Trustee Duties
The Trustees have certain duties and liabilities placed on them under the relevant Trust Deed, New Zealand Legislation and Common Law (decisions of the Courts in New Zealand and Overseas). These duties include:
- knowing the trust deed, the trust assets and liabilities;
- advancing charitable purposes;
- fiduciary duties of honesty and loyalty and acting in the best interests of the trust;
- exercising care, skill and prudent diligence;
- acting impartially amongst beneficiaries’
- selling wasting property;
- exercising reasonable care;
- insuring assets and keep property safe;
- keeping inventories;
- investing within a reasonable time;
- repairing trust property;
- investing prudently;
- not delegating;
- acting jointly where there is more than one trustee;
- not profiting from trust property;
- being accountable; and
- being honest, loyal, diligent and prudent in carrying out the terms of the trust.
If you would like further explanation of any of these duties, please get in touch with us.
Generally, a charitable trust will have between 3 to 7 trustees. Usually, trustees are a mix of professional executives and non-executives. They will be held to the same standard of care in their actions as applies to directors of a business (there is not a lower standard due to it being a charitable trust).
Trustee Liability
Trustees are representatives of the Trust. As noted above when discussing duties, they act as fiduciaries who hold the trust property for the benefit of the charitable purpose set out in the deed. It is important that trustees clearly understand what those purposes are and do not overreach and act in a way that is further than what was set out in the deed. If trustees fail to perform their duties then they may be subject to proceedings taken out by interested persons. Ultimately, the New Zealand Attorney General has certain rights as the ultimate power ensuring accountability. It is common for trust deeds to include some limits on trustee liability. However, as mentioned before it is possible that trustees will be jointly and severally liable where a trust fails to account for GST, ACC levies or PAYE payments.
This article is the second in a series on charitable trusts. To have a look at our first article which sets out the advantages and disadvantages of charitable trusts, click here.
The information contained in this outline is of a general nature, should only be used as a guide and does not amount to legal advice. It should not be used or relied upon as a substitute for detailed advice or as a basis for formulating decisions. Special considerations apply to individual fact situations. Before acting, clients should consult their Parry Field Lawyer.
