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Part 1 Preliminary
(f) the estate of a deceased person.
(2) A reference in this Act to trust property includes a reference to
a part of the trust property.
10 Meaning of capacity and impaired capacity
(1) A person has capacity for a matter only if the person is
capable of—
(a) understanding the nature and effect of decisions about
the matter; and
(b) freely and voluntarily making decisions about the
matter; and
(c) communicating the decisions in some way.
(2) A person has impaired capacity for a matter if the person does
not have capacity for the matter.
Example of a matter for this section—
administering a trust
11 Meaning of charitable
(1) The established rules of law relating to what is charitable, as
in force immediately before the commencement, continue to
apply.
Examples of categories of charitable purposes—
• the relief of poverty
• the advancement of education
• the advancement of religion
(2) Despite any rule of law to the contrary, it is declared that it is
and always has been charitable to provide, or to help in
providing, facilities for recreation or other leisure time
activity, if the facilities are provided in the interests of social
welfare.
(3) For subsection (2), facilities are provided in the interests of
social welfare only if—
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Part 2 Restrictions on appointment of trustees and related matters
(a) the facilities are provided with the object of improving
the conditions of life for the persons for whom the
facilities are primarily intended; and
(b) either—
(i) those persons have need of the facilities because of
their youth, age, infirmity or disability, poverty or
social and economic circumstances; or
(ii) the facilities are to be available to the members of
the public at large or to a substantial section of the
public at large.
(4) Nothing in this section limits the requirement that, in order to
be charitable, a gift, trust or institution must be for the public
benefit.
12 References to security when lending or investing trust
funds
In this Act, a reference to a trustee lending or investing trust
funds on the security of property includes a reference to a
trustee lending or investing trust funds on a new security or on
the transfer of an existing security.
Part 2 Restrictions on appointment of
trustees and related matters
13 Persons who can not be appointed as trustees
(1) The following persons can not be appointed as a trustee—
(a) a child;
(b) an individual who is an insolvent under administration;
(c) a corporation that is a Chapter 5 body corporate;
(d) a person who is disqualified from being appointed as a
trustee by an order made under section 168.
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(2) The purported appointment of a person mentioned in
subsection (1)(a), (b), (c) or (d) is of no effect.
(3) Subsections (1)(b) and (c) and (2) do not affect the
appointment of—
(a) an individual who becomes an insolvent under
administration after the individual’s appointment as
trustee has taken effect; or
(b) a corporation that becomes a Chapter 5 body corporate
after the corporation’s appointment as trustee has taken
effect.
Note—
See, however—
(a) sections 20, 23 and 29 in relation to the replacement and removal
of a trustee who becomes an insolvent under administration; and
(b) sections 20 and 29 in relation to the replacement and removal of a
trustee that becomes a Chapter 5 body corporate.
(4) This section does not apply in relation to the appointment of a
personal representative.
(5) Also, to remove any doubt, it is declared that this section does
not limit the court’s power to declare that a person mentioned
in subsection (1)(a), (b), (c) or (d) holds property as a trustee.
14 Limit on number of trustees of particular trusts
(1) This section applies to a trust other than—
(a) a charitable trust; or
(b) a trust that is, or is created for the purpose of becoming,
a self managed superannuation fund within the meaning
of the Superannuation Industry (Supervision) Act 1993
(Cwlth).
(2) The trust may not have more than 4 trustees.
(3) If more than 4 persons are named as trustees under the trust
instrument—
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(a) the first 4 persons named, who are able and willing to
act as trustees and whose appointments are otherwise
able to take effect, are the trustees; and
Example of a person who is not able to act as a trustee—
a person who has impaired capacity for administering the trust
Example of a person whose appointment as a trustee is not
otherwise able to take effect—
a person who can not, under section 13, be appointed as a trustee
(b) the appointment of the other persons is of no effect.
(4) A custodian trustee is not to be counted for the purpose of any
limitation on the number of trustees the trust may have.
Note—
See part 4 in relation to custodian trustees.
(5) This section applies subject to section 15.
