Trustee Act 1898

Trustee Act 1898

This Act may be cited as the Trustee Act 1898.

This Act shall come into operation on 1st November 1898.

In this Act, unless the contrary intention appears –

company includes any banking or mercantile or trading corporation, however created, and any company registered, incorporated, or constituted under or pursuant to any Act;

contingent right, as applied to land, includes a contingent or executory interest, a possibility coupled with an interest, whether the object of the gift or limitation of the interest, or possibility, is or is not ascertained, also a right of entry, whether immediate or future, and whether vested or contingent;

convey and conveyance, applied to any person, include the execution by that person of every necessary or suitable assurance for conveying, assigning, appointing, surrendering, or otherwise transferring or disposing of any property whereof he is seised or possessed, or wherein he is entitled to a contingent right, either for his whole estate or for any less estate, together with the performance of all formalities required by law for the validity of the conveyance;

the Court means the Supreme Court or a judge;

devisee includes the heir of a devisee and the devisee of an heir, and any person who may claim right by devolution of title of a similar description;

financial institution means any authorised deposit-taking institution, or the manager of any authorised deposit-taking institution, authorised under this Act to receive fixed deposits from trustees;

instrument includes Act;

land includes incorporeal as well as corporeal hereditaments, and any interest therein, and also an undivided share of land;

mortgage and mortgagee include and relate to every estate and interest regarded by law or in equity as merely a security for money, and every person deriving title under the original mortgagee;

pay and payment, as applied in relation to stocks and securities, and in connection with the expression "into Court", include the deposit or transfer of the same in or into Court;

possessed applies to receipt of income of, and to any vested estate less than, a life estate, legal or equitable, in possession or in expectancy, in any land;

property includes real and personal property, and any estate and interest in any property, real or personal, and any debt and any thing in action, and any other right or interest, whether in possession or not, excluding only stock and choses in action in the construction and interpretation of section 33;

representative includes – the devisee or devisees, or the executor or executors, administrator or administrators, or the curator of the intestate estate of any person; the heir of any person who died intestate before 1874;

rights includes estate and interests;

securities means – debentures, stocks, shares, bonds, or notes issued or proposed to be issued; any right or option in respect of any such debentures, stocks, shares, bonds, or notes; or interests in a registered scheme within the meaning of the Corporations Act – and in particular, without limiting the generality of the foregoing, includes – bills of exchange; promissory notes; certificates of deposit issued by an authorised deposit-taking institution; and any money or securities for money paid into or deposited in Court to the credit of any cause, matter, or account;

shares means shares in the capital of a body corporate;

spouse, in relation to a person, includes the person who is in a significant relationship, within the meaning of the Relationships Act 2003, with that person;

stock includes fully paid-up shares, and, so far as relates to vesting orders made by the Court under this Act, includes debentures, shares in companies, and any fund, annuity, or security transferable in books kept by any company or society, or by instrument of transfer, either alone or accompanied by other formalities, and any share or interest therein;

transfer, in relation to stock, includes the performance and execution of every deed, power of attorney, act, and thing on the part of the transferror to effect and complete the title in the transferee;

trust does not include the duties incident to an estate conveyed by way of mortgage, but, with this exception, trust includes implied and constructive trusts, and cases where the trustee has a beneficial interest in the trust property and the duties incident to the office of representative of a deceased person;

trustee includes – any person seised or possessed of or entitled to any property subject to any trust as aforesaid; any person who has also a beneficial interest in the trust property; any company, corporation, firm, or association authorized by law to act as trustee, executor, or administrator of the estate of any deceased person; any representative in any way possessed of or entitled to any property subject to any trust express or implied; any trustee whose trust arises by construction or implication of law, but does not include a mortgagee; and joint trustees, executors, or administrators, where more than one person is acting in any of the said capacities;

trustee company means a trustee company within the meaning of the Trustee Companies Act 1953;

valuer means a person who is qualified to practise as a land valuer under section 4 of the Land Valuers Act 2001.

This Part applies to trusts created before or after the commencement of this Part.

A trustee, unless expressly forbidden by the instrument creating the trust, may –

invest trust funds in any form of investment; and at any time, vary an investment or realise an investment of trust funds and reinvest money resulting from the realisation in any form of investment.

Subject to any provision to the contrary in an instrument creating a trust, a trustee, in exercising a power of investment – if the trustee's profession, business or employment is or includes acting as a trustee or investing money on behalf of other persons, must exercise the care, diligence and skill that a prudent person engaged in that profession, business or employment would exercise in managing the affairs of another person; or if the trustee is not engaged in such a profession, business or employment, must exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of another person.

A trustee, in exercising a power of investment, must comply with any provision of the instrument creating the trust that is binding on the trustee and requires the obtaining of a consent or an approval or a compliance with any direction with respect to trust investments.

