholarships, and kaumātua grants for older owners.
Cancelling a Māori land trust or removing your shares
How is a trust brought to an end?
Te Ture Whenua Māori Act 1993, s 241
A court order is needed to end a trust. To cancel a Māori land trust a majority of the landowners must agree that the trust is no longer required. This can be agreed at a meeting of the owners, or all the people concerned can give their written consent. An application must then be made to the Māori Land Court.
Can I take my shares out of a trust?
If you are a beneficiary of one of the kinds of trusts where you hold shares, then you may be able to sell or gift your shares to someone else.
If you want to withdraw from a whānau trust, you can apply for a partial termination of the trust, to take your shares out.