The Trusts Bill 2024 was introduced during a recent sitting of the Queensland Parliament on 21 May 2024. The Bill seeks to replace the Trusts Act 1973 with a more modern and simplified trusts legislation.
Trusts are a popular and important tool for estate planning. The trust laws play an essential role in ensuring that funds, properties or assets held by trustees are appropriately managed and used to advance the purpose of the trust or for the benefit of the trust’s beneficiaries.
The existing Trusts Act 1973 which applies to every trust falling within the definition in the Act, governs various aspects of Queensland trust law. It does not codify the law of trusts but instead supplements the law to provide for the efficient administration of trusts by conferring powers on trustees which might otherwise be lacking under the trust instrument. The Act deals with amongst other aspects, the appointment and discharge of trustees, the general powers and duties of trustees as well as the specific powers of trustees to invest trust funds, the indemnities and protection of trustees and the powers of the court in overseeing the administration of trusts.
The Act is more than half a century old and has not been comprehensively amended since it was introduced. Many of its provisions have their origins in English trustee legislation of the mid-to-late 19th century and, as a consequence, the Act contains many outdated historical concepts and terminology.
The new Bill aims to streamline the existing legislative provisions to meet modern needs and address gaps in the Act, many of the provisions of which are considered obsolete or no longer appropriate in a modern context. It is the result of a full review of the Act conducted by the Queensland Law Reform Commission.
The changes introduced by the Bill include:
- re-stating trustees’ management powers and minimum or core duties in modern language;
- granting new powers to trustees to authorise another person to exercise the trustee’s investment powers (under the current Act, there is no power to delegate the trustee’s investment powers to another person). This is subject to an express contrary intention in the trust instrument;
- limiting a trustee’s power to delegate the administration or exercise of the trusts powers, authorities and discretions vested in the trustee to 12 months’ duration;
- modernising the capital amount which may be applied for the maintenance, education or advancement of a beneficiary by a trustee (Section 62 of the Act allows a trustee to pay or apply capital for the maintenance, education or advancement (including past maintenance or education) of a beneficiary from any part of the capital to which the beneficiary is entitled provided that the amount advanced is limited to the greater of $2,000 or half of the capital, unless the court consents to a greater amount being paid or applied. The Bill seeks to increase the amount of capital which may be paid or applied from $2,000 to $100,000);
- simplifying the administration of trusts by granting a power (without the need to resort to court):
- to the administrator or attorney of the last continuing trustee with impaired capacity to appoint a replacement trustee or trustees; and
- to the last continuing trustee who is a bankrupt, or taking advantage of the laws of bankruptcy as a debtor, to appoint a replacement trustee or trustees;
- reflecting modern trust instruments by allowing the appointment of a trustee not only by the appointor of the trust, but also by any other mechanisms under the trust instrument, to be exercised in a reasonable period before other mechanisms for appointment of a new trustee under the Bill apply;
- providing safeguards for beneficiaries of a trust by preventing certain persons from being appointed as a trustee of a trust;
- granting the power to the Attorney-General to consider and determine certain cy pres applications in certain circumstances (under section 106 of the Act, only the Supreme Court may approve a scheme to change the purposes of a charitable trust to allow the trust property to be applied cy pres if the required circumstances under section 105 of the Act exist); and
- conferring additional statutory powers on courts to address existing gaps
The Bill therefore introduces important practical changes to the trusts law in Queensland. For many people these laws apply to a substantial portion of their estates of businesses. Once passed into law, the new Trusts Act 2024 will commence on a day to be fixed by proclamation.
The Bill introduces changes that affect both trustees and beneficiaries of trusts. For instance, the Bill makes it easier (and cheaper) for trustees to approve the application of capital for the maintenance, education or advancement of a beneficiary. Trustees would still need to consider whether the purposes of applying the trust capital fall within the ambit of ‘maintenance, education or advancement’ of a beneficiary.
Trustees in particular, should welcome the mechanisms introduced by the Bill to streamline and simply the administration of trusts. For instance, a last remaining trustee who is taking advantage of the bankruptcy laws, can appoint a replacement trustee which can ensure continuity in the administration of the trust. Trustees will also have powers to appoint an appropriate professional to exercise the trustee’s investment powers. However, this should be done responsibly as a trustee remains liable for the acts or omissions of this other person exercising the trustee’s investment powers as if the acts or omissions were those of the trustee.
Further Information
Marino Law has extensive experience both in drafting and advising on trust instruments and estate planning as well as in dispute resolution involving trusts and are well placed to advise clients on the impact of the changes introduced by the new Bill.
To find out more about what we can offer please contact one of our highly experienced solicitors for a consultation.
July 2024
