What Happens When Trustee Dies

In the world of legal and financial management, the role of a trustee is both pivotal and complex. A trustee, whether an individual or a company, is entrusted with the administration of a trust. This could range from superannuation funds and managed investment funds to deceased estates. In Victoria, the Trustee Act 1958 outlines the general and specific duties that a trustee must adhere to. This blog post delves into the essence of these duties, the responsibilities trustees bear, and what happens in the event of a trustee's death, among other scenarios.

The Core Duties of a Trustee

Common Law Duties

Derived from court decisions over the years, common law establishes several fundamental duties for trustees. Paramount among these is the obligation to act in the best interests of the beneficiaries. Additional duties under common law include:

• Adhering strictly to the trust's terms.
• Investing trust funds responsibly and prudently.
• Keeping trust property distinct from personal assets.
• Exercising trust powers judiciously and in a timely manner.
• Not delegating responsibilities unless explicitly permitted by the trust.
• Maintaining accurate records and accounting to beneficiaries.
• Performing duties without expecting payment, unless the trust document specifies otherwise.

Statutory Duties Under the Trustee Act 1958

Mirroring and expanding upon common law principles, the Trustee Act specifies four main duties for trustees, which are:

• Best Interest: Act in the best interest of all beneficiaries.
• Prudent Investment: Invest in non-speculative ventures.
• Impartiality: Treat all beneficiaries and classes of beneficiaries fairly.
• Seek Advice: Obtain guidance when necessary.

Investment Strategies and Trustee Powers

Trustees are tasked with the prudent investment of trust funds, guided by a set of criteria that ensures the trust's objectives and the beneficiaries' needs are met. These criteria include diversification, risk assessment, and the long-term preservation of the trust's value. Trustees also have the authority to manage trust property, including selling, mortgaging, and investing in the improvement of assets.

Appointing New or Additional Trustees

Circumstances may necessitate the replacement or addition of trustees. Reasons for such changes include death, prolonged absence from Victoria, resignation, or incapacity. The Trustee Act provides mechanisms for appointing successors, ensuring the continuity of trust administration. Notably, there's a cap on the number of trustees for land sale trusts, except in cases of charitable or public interest trusts.

Breaches of Trustee Duties

Breaches of trustee duties are taken seriously, with courts having the authority to adjudicate and remedy such situations. The consequences for a trustee can vary, taking into account the nature of the breach and the extent to which the trustee sought and followed professional advice. In cases where losses occur, courts may offset these against gains from other investments.

What Happens When a Trustee Dies?

Upon the death of a trustee, the process to appoint a new trustee is activated. This ensures the trust's administration continues without disruption. The Trustee Act outlines the procedure for such appointments, emphasising the seamless transition of responsibilities and the preservation of the trust's integrity.

Conclusion

Trustees play a critical role in managing trusts, carrying out duties that require diligence, fairness, and adherence to legal standards. Understanding these responsibilities is crucial for anyone involved in or planning to establish a trust. Should you find yourself in need of advice or representation regarding trustee duties, estate planning, or any related legal matter, Pearson Chambers Conveyancing is here to assist. With a commitment to clarity and client-focused service, we can guide you through the complexities of trust administration and ensure your interests are protected.

For expert legal support, contact us at 03 9969 2405 or email contact@pearsonchambers.com.au. Let us help you navigate the legal landscape with confidence and peace of mind.