Responsibilities and Liabilities of Trustees: A Guide

A trustee is a person or company appointed to manage assets (known as a trust) on behalf of another party (known as the beneficiary).

Trustees have legal duties to act in good faith, in the best interest of the trust, and in accordance with the terms of the trust documents.   

Establishing a trust and appointing a trustee may assist with asset protection concerns, tax planning, providing for children or those with disabilities, and other charitable causes.

The Responsibilities of Trustees

The obligations of a trustee involve a legal and fiduciary duty. A trustee’s responsibilities are outlined in trust’s documents (the trust deed) and under law.

Trustee duties and trustee legal responsibilities include:

• To act as a fiduciary. Fiduciary duty dictates that one must act in a means that benefits someone else, the beneficiary, rather than themselves. Trustees must uphold a high standard by protecting the assets of the trust.  
• To preserve trust property:  A duty to preserve and safeguard the trust property as set out in the trust documents.
• To act in good faith. To maintain honestly, sincerity, and to retain fidelity to the beneficiaries and the trust.
• To keep records of accounts and supply relevant information to a beneficiary upon request.
• Non-Delegation. The duty to act personally. A trustee generally holds no right to delegate their responsibilities to a third party. The trust deed may contain some exemptions to this general rule e.g. appointing lawyers and accountants.  
• To communicate with beneficiaries. A trustee must provide certain information as requested such as statements, account information, and tax reports.
• To not be deceitful. A trustee must not accept any personal monetary gain and must account for profits to the trust and beneficiaries.

Please note that this list is extensive but not exclusive. A trustee’s roles and responsibilities are set out in the trust’s governing documents e.g. a trust deed and at law.

Breaches of Trust 

A breach of trust denotes the failure of a trustee to conduct their duties and responsibilities to the standard instructed by the trust deed and at law. Trustees are obligated to act in good faith and in the best interest of the trust and beneficiaries, never prioritising personal gain.

Liabilities of trustees include:

• Exploiting funds from the trust for personal gain.
• Accepting bonuses or commissions from third parties.
• Engaging with a competitor business.
• Becoming compromised by a conflict of interests.

In the case that a trustee fails to meet the standard of care required under the trust documents or under law, they may be held liable for any incurred losses. Failure to fulfill duties to the trust may entitle effected parties to apply to the Court for an Order compelling performance or an injunction.   

A trustee may be relieved from liability if a Court finds that the trustee has acted honestly, justly, and reasonably in discharging their duties under the trust. 

To avoid potential liability for losses, before accepting the responsibility for another’s assets it is important that you practice caution and familiarise yourself with the responsibilities and liabilities of a trustee.

If you require further information in relation to your particular trust, we recommend contacting our reliable team of trust lawyers at wilson/ryan/grose. 

How Can We Help?

If you are a trustee and are unable to meet your obligations or if you are a beneficiary and have concerns with a trustee’s actions, please contact wilson/ryan/grose. At wilson/ryan/grose, we have over 125 years of experience and leadership in law. Our offices are located in Townsville and on the Sunshine Coast, where we have shaped our local communities and sustained client relationships with trust, mutual respect, and communication. If you require more information on the responsibilities and liabilities of trustees or would like some clarity surrounding your situation, give our law firm a call on 1800 974 529.