The position of a trustee of a trust is an important position which is governed by State and Commonwealth Legislation and Case Law.
Trustees of a family trust have many duties. Broadly speaking, these include the trustee:
• Acting in good faith;
• Acting personally;
• Acting unanimously where multiple trustees are involved;
• Not being dictated to by others such as beneficiaries;
• Having a duty to consider how distributions should be made and to whom; and
• Having a duty to avoid fettering of any discretion they have.
So can a trustee appoint someone else to perform the trustee’s duties, like an attorney? It is not uncommon to see where a Trustee has executed a power of attorney in favour of third party.
The law is that a trustee cannot delegate these duties unless permitted by the Trust Deed, legislation or a Court Order.
The office of trustee is viewed by the Courts as one of trust and personal confidence.
A trustee must not execute a Power of Attorney to a third party granting the attorney, general or wide powers relating to the authority of the trustee. A trustee who does this will be acting outside the scope of the trust and the law and any transaction entered into utilising such Power of Attorney is likely to be unenforceable.
Section 10 of the NSW Powers of Attorney Act states that a prescribed Power of Attorney does not confer authority to exercise any function as a trustee.
Accordingly, a trustee cannot delegate their powers and authorities.
There is a statutory exception with respect to trustees of a self-managed super fund.
Trusts, trust deeds, trustee duties and the law surrounding them are complex.
At Everingham Solomons, we have the expertise to assist you because Helping You is Our Business.
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