Changes to Trust Legislation

Trustee Duties

Previously, to locate Trustee duties we relied on lawyers, texts on trust law and case law, but now Trustee duties are formalised in legislation.  The requirements placed on Trustees are higher and there is no excuse for not knowing what is required.

The new Act separates Trustee duties into two areas as follows:

Mandatory Trustee duties:

• Duty to know the terms of the Trust;
• Duty to act in accordance with the terms of the Trust;
• Duty to act honestly and in good faith;
• Duty to act for the benefit of Beneficiaries or to further the permitted purpose of the Trust;
• Duty to exercise powers for a proper purpose.

Default Trustee duties:

• General duty of care;
• Duty to invest prudently;
• Duty not to exercise power for own benefit;
• Duty to consider exercise of power;
• Duty not to bind or commit trustees to future exercise of discretion;
• Duty to avoid conflict of interest;
• Duty to act impartially;
• Duty not to profit;
• Duty to act for no reward;
• Duty to act unanimously.

Mandatory duties apply no matter what and cannot be excluded.  Default duties can be modified or excluded by the terms of the Trust.

The list of Trustee duties is not full and final.  However, it is intended to outline the basics so that both Beneficiaries and Trustees are aware of what is expected.

Beneficiaries’ rights to information:

As a minimum, Trustees are required to provide Beneficiaries with basic Trust information, as early as possible, after the Trust has been set up.  Basic Trust information should ideally be supplied to Beneficiaries without them asking for it.

Basic Trust information is:

• The fact that the person is a Beneficiary of the Trust;
• The name and contact details of the Trustees;
• The occurrence of, and details of, each appointment, removal, and retirement of a Trustee as it occurs; and
• The right of the Beneficiary to request a copy of the terms of the Trust and Trust information.

On an ongoing basis, Beneficiaries need to be kept informed of the administration of the Trust.

Trust information is defined in the Act as meaning any information:

• Regarding the terms of the Trust, the administration of the Trust, or the Trust property; and
• That it is reasonably necessary for the Beneficiary to have to enable the Trust to be enforced; but
• Does not include reasons for Trustees’ decisions.

Other areas impacted by the Trusts Act 2019:

Under the old law, the age of majority was 20. This is the default age that a person can inherit if a specific age is not stated. Under the new Act, the age of majority is now 18. 

The new Act also extends the maximum period of a Trust from 80 years to 125. This is the default maximum lifetime of a Trust, unless a specific period is stated in the Trust deed.