Trusts
11. The Role of the Trustee
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 23 Sep 2015
- The trustee can be an individual, a group of individuals or a company.
- Because the trustee is legally responsible for the proper management of the trust and can be personally sued for activities undertaken on behalf of the trust (or business) your lawyer will often advise that the trustee should be a special purpose company which you control. This is referred to as a 'corporate trustee'.
- The primary income earner and business operator may then hold the position of director in the trustee company allowing you to:
- maintain control over the day to day management of the business;
- receive the benefits of the trust structure; and
- benefit from the asset protection of having a corporate trustee.
- Ideally the company would not have significant assets of its own which might be exposed to the creditors of the trust.
- However even corporate trustees do not provide you with total protection. A director of a trustee company can still be held personally liable in situations where for example:
- taxation offences have been committed;
- there are unpaid taxes;
- directors give personal guarantees; or
- debts are taken on which can't be repaid.
- In family trusts that carry on a relatively low-risk business and have a low risk of being litigated against it may not be advisable to appoint a corporate trustee due to the added cost and complexity.
- It is important that you consult a lawyer who can advise you on the most appropriate way to set up your trust for your current and future business needs.
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