What it does
The Trustee Act 1898 (Tas) is a comprehensive statute that codifies, expands, and regulates the powers, duties, and liabilities of trustees in the administration of express, implied, and constructive trusts, as well as the estates of deceased persons. At its core, the Act modernises the trustee's investment mandate. Under s.6 (as substituted by No. 64 of 1997, s.4), a trustee may, unless expressly forbidden by the trust instrument, "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". This represents a complete departure from the historical "authorised investments" lists that once constrained trustees to government securities or first mortgages.
The prudent-person standard is imposed by s.7. A professional trustee (one whose business includes acting as trustee or investing for others) must exercise the care, diligence, and skill that a prudent person engaged in that profession would exercise. A lay trustee must meet the standard of a prudent person of business. Section 7(3) mandates an annual review of investments both individually and collectively. Section 8 provides a non-exhaustive checklist of 15 matters to which the trustee may have regard, including the purposes of the trust and needs of beneficiaries, diversification, risk of capital loss, potential for appreciation, liquidity, tax consequences, and inflation. These provisions embed modern portfolio theory into statute.
Part III confers a wide array of administrative powers. Trustees may appoint new trustees (s.13), retire (s.14), and have trust property vest automatically upon appointment or retirement where the deed contains the appropriate declaration (s.15). A trustee for sale may sell by public auction or private contract, buy in at auction, or rescind contracts without liability for loss (s.16), and sales cannot be impeached for depreciatory conditions unless the price was rendered inadequate or the purchaser colluded (s.17). Trustees may insure buildings up to three-quarters of value and pay premiums from income (s.21), renew renewable leaseholds and raise money by mortgage for that purpose (s.22), give valid receipts (s.23), compound debts, submit to arbitration, or settle claims without liability if acting in good faith (s.24). Powers of two or more trustees are exercisable by the survivor(s) unless the trust instrument provides otherwise (s.25).