In performing the mandatory duties set out in sections 22 to 26 and (except to the extent modified or excluded by the terms of the trust) the default duties set out in sections 27 to 36, a trustee must have regard to the context and objectives of the trust.

The duties set out in sections 22 to 26 are mandatory duties that—

A trustee must know the terms of the trust.

A trustee must act in accordance with the terms of the trust.

A trustee must act honestly and in good faith.

A trustee must hold or deal with trust property and otherwise act—

A trustee must exercise the trustee’s powers for a proper purpose.

The duties set out in sections 27 to 36 are default duties that must be performed by the trustee unless modified or excluded in accordance with section 5(3A) and (3B).

When administering a trust (other than when exercising a discretion to distribute trust property), a trustee must exercise the care and skill that is reasonable in the circumstances, having regard, in particular,—

When exercising any power to invest trust property, a trustee must exercise the care and skill that a prudent person of business would exercise in managing the affairs of others, having regard, in particular,—

A trustee must not exercise a power of a trustee directly or indirectly for the trustee’s own benefit.

A trustee must consider actively and regularly whether the trustee should be exercising 1 or more of the trustee’s powers.

A trustee must not bind or commit trustees to a future exercise or non-exercise of a discretion.

A trustee must avoid a conflict between the interests of the trustee and the interests of the beneficiaries.

A trustee must act impartially in relation to the beneficiaries, and must not be unfairly partial to one beneficiary or group of beneficiaries to the detriment of the others.

This section does not require a trustee to treat all beneficiaries equally (but all beneficiaries must be treated in accordance with the terms of the trust).

A trustee must not make a profit from the trusteeship of a trust.

A trustee must not take any reward for acting as a trustee, but this does not affect the right of a trustee to be reimbursed for the trustee’s legitimate expenses and disbursements in acting as a trustee (see section 77(2)).

If there is more than 1 trustee, the trustees must act unanimously.

This section applies to a person who—

Before the creation of the trust, a person to whom this section applies must take reasonable steps to ensure that the initial settlor is aware of the meaning and effect of the modification or exclusion.

Failure to comply with subsection (2) does not of itself invalidate the modification or exclusion in the terms of the trust.

In this section, initial settlor means the settlor who initially creates the trust or causes the trust to be created.

The terms of a trust must not limit or exclude a trustee’s liability for any breach of trust arising from the trustee’s dishonesty, wilful misconduct, or gross negligence.

The terms of a trust must not give a trustee any indemnity against the trust property for liability for any breach of trust arising from the trustee’s dishonesty, wilful misconduct, or gross negligence.

A clause in the terms of a trust is invalid to the extent that it purports to have the effect prohibited by section 37 or 38.

This section applies if—

Before the creation of the trust, the adviser must take reasonable steps to ensure that the settlor is aware of the meaning and effect of the clause.

The liability exclusion or indemnity clause has no effect with respect to an adviser who is or becomes a trustee of the trust and who is in breach of subsection (2).

Failure to comply with subsection (2) does not of itself invalidate the clause (except as provided in subsection (3)).

In this section, liability exclusion or indemnity clause means a clause that has the effect of—

This section applies when a court is deciding whether a trustee has been grossly negligent for the purposes of section 37, 38, 71, or 78.

The court must consider, having regard to the factors in subsection (3), whether the trustee’s conduct (including any action or inaction) was so unreasonable that no reasonable trustee in that trustee’s position and in the same circumstances would have considered the conduct to be in accordance with the role and duties of a trustee.

The factors to which the court must have regard are—

Each trustee of a trust must keep, so far as is reasonable, the following documents relating to the trust:

If there is more than 1 trustee of a trust, each trustee must comply with the obligation in section 41 by—

A trustee must keep, so far as is reasonable, the documents for the duration of the trustee’s trusteeship.

At the time that the trusteeship of a trustee ends, if the trust continues, the trustee must give at least 1 replacement trustee or continuing trustee the documents that the trustee holds at that time.

In this section and in sections 46 to 51,—

The purpose of sections 47 to 51 is to ensure that beneficiaries have sufficient information to enable the terms of the trust and the trustees’ duties to be enforced against the trustees.

Sections 47 to 51 do not apply to charitable trusts or to other trusts for a permitted purpose that do not have beneficiaries.

There is a presumption that a trustee must make available to every beneficiary or representative of a beneficiary the basic trust information set out in subsection (3).

