Law Commission releases paper: Powers of a Trustee

Law Commission releases paper 'The Duties, Office and Powers of a Trustee'. Fourth issues paper on the Review of the Law of Trusts

Media Release Law Commission

Thursday 30 June 2011

The role of trustees is the focus of the fourth Issues Paper in the Law Commission’s project reviewing the law of trusts in New Zealand. The Commission today releases The Duties, Office and Powers of a Trustee, which gives New Zealanders an opportunity to comment on important issues relating to the nature and day-to-day operation of trusts.

The Law Commission has been tasked with reviewing the Trustee Act 1956 and law of trusts generally. It is releasing a series of Issues Papers on different aspects of trusts law. Following this information-gathering and consultation phase of the project, the Commission will present its conclusions and recommendations in its final report.

This paper raises a number of issues fundamental to the operation of trusts, with a core focus on the duties that trustees owe to beneficiaries.

Commissioner George Tanner QC said that “the obligations owed in the trustee/beneficiary relationship are central to the concept of a trust, yet many trustees may not be aware of what the law requires of them.”

“This paper asks whether more clarity is needed regarding what the duties of trustees are. Should the duties be set out in a statute in the same way that company directors’ duties are?”

Many of the duties of trustees that exist in law can be overridden by the terms of a trust deed. This means trustees can avoid being liable for failing to properly carry out the duties.

“We want to know whether the law should go further in holding that there are certain duties that cannot be excluded by these exemption clauses. Which duties are so fundamental to what makes a trust a trust that trustees should always be liable for carrying them out? Should there be limits on what exemption clauses can do?” Mr Tanner asked.

The paper also discusses the rules relating to how trustees are appointed and removed, and whether there should be restrictions on the types of people that may become trustees.

The Commission looks at the powers that a trustee is given under the Trustee Act, such as dealing with trust property, investing, and delegating functions. It asks whether the law is effective in these areas or whether it can be modernised and improved.

The paper is now available on the Law Commission’s website at www.lawcom.govt.nz. The Commission asks a number of questions in the paper, and welcomes responses and comments by 31 August 2011.

This paper will be followed by a further Issues Paper within the next few months, which will address a variety of issues, including the jurisdiction of the courts in trust matters, options for improved disputes resolution, trading trusts and the possibility of introducing a register for trusts.

Download the full paper here (pdf)

© Scoop Media