Powers of Trustees

People become trustees to look after funds or property for other people. The most common role we see is that in Estates. When a person dies with a Will, the Executor after the administration of the Estate if there is still property to be held as trustee, then it automatically becomes the Trustee. If there is no Will and there is an Administrator appointed by the Court, once the Administrator has finished his or her role but there is still property to be held as trustee, the role of trustee takes place.

If the person does not wish to be a trustee they are not required to do so. Formal resignation however, must take place by a written document.

The Trustee has what is commonly called a fiduciary duty to beneficiaries. The duties of a trustee are governed by the New South Wales Trustee Act.

Quite often trustees have funds which are to be invested. The Trustee Act Regulation provides what might reasonably be considered as appropriate investments, Banks. A copy of the Regulation is attached.

Trustees must be impartial to all beneficiaries even if the Trustee him or herself is also a beneficiary.

Quite often parents will invest funds as trustees for children or get funds being a gift from another family member and invested as a trustee. The obligations imposed by the Trustee Act still apply.

Specific rules if Trustees are going to invest funds in Real Estate likewise, if they are going to be lent to a third party.

The most other common form of trustee we are now seeing is that of superannuation funds. The have special duties under the superannuation legislation. In particular self managed funds must be complaint with the legislation otherwise, there are significant penalties placed upon the trustee and it can make the superannuation fund liable for significant sums of money if the fund is not complaint.

The Trustee itself must also be updated on a regular basis. Most people get advice from their accountant in relation to the Trust deed.

People must be careful as to who are to be trustees of superannuation funds in particular with making provisions in Wills for people who become trustees of superannuation funds have a lot of power and if there is a discretion can have the untended consequence of the deceased person’s intention that certain beneficiaries may miss out because certain trustees of the superannuation fund decide not to make provision for other trustees.

Aired March 2011 on Radio 2RG Griffith