Subject to the instrument creating the trust, a trustee must, at least once in each year, review the performance, individually and as a whole, of the trust investments.

Without limiting the matters that a trustee may take into account when exercising a power of investment, a trustee, so far as is appropriate to the provisions of the trust, may have regard to any one or more of the following:the purposes of the trust and the needs and circumstances of the beneficiaries; the desirability of diversifying trust investments; the nature of existing trust investments and other trust property; the need to maintain the real value of the capital or income of the trust; the risk of capital loss or depreciation; the potential for capital appreciation; the likely income and the timing of the income return; the length of the term of the proposed investment; the probable duration of the trust; the liquidity and marketability of the proposed investment during, and on the determination of, the term of the proposed investment; the aggregate value of the trust estate; the effect of the proposed investment in relation to the tax liability of the trust; the likelihood of inflation affecting the value of the proposed investment or other trust property; the costs, including any commission, fee, charge or duty payable, of making the proposed investment; the results of a review of any existing trust investments.

A trustee may – obtain and consider independent and impartial advice reasonably required for the investment of trust funds or the management of the investment, from a person whom the trustee reasonably believes to be competent to give that advice; and pay out of trust funds the reasonable costs of obtaining the advice.

Any rule or principle of law or equity that imposes a duty on a trustee exercising a power of investment including, without limiting the generality of those duties, rules and principles that impose – a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust; or a duty to act impartially towards beneficiaries and between different classes of beneficiaries; or a duty to take advice; or a duty to invest trust funds in investments that are not speculative or hazardous – continues to apply except so far as it is inconsistent with this or any other Act, or the instrument creating the trust.

Any rule or principle of law or equity that relates to a provision in an instrument creating a trust that purports to exempt, limit the liability of, or indemnify a trustee in respect of a breach of trust, continues to apply.

If a trustee has a duty to take advice relating to the administration of a trust, the reasonable costs of obtaining the advice are payable out of trust funds.

If securities of a body corporate are subject to a trust, the trustee may concur in any scheme or arrangement – for, or arising out of, the reconstruction, reduction of capital or liquidation of, or the issue of shares by, the body corporate; or for the sale of all or any part of the property and undertaking of the body corporate to another body corporate; or for the acquisition of securities of the body corporate, or of control of the body corporate, by another body corporate; or for the amalgamation of the body corporate with another body corporate; or for the release, modification or variation of rights, privileges or liabilities attached to the securities, or any of them – in the same manner as if the trustee were beneficially entitled to the securities.

The trustee may accept instead of, or in exchange for, the securities subject to the trust securities of any denomination or description of another body corporate party to the scheme or arrangement.

If a conditional or preferential right to subscribe for securities in a body corporate is offered to a trustee in respect of a holding in that body corporate or any other body corporate, the trustee may, as to all or any of the securities – exercise the right and apply capital money subject to the trust in payment of the consideration; or assign to any person, including a beneficiary under the trust, the benefit of the right, or the title to the right, for the best consideration that can be reasonably obtained; or renounce the right.

A trustee accepting or subscribing for securities under this section is, for the purposes of any provision of this Part, exercising a power of investment.

A trustee may retain securities accepted or subscribed for under this section for any period for which the trustee could properly have retained the original securities.

The consideration for an assignment made under subsection (3)(b) must be held as capital money of the trust.

This section applies in relation to securities acquired before or after the commencement of this section but subject to the provisions of the instrument creating the trust.

Subject to the provisions of any instrument creating a trust –

a trustee may apply capital money subject to the trust in payment of calls on shares subject to the same trust; and if the trustee is a trustee company, it may exercise the powers conferred by this section whether or not the shares on which the calls are made are shares in the trustee company.

Subject to the provisions of any instrument creating a trust, a trustee may – purchase a dwelling house for use by a beneficiary as a residence; or enter into any other agreement or arrangement to secure for a beneficiary a right to use a dwelling house as a residence.

Despite the terms of the instrument creating the trust, a trustee may, if to do so would not unfairly prejudice the interests of other beneficiaries, retain as part of the trust property, a dwelling house for a beneficiary to use as a residence.

A dwelling house purchased, retained or otherwise secured for use by the beneficiary as a residence may be made available to the beneficiary for that purpose on such terms and conditions consistent with the trust and the extent of the beneficiary's interest as the trustee thinks fit.

The trustee may retain a dwelling house or any interest or rights in respect of a dwelling house acquired under this section after the use of the dwelling house by the beneficiary has ceased.

In this section,dwelling house includes – any building or part of a building designed, or converted or capable of being converted, for use as a residence; and any amenities or facilities for use in association with the use of a dwelling house.