However,—

The basic trust information is—

A trustee is required to consider at reasonable intervals whether the trustee should be making the basic trust information available under this section.

There is a presumption that a trustee must within a reasonable period of time give a beneficiary or the representative of a beneficiary the trust information that person has requested.

However,—

The factors that the trustee must consider (for the purposes of sections 47(2)(a) and 48(2)(a)) are the following:

This section applies in relation to a trust if, as a result of 1 or more of the following circumstances or events, no beneficiary has any trust information:

The trustee must apply to the court for directions in relation to—

However, the trustee is not required to apply to the court for directions if—

In giving directions under this section, the court must take into account the following principles:

A trustee may require the beneficiary to whom trust information is given under section 48 or in accordance with the terms of the trust to pay the reasonable cost of giving that information.

The trustee may require the beneficiary to pay some or all of that cost before the trustee gives the information to the beneficiary.

A trustee has the following general powers:

Sections 54 to 75 set out specific powers of a trustee and the way in which those powers may be exercised, but they are not an exhaustive source or description of the specific powers of a trustee.

A trustee may invest trust property in any property.

A trustee exercising any power to invest may have regard to the following matters, so far as they are appropriate to the circumstances of the trust:

This section does not limit the matters that a trustee may take into account.

For the purposes of distribution, and of preparing and completing a financial statement for a trust, a trustee may determine whether a return on an investment is to be treated as income or capital.

A trustee’s powers under subsection (2) may be exercised only—

A trustee may—

This section extinguishes the rules of common law and equity relating to the apportionment of receipts and outgoings.

If a trustee is the landlord, tenant, vendor, or purchaser of land, the apportionment rules in the Property Law Act 2007 apply in respect of that land.

A trustee may pay or apply some or all of the income on the interest of the beneficiary in respect of whom this section applies for the beneficiary’s welfare.

This section applies in respect of a beneficiary who is a child with an interest (whether vested or contingent) in some or all of the trust property.

In this section and section 59, income—

In deciding whether to make a payment and the amount of any payment, the trustee must consider all of the relevant circumstances, including the beneficiary’s age and requirements.

The trustee may make the payment under subsection (1) to the child’s parent or guardian, or in some other manner that is for or toward the beneficiary’s welfare.

This power is subject to any prior interests or charges affecting the income.

While a beneficiary is a child, a trustee may use the income on the beneficiary’s interest in 1 or more of the following ways:

If either of the following applies, the trustee must hold the income for the beneficiary absolutely:

A trustee may pay or apply some or all of a share of a beneficiary’s interest in the capital money or other capital assets of the trust property of a beneficiary in respect of whom this section applies for the beneficiary’s welfare for the beneficiary’s welfare, if this section applies to the beneficiary.

This section applies in respect of a beneficiary with an interest (whether vested or contingent) in some or all of the capital of the trust property.

In deciding whether to pay or apply capital and the amount to pay or apply, the trustee must consider all of the relevant circumstances.

In exercising the power under this section, a trustee must not pay or apply capital for a beneficiary’s welfare if—

An amount paid or applied under this section must be accounted for as part of the share in the trust property to which the person is or becomes absolutely or indefeasibly entitled.

A trustee exercising a power to pay or apply an amount of income or capital for the welfare of a beneficiary may impose 1 or more conditions.

A condition may require the repayment of the amount, payment of interest on the amount, or giving security for the amount.

At any time after imposing a condition, the trustee may, either wholly or in part, waive the condition, or release an obligation undertaken or any security given because of the condition.

A trustee, when imposing a condition about giving security, is not affected by any restriction on the investment of trust property, whether imposed under this Act or otherwise.

When working out the amount of income or capital that a trustee who has imposed a condition may pay or apply, an amount repaid to the trustee or recovered by the trustee is taken not to have been paid or applied by the trustee.

A trustee is not liable for any loss that may be incurred in relation to an amount that is paid or applied for a beneficiary’s welfare if the loss arises—

A trustee may—

However, a trustee may not under this section or under any comparable power in the terms of the trust appoint a person to exercise or perform, on behalf of the trustee, any of the following powers or functions:

A person appointed under subsection (1) or under any comparable power in the terms of the trust—

For the purposes of subsection (1)(c), eligible person means—

For the purposes of subsection (4)(b), a body corporate is controlled by the trustee if—

If a trustee exercises a power under section 63(1) or any comparable power in the terms of the trust, the trustee must—

The general duty of care in section 27 applies to the exercise of a power under section 63(1).