15 Court approval of more than 4 trustees for particular
trusts
(1) This section applies in relation to a trust other than a trust
mentioned in section 14(1)(a) or (b).
(2) The court may, on application, make an order approving the
appointment of more than 4 trustees of the trust if satisfied it
is appropriate to do so in the particular circumstances of the
case.
Note—
See section 163 in relation to the persons who may apply to the court
for particular orders.
(3) The number of trustees approved by an order made under
subsection (2) is the approved number.
Example—
If the court approves the appointment of 6 trustees, the approved
number is 6.
(4) If the court makes an order under subsection (2) in relation to
a trust, section 14 applies to the trust as if—
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(a) the reference in section 14(2) to 4 trustees were a
reference to the approved number of trustees; and
(b) a reference in section 14(3) to 4 persons were a
reference to the approved number of persons.
16 Local government trustees may act in administration of
trusts
(1) If a local government is appointed as trustee of a trust, the
local government may act in the administration of the trust for
the purpose of, and according to, the trust, even if the purpose
is not a function of local government.
(2) Subsection (1) applies whether or not the local government is
an original trustee of the trust.
(3) However, if the local government is not an original trustee of
the trust, subsection (1) applies subject to a contrary intention
in the trust instrument.
Part 3 Appointment, discharge and
removal of trustees and
devolution of trusts
Division 1 Preliminary
17 Application of part
This part applies in relation to a trustee who is the personal
representative of the estate of a deceased person only if, and to
the extent, the personal representative—
(a) has completed the administration of all, or a part, of the
estate; and
(b) holds the estate, or a part of the estate, in the capacity of
trustee only.
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Part 3 Appointment, discharge and removal of trustees and devolution of trusts
18 When appointors are not able and willing to act
(1) For this part, if there is 1 appointor for a trust, the appointor is
not able and willing to act as appointor for the trust if—
(a) the appointor does not exercise the power of
appointment within a reasonable period; or
(b) the appointor is otherwise not able and willing to act as
appointor.
(2) For this part, if there are 2 or more appointors for a trust, the
appointors are not able and willing to act as appointors for the
trust if—
(a) the appointors can not, within a reasonable period—
(i) if the trust instrument provides for the appointors
to exercise the power of appointment by
majority—reach a majority decision on the
appointment; or
(ii) otherwise—reach a unanimous decision on the
appointment; or
(b) the appointors are otherwise not able and willing to act
as appointors.
Division 2 Appointment of trustees
19 Application of division
(1) If there is an appointor for a trust, the provisions of this
division relating to appointors apply, whether the appointment
of a trustee is to be made in a circumstance mentioned in this
division or in the trust instrument.
(2) However, if an appointor is authorised under this division to
appoint a trustee in a circumstance that is also mentioned in
the trust instrument, an appointment made under this division
in that circumstance is subject to the terms applying under the
trust instrument to an appointment in that circumstance.
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(3) If a will names a person as trustee of a trust created by the will
and the person is dead, the provisions of this division that
apply if a trustee is dead apply—
(a) whether the person is named as a sole trustee or
otherwise of the trust; and
(b) whether the death of the person happened before or after
the death of the testator.
20 Appointment of trustees—replacement of trustee in
particular circumstances
(1) This section applies if a trustee of a trust (a relevant
trustee)—
(a) is dead; or
(b) declares, by instrument, that the trustee wishes to be
discharged from all or part of the trusts reposed in the
trustee; or
(c) refuses to act as trustee; or
(d) is unfit to act as trustee; or
(e) is incapable of acting as trustee, including, for example,
because of having impaired capacity for administering
the trust; or
(f) becomes an insolvent under administration; or
(g) is disqualified from managing corporations under the
Corporations Act, part 2D.6 and either—
(i) does not have permission under section 206GAB
or 206G of that Act to manage all corporations; or
(ii) has permission under section 206GAB or 206G of
that Act to manage all corporations, but the
permission is subject to exceptions or conditions;
or
(h) is a corporation that—
(i) stops carrying on business; or
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(ii) becomes a Chapter 5 body corporate; or
(iii) is deregistered or otherwise ceases to exist; or
(i) is removed under the trust instrument.
