We often get asked by trustees if they can just delegate their powers to someone else who will step into their shoes. The basic principle is no, because the role of being a trustee is personal to an individual. This means that generally a trustee cannot delegate their duties or powers to others. There are very few exceptions to this well-established rule, and we want to talk about one of the key ones in this article.
Permitted delegation under section 70 of the Trusts Act 2019
Under section 70 of the Trusts Act 2019, a trustee may delegate any or all of their powers and functions under the trust to a qualified person by way of power of attorney. This section applies to both charitable trusts and private trusts.
However, under section 70(2) this power to delegate can only be exercised in the circumstances are necessary because the trustee is:
- absent from New Zealand; or
- temporarily unable to be contacted; or
- temporarily physically incapacitated; or
- temporarily does not have capacity to perform the functions of a trustee.
The period of delegation begins when the section 70(2) circumstance occurs, and continues for the shorter of:
- the duration of the section 70(2) circumstances; and
- 12 months.
If the delegation has been in place for 12 months and the section 70(2) circumstances continue, the delegation may be extended by the delegating trustee (or the trustee’s delegate where subsection 70(2)(d) applies) for the shorter of:
- the remaining duration of the section 70(2) circumstances; and
- a further 12 months.
In this situation the person who is delegated the trustee’s powers can exercise all of their duties and powers, including the power to resign.
Delegation by way of power of attorney must be executed as a deed. A trustee may delegate their powers to a sole co-trustee only where that sole co-trustee is a body corporate that is authorised under the Trusts Act 2019 to act as executor or administrator of a deceased person’s estate and includes a trustee corporation. This means a trustee could not delegate their powers to a sole co-trustee who is a natural person.
These limits reflect the fact that trustees cannot delegate their duties or powers, except where absolutely necessary in the circumstances. A power of attorney cannot be used to delegate or hand over the duties of the trustee to another, but may only be used in very particular circumstances and for a limited period.
Trustees cannot delegate their duties or powers, except where absolutely necessary in the circumstances as set out in section 70. We have helped many trusts over the years and would be happy to discuss your situation with you. You can contact us any time by email or phone.
This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact Steven Moe – firstname.lastname@example.org, or Michael Belay – email@example.com at Parry Field Lawyers.
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