This section applies despite section 20(2) section 26A.

A trustee is not liable in a proceeding brought by or on behalf of a beneficiary for any act or default of an appointee of the trustee unless the trustee failed—

Despite sections 63 and 64, a trustee may, by power of attorney, delegate all or any of the trustee’s powers and functions under the trust to any person qualified to be a trustee under section 90.

However, the power to delegate may be exercised only in the circumstances where the delegation is necessary (or the trustee expects that it may from time to time become necessary) because of the trustee’s—

The delegation—

If a delegation has been in place for 12 months and the circumstance in subsection (2) continues, the delegation may be extended by the delegating trustee (or the trustee’s delegate in cases to which subsection (2)(d) applies) for the shorter of—

A trustee may delegate powers to a sole co-trustee only if that sole co-trustee is a statutory trustee.

A delegate may exercise the delegating trustee’s power to resign.

Not later than 5 working days after a delegation under section 66 commences, the delegating trustee (or, if the trustee is incapable, the delegate) must notify any co-trustees and any person with the power to remove or to appoint trustees of the following:

In the case where a power of attorney authorising delegation under section 66 is signed on the basis that the trustee expects that the delegation may from time to time become necessary (see section 66(2)), the delegating trustee (or, if the trustee is incapable, the delegate) must, not later than 5 working days after the power of attorney is signed, notify any co-trustees and any person with the power to remove or to appoint trustees. of the following:

For a sole delegating trustee, it is sufficient compliance with subsections (1) and (2) if the trustee (or, if the sole trustee is incapable, the trustee’s delegate) notifies—

However, a trustee or delegate is not required to comply with notification requirements under subsection (3)(b) or (c) if the trustee or delegate reasonably considers, after taking into account the factors in section 49, that beneficiaries should not be notified.

Failure to comply with a notification requirement under this section does not invalidate any act done or document executed by the delegate in favour of a person dealing with a trustee’s delegate.

The trustee is not liable in a proceeding brought by or on behalf of a beneficiary for any act or default of a delegate appointed under section 66 unless the trustee failed, in appointing the delegate, to fulfil any of the trustee’s mandatory duties or the general duty of care in section 27 (to the extent that it applies).

This section applies in relation to a trust where—

A co-trustee or a beneficiary of the trust may apply to Public Trust for consent for Public Trust to be made the delegate of the trustee.

Public Trust—

Public Trust may charge fees for providing services as a delegate under this section.

If Public Trust consents to be made the delegate of the trustee, sections 66 to 68 apply (with any necessary modifications) to the delegation.

A special trust adviser—

A special trust adviser may be appointed—

In this section, manager and property order have the meanings given in section 2 of the Protection of Personal and Property Rights Act 1988.

If there is a special trust adviser, a trustee—

A special trust adviser’s disagreement with or objection to a proposed action to be taken by a trustee in respect of trust property does not affect a person dealing with the trustee in the matter.

If remuneration is payable to a trustee, remuneration may also be paid to a special trust adviser.

The amount of remuneration for a special trust adviser is to be determined,—

This section applies if—

If a beneficiary is entitled to receive insurance money, the beneficiary must—

The trustee must hold the insurance money in trust on the same terms and subject to the same powers and provisions as (or those corresponding as nearly as possible to) those to which the lost or damaged property is subject.

The trustee may apply the insurance money (or part of it) to rebuilding, reinstating, replacing, or repairing the lost or damaged property.

If the insurance money is held by the Crown, the court may direct that the money (or part of it) be applied to rebuilding, reinstating, replacing, or repairing the lost or damaged property.

This section does not affect any right a person may have to require the insurance money (or part of it) to be applied to rebuilding, reinstating, replacing, or repairing the lost or damaged property.

This section applies where any trust property is employed in an activity that the trustee is empowered or authorised to carry on as a portfolio investment entity.

The trustee may adjust the interest of the beneficiaries in the property in any of the ways specified in section HM 48 of the Income Tax Act 2007 in order to comply with that section.

This section applies despite any other provision in this Act or in the Financial Markets Conduct Act 2013.

A trustee is not liable in a proceeding brought by or on behalf of a person in relation to the distribution of trust property if—

A notice to potential creditors and other claimants must—

A trustee may apply to the court for directions under section 125 regarding the type of notice that is appropriate.

