As outlined above, it is vital that you understand what your responsibilities are as a Trustee. Some of these duties might surprise you, particularly the fact that Trustees decisions need to be unanimous (unless your Trust Deed says otherwise), that you must act in the interest of all beneficiaries, and that you need to understand the Trust Deed.
If you want to continue operating your Trust and you are going to be a Trustee, we strongly recommend that you learn more about your responsibilities, maybe attend a course run by a legal firm on how to fulfil these obligations and ensure that all your fellow Trustees understand their obligations.
Vicki Ammundsen is a leading legal practitioner in the field of Trust law. She has noted that there are some important changes to Trust Law in the Bill. We have outlined her comments below:
The Trusts Bill comprises 168 sections and 5 schedules.
- Where the trust has a sole trustee, that trustee cannot be the sole beneficiary (clause 14).
- When a trust expires, the trust property must be distributed in accordance with the terms of the trust, and where that is not possible, to the surviving beneficiaries in equal shares
- The Bill abolishes the Perpetuities Act 1964 and provides for a maximum duration of 125 years. (clause 16).
- Part 3 provides a comprehensive list of mandatory and default trustee duties and places new obligations on advisers who modify or exclude default duties. (clause 21).
- The Trusts Bill provides that the terms of a trust must not limit or exclude a trustee’s liability for any breach of trust arising from the trustee’s dishonesty, wilful misconduct, or gross negligence. (clause 37).
- There will be a presumption that trustees mustmake available to every beneficiary or representative of a beneficiary basic trust information.
- The basic trust information is—
- the fact that a person is a beneficiary of the trust
- the name and contact details of the trustee
- 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 or trust information.
Mandatory Duties which (a) must be performed by the trustee; and (b) may not be excluded or modified by the terms of the trust are:
22 Duty to know terms of trust
23 Duty to act in accordance with terms of trust
24 Duty to act honestly and in good faith
25 Duty to act for benefit of beneficiaries or to further permitted purpose of trust – A trustee must hold or deal with trust property, and otherwise act, for the benefit of the beneficiaries or to further the permitted purpose of the trust.
26 Duty to exercise powers for proper purpose
Default Duties – that must be performed by the trustee unless modified or excluded by the terms of the trust, expressly or by implication are:
27 General duty of care.
28 Duty to invest prudently
29 Duty not to exercise power for own benefit
30 Duty to consider exercise of power
31 Duty not to bind or commit trustees to future exercise of discretion
32 Duty to avoid conflict of interest
33 Duty of impartiality
34 Duty not to profit
35 Duty to act for no reward
36 Duty to act unanimously
By Carey Church