Whilst the Law Commission is reviewing trust law, we've
undertaken to keep you up-to-date with its recommendations; which
is much easier than you having to read the 300+ pages of the
Core trust concepts
The Commission has recommended that new trust law will define
the requirements for the creation of an express trust and a
provision confirming no trust exists if the 'three
certainties' are not present: the settlor's intention to
create a trust, the beneficiary or beneficiaries, or permitted
purpose, and the trust property.
Trustees' duties, restrictions on the use of exemption
clauses and a default provision on the requirements of the duty to
inform beneficiaries will be clearly set out.
Further to our article in Trust eSpeaking/15 Spring
2012, the Commission makes the following recommendations:
Giving trustees the same powers in relation to trust property
that a trustee would have if the property was owned by the trustee
Allowing trustees the power to determine what is income and
capital for the purposes of distribution to allow them to invest
assets without regard to whether the return is of an income or
Providing Public Trust with a role to carry out official
administrative procedures and to provide advice, including to issue
vesting certificates, confirm the removal of an incapacitated
trustee and to oversee the retirement and replacement of sole
Confirming that a trustee's indemnity cannot be limited or
excluded by the trust deed
Requiring companies, when acting as trustees, to clearly
describe their status in all communications and contracts
Making directors of companies acting as trustees directly
liable for trust liabilities in some circumstances, and
Requiring directors of a corporate acting as a trustee to have
the same obligation to the beneficiaries as they would have had
they, and not the company, been the trustees.
Court powers and jurisdiction
The Commission has recommended:
Statutory restatement of the rule in Saunders v
Vautier3 (where all the beneficiaries of a trust
are adult and of sound mind can bring a trust to an end) regarding
revocation and variation by beneficiaries, and the power of the
court, following consideration of specified factors, to waive the
requirement for consent of any person and approve a revocation,
variation or re-settlement or any change to the scope or nature of
the trustees powers
Extend the power of the court to review the exercise of a
trustee's discretion to a decision made under a power in trusts
legislation or a trust deed
Extend the District Court's jurisdiction under new trusts
legislation to determine any proceedings where the amount claimed
or the value of the property in issue is $500,000 or less, subject
to the right of any party to give notice objecting to the
proceeding being determined in that court and to have the
proceeding transferred to the High Court, and
Extend the Family Court's jurisdiction to make any orders
and give any directions under new trusts legislation where the
orders or directions are necessary to give effect to a
determination of other proceedings properly before it.
General trust issues
On a more general note, the Commission has also proposed:
Replacing the Perpetuities Act 1964 and the rules against
perpetuities and remoteness of vesting with a rule limiting the
duration of non-charitable trusts to 150 years
The Official Assignee should have standing to challenge a trust
regardless of whether the bankrupt could have done so prior to the
Amending s182 of the Family Proceedings Act 1980 (which gives
the court power to vary a marriage settlement trust on dissolution
of marriage) so it covers de facto relationships in addition to
marriages and civil unions.
Space limits greater detail about these proposals but we intend
to cover the more contentious proposals in more detail in future
issues of Trust eSpeaking. If you would
like to talk to us on any aspect of your trust or how these
proposals may affect your trust, please don't hesitate to
3 (1841) 49 ER 282; 4 Bea v 115 (Ct of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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