The Might of the Trustee: What is a trustee?

The Might of the Trustee: What is a trustee?

Hello again, and welcome to episode 1 of The Might of the Trustee!

What is a trustee? What do they do? Who can be the trustee? More importantly, who should be the trustee? What are a trustee's powers and what does a trustee need to be careful of? In this series we delve into all the nitty gritty details about the mighty Trustee.


So, what is a trustee?

A trustee is the person that has control of administering the property in a trust. The trustee must administer trust property for the benefit of the trust's beneficiaries. A trustee's power is mighty, so choice of trustee is a critical decision!

A trustee can:

  • be a natural person (over 18 years and of legal capacity) or a company (known as a trust company);
  • be a sole trustee or multiple, joint trustees (if the trustee is an individual);
  • have one person or multiple people as directors of the trust company.


That's who can be the trustee - but who should be the trustee?

Remember, the trustee has complete control of the property in the trust. The trustee is legally obliged to administer the property for the benefit of the beneficiaries; but as Frank Underwood (House of Cards) says, "proximity to power deludes some", and a trustee could be tempted to benefit themself. To avoid this you may want to have two individual trustees - two heads might be better than one.

Allawdocs recommends appointing a trust company, as it has numerous advantages. In the coming weeks we will chat about trustee powers and duties. A trust company is often more suited to accepting those powers and duties - the company structure quarantining the natural persons controlling the company from liabilities that may arise. Further, appointing a trust company can avoid some of the problems associated with transferring trust assets on the death of the individual trustee to the new trustee.


Once a trustee is selected, how are they appointed?

Successful appointment of a trustee requires:

  • authorisation to act, which occurs when the settlor names the trustee in the trust deed or when the trustee is otherwise validly appointed (see below);
  • acceptance of the role, which is generally indicated in writing or by participation in the trust. A person who wishes to decline the role of trustee must indicate as such - usually in writing; and
  • the trust property to be vested in the trustee.

Allawdocs trust deeds empower a person, known as the appointor, to appoint additional or future trustees. The appointment will be valid provided the person empowered acts in accordance with their power.

A trustee may be appointed by a court in certain circumstances.


Can a trustee retire or be removed?

A trustee (usually an individual trustee) can retire pursuant to the trust deed or the relevant state legislation. In most states a trustee's retirement must be:

  • communicated in writing; and
  • consented to (for the benefit of the beneficiaries) by all continuing trustees and the person empowered to appoint new trustees.

Trustee legislation in all Australian states requires there to be two or more continuing trustees after retirement of a trustee, unless the trust originally had only one trustee or the trust deed removes this limitation.

It is also possible for a trustee to be removed:

  • by the court pursuant to the State trustees legislation, if the trustee is unfit or incapable of acting, or refuses to act;
  • by the court pursuant to its inherent jurisdiction in certain circumstances (e.g. misconduct), if requested by a co-trustee or beneficiary; 
  • under specific provisions of the trust instrument.


All in all

As you can see, choosing a trustee, appointing and removing trustees takes a lot of thought and effort - as it should! Allawdocs is supported by GV Lawyers, who can provide advice relevant to your particular circumstances if required. We'll be back with our next instalment to chat about just how Mighty the powers of the trustee are!



About us

Allawdocs provides fast, quality online legal documents for accountants, financial planners, lawyers, and business owners around Australia, including company formations, trust deeds, and SMSF documents. With the legal support of GV Lawyers, clients can receive free legal advice relating to their Allawdocs document.

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Blog provided by GV Lawyers.


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