This section does not apply to any claim—

Nothing in this section affects a remedy that a person may have under section 49(1) of the Administration Act 1969 or any other right or remedy available against another person other than the trustee, including a right to follow the property and any money or property into which it is converted.

This section applies if a trustee purports to exercise a power (whether statutory, under the terms of a trust, or otherwise) to sell or mortgage trust property or an interest in trust property.

The purchaser or mortgagee is under no obligation is not under any obligation to inquire into whether the money received by the trustee as a result of the sale or mortgage is needed, or how that money is later dealt with, by the trustee.

This section is subject to the Land Transfer Act 2017 and the Personal Property Securities Act 1999.

In this section, mortgage and mortgagee have the same meanings as in section 4 of the Property Law Act 2007.

A trustee is personally liable for an expense or a liability incurred by the trustee when acting as a trustee.

However, a trustee who incurs an expense or a liability when acting reasonably on behalf of the trust is entitled,—

The operation and enforcement of the indemnity in this section is governed by the rules of the common law and equity relating to trusts.

This section does not limit any indemnity available at common law or in equity.

A trustee may be indemnified from the trust property for a breach of trust if all of the beneficiaries who together hold all of the beneficial interest in the trust property agree and if the conditions set out in subsection (1A) are satisfied.

The conditions are that—

However, the beneficiaries cannot indemnify the trustee if the breach of trust arises from the trustee’s dishonesty or wilful misconduct.

See section 40A, which relates to the court’s consideration of gross negligence.

The court may, on behalf of any of the beneficiaries described in subsection (2) who has an interest in the property of a trust, approve the indemnification of a trustee for a breach of trust under section 78.

The beneficiaries are—

An application for an order of approval may be made by—

On an application for an order of approval, the court must take into account each of the following factors:

An order of approval binds the person on whose behalf it is made and takes effect without any further step.

The court may waive the requirement that a beneficiary consent to the indemnification of a trustee for a breach of trust under section 78.

An application for an order of waiver of consent may be made by—

On an application for an order of waiver of consent, the court must take into account each of the following factors:

An order of waiver of consent binds the person on whose behalf it is made and takes effect without any further step.

For the purposes of section 77(1) (and despite section 77(2)), the terms of the trust may rank the order in which the trust property must be applied to reimburse the trustee or pay or discharge an expense or a liability.

However, the court may set aside the ranking of trust property on the application of—

This section applies if a trustee incurs an expense or a liability to a creditor and the trustee—

The creditor has a claim against the trustee that may be satisfied by the creditor being indemnified from the trust property as if the creditor were in the position of a trustee who has a right to be indemnified from the trust property.

The creditor has not acted in good faith for the purposes of subsection (1)(b)(iii) if the creditor had knowledge of the circumstances that excluded or limited the trustee’s indemnity (whether or not the creditor knew they would have that effect).

For the purposes of subsection (1)(b), a claim under this section—

This section applies in respect of a former trustee who incurs an expense or a liability as a trustee acting on behalf of the trust.

This section applies if a trustee pays any premiums in respect of any insurance contract for trust property for which the trustee has not previously received reimbursement from the trust property.

The trustee has a lien on—

This section applies if a trustee is, for any reason, liable in relation to—

The trustee may assign the lease to a person entitled to call for an assignment of the lease if the trustee—

If the trustee acts under subsection (2), the trustee—

A trustee who acts under subsection (2) and distributes the remaining trust property under subsection (3)(b) is not personally liable for any later claim under the lease.

This section does not affect the right of the lessor, or a person deriving title under the lessor, to follow the trust property into the hands of the persons to whom it was distributed.

If personal property is given by will to a person (including a child) for a life interest or another limited interest, the trustee may deliver the personal property to the person (or in the case of a child, to the child’s parent or guardian) on the terms and conditions that the trustee thinks fit.

However, before delivering the personal property to the person, the trustee must—

On and after the delivery of the property, the trustee—

A copy of the inventory signed by the person and the trustee is a security interest for the purposes of the Personal Property Securities Act 1999, and a financing statement may be registered accordingly.

A trustee may deliver to a child, or the child’s parent or guardian, any tangible personal property that is absolutely vested in the child.

The receipt of the child or parent or guardian is a good discharge to the trustee for the property.

This section applies to a trustee acting for more than 1 trust.

The trustee is not, unless the trustee is acting in bad faith, to be taken to have notice of a matter in relation to a trust only because notice of the matter is, or was, given to the trustee when acting for another trust.

In this section, matter includes document, fact, and thing.