Trusts Act 2019
Posted: 9 October 2019
The new Trusts Act 2019 will come into effect on 30 January 2021. Much of the Act updates or restates lawthat exists already, either in statute or in case law. There are, however, a number of changes about which trustees and settlors should be aware.The Act contains ‘mandatory’ and ‘default’ duties for trustees.
Mandatory duties
Mandatory duties cannot be modified or excluded by the trust deed so all trustees will be required to abide by
these duties. These duties are to:
- Know the terms of the trust
- Act in accordance with the terms of the trust
- Act honestly and in good faith
- Deal with the trust property and to act for the benefit of the beneficiaries in accordance with the terms of the trust deed
- Exercise the trustees’ powers for a proper purpose.
Default duties
Default duties are obligations by which trustees must abide — unless the settlor decides otherwise when the
trust is established. These default duties include a general duty of care, a requirement to invest prudently, a
prohibition on trustees acting in their own interests, a duty to consider the exercise of trustees’ powers, a
duty not to fetter a trustee’s discretion, a duty to act unanimously and duties not to profit from the
trusteeship or benefit from the exercise of trustee discretions.
Default duties can be modified or excluded if this is how the settlor wants to set up a trust. For example, a settlor might want the trustees to be able to purchase depreciating assets such as retirement village units. The settlor may want trustees to be able to act with a majority in favour of any particular decision, or it may be desirable to allow a trustee (who is also a beneficiary) to take part in decisions despite a conflict of
interest.
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