• The trustee has a number of duties and obligations imposed on them by law. As a trustee is responsible for someone else's property and income these duties reflect high expectations of:
  • fairness;
  • prudence; and
  • propriety.

• Beneficiaries can seek remedies through the courts to prevent a potential breach of duty by a trustee or for a breach that has already occurred. It is important that trustees fully understand how to fulfil their duties according to law to avoid action being brought against them.
• There are three main sources of a trustee's duties:
  • the terms and conditions of the trust deed;
  • legislation; and
  • equitable principles such as 'fiduciary' obligations.

·         The terms and conditions of the trust deed set out:

o   rules for the management and investment of trust assets;

o   how to distribute trust income and other property;

o   when the trust is to end; and

o   any other important matters.

·         It is essential that the trustee is familiar with the terms and conditions of the trust deed. A trustee must obey every provision of the trust deed and protect and defend the rights and entitlements of the beneficiaries. A lawyer can assist in interpreting the terms of a trust deed and providing guidance on how to carry out trustee duties according to law.

·         Legislation in each state and territory sets out additional obligations for trustees. In Victoria this legislation is the Trustee Act 1958. Equivalent legislation exists in other states and territories.

·         A trustee is a 'fiduciary' and is bound by various fiduciary obligations such as:

o   the trustee must act in good faith and in the best interests of the beneficiaries;

o   the trustee must not obtain unauthorised profits or otherwise benefit from their position as trustee without the informed consent of the beneficiaries;

o   the trustee must not put themselves in a position where there is or might be a real possibility of conflict between their own interests and those of the beneficiaries;

o   the trustee must act personally which means that subject to some exceptions the trustee must not delegate their duties to another person; and

o   the trustee must keep accounts and inform the beneficiaries as to the state of the trust fund.

• If you are a trustee it is important that you seek appropriate legal advice to avoid any action being brought against you for breach of your duties as a trustee. This is particularly so when managing complex high value trusts. Our free Find a Lawyer directory may help you get in touch with an experienced equity and trusts lawyer near you.