Contents

Chapter 6
Trustees’ powers

Introduction

6.1The recommendations in this chapter remove unnecessary restrictions on powers that are in the current provisions of the Trustee Act 1956 and instead rely on the clear statements of the duties of trustees, as recommended in chapter 5, and the standard of care to guard against inappropriate use of powers by trustees. Our view is that this approach is better at making sure the default powers provisions in the new Act are sufficiently flexible and suitable to the majority of trusts. The interests of beneficiaries or the trust’s purpose will be protected by the duties a trustee must adhere to in making any decision or exercising any power as trustee.

6.2The administrative and distributive powers provisions discussed in this chapter are default in that they may be varied or excluded by the terms of a trust. In trust deeds settlors can give the trustees whatever powers they like to manage and distribute the trust property, although these must be exercised subject to the overriding duties on trustees and the standard of care.

6.3This chapter also includes recommendations to make the age of majority for the purposes of trust law 18 years and to clarify the powers of trustees to appoint agents, nominees, custodians and delegates. Included in this chapter is a discussion on the standard of care required of trustees when exercising powers. We recommend including a default provision on the standard of care in the new Act.

6.4The reform of trustees’ powers was previously discussed in the Preferred Approach Paper and the Fourth Issues Paper.185
185Law Commission Review of the Law of Trusts – Preferred Approach (NZLC IP31, 2012) at ch 4; Law Commission The Duties, Office and Powers of a Trustee: Review of the Law of Trusts – Fourth Issues Paper (NZLC IP26, 2011) at ch 5.