(2) For subsection (1), it does not matter whether the relevant
trustee is an original trustee of the trust or was appointed by
the court or otherwise.
(3) The following persons may, by instrument, appoint 1 or more
persons as trustees to replace the relevant trustee—
(a) if there is an appointor for the trust—the appointor;
(b) if there is no appointor for the trust, or no appointor who
is able and willing to act as an appointor—the
continuing trustee of the trust or, if there is more than 1
continuing trustee, the continuing trustees.
Notes—
1 See section 14 in relation to the limit applying to the number of
trustees of particular trusts.
2 See also section 166 in relation to the court’s power to appoint and
remove trustees.
(4) Subject to a contrary intention in the trust instrument, an
appointor for the trust may appoint themself as a trustee under
subsection (3)(a).
(5) In this section—
continuing trustee includes a relevant trustee mentioned in
subsection (1)(b) or (c) who is willing to act under subsection
(3)(b).
21 Appointment of trustees—replacement of last continuing
trustee who is dead
(1) This section applies if all of the following apply—
(a) the last continuing trustee of a trust is dead;
(b) there is no appointor for the trust, or no appointor who is
able and willing to act under section 20 to appoint a
trustee to replace the last continuing trustee;
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Part 3 Appointment, discharge and removal of trustees and devolution of trusts
(c) if the trust instrument includes a mechanism, other than
the appointment of an appointor, for appointing a trustee
to replace the last continuing trustee—an appointment
of a trustee under the mechanism has not taken effect
within a reasonable period after the death of the last
continuing trustee.
(2) For subsection (1), it does not matter whether the last
continuing trustee was an original trustee of the trust or was
appointed by the court or otherwise.
(3) The personal representative of the last continuing trustee may,
by instrument, appoint 1 or more persons as trustees to replace
the last continuing trustee.
Notes—
1 See section 14 in relation to the limit applying to the number of
trustees of particular trusts.
2 See also section 166 in relation to the court’s power to appoint and
remove trustees.
(4) The personal representative of the last continuing trustee—
(a) is taken to have always had the power of appointment
conferred under subsection (3); and
(b) if the personal representative is the executor, whether
original or by representation, of the last continuing
trustee’s will—may exercise the power of appointment
conferred under subsection (3) without the agreement of
any executor named in the trustee’s will who has not
proved the trustee’s will.
(5) Subject to a contrary intention in the trust instrument, the
personal representative of the last continuing trustee may
appoint themself as a trustee under subsection (3).
(6) If there is more than 1 personal representative of the last
continuing trustee, the personal representatives must exercise
the power of appointment under subsection (3) jointly.
(7) In this section—
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personal representative, of the last continuing trustee of a
trust, does not include an executor named in the trustee’s will
who has not proved the trustee’s will.
22 Appointment of trustees—replacement of last continuing
trustee with impaired capacity
(1) This section applies if all of the following apply—
(a) the last continuing trustee of a trust is incapable of
acting as trustee because the trustee has impaired
capacity for administering the trust;
(b) there is no appointor for the trust, or no appointor who is
able and willing to act under section 20 to appoint a
trustee to replace the last continuing trustee;
(c) if the trust instrument includes a mechanism, other than
the appointment of an appointor, for appointing a trustee
to replace the last continuing trustee—an appointment
of a trustee under the mechanism has not taken effect
within a reasonable period after the later of the
following to happen to the last continuing trustee—
(i) becoming the last continuing trustee;
(ii) becoming a person with impaired capacity for
administering the trust;
(d) an administrator or attorney for the last continuing
trustee is authorised, under their appointment as
administrator or attorney, to exercise power for all
financial matters for the trustee.
(2) For subsection (1), it does not matter whether the last
continuing trustee is an original trustee of the trust or was
appointed by the court or otherwise.
(3) The administrator or attorney may, by instrument, appoint 1 or
more persons as trustees to replace the last continuing trustee.
Notes—
1 See section 14 in relation to the limit applying to the number of
trustees of particular trusts.
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