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Part 6 Investments
investment power means—
(a) a power of investment conferred on a trustee under the
trust instrument; or
(b) a power conferred on a trustee under this part.
professional investor means a person whose profession,
business or employment is, or includes, investing money for
other persons.
Division 2 Duty of particular trustees to
exercise care, diligence and skill in
exercising investment powers
67 Duty of trustees who are professional investors
(1) This section applies to a trustee if the trustee is a professional
investor.
(2) The trustee has a duty, in exercising an investment power, to
exercise the care, diligence and skill that a prudent person
engaged in the trustee’s profession, business or employment
would exercise in managing the affairs of other persons.
(3) This section applies subject to a contrary intention in the trust
instrument.
Note—
See also part 5, division 2 in relation to a trustee’s general duty in
administering a trust.
68 Duty of particular trustees who are not professional
investors
(1) This section applies to a trustee if—
(a) the trustee is not a professional investor; but
(b) the trustee has, or holds themself out as having, special
knowledge or experience in investing money for other
persons.
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Part 6 Investments
(2) The trustee has a duty, in exercising an investment power, to
exercise the care, diligence and skill that a prudent person
having that special knowledge or experience would exercise in
managing the affairs of other persons.
(3) This section applies subject to a contrary intention in the trust
instrument.
Note—
See also part 5, division 2 in relation to a trustee’s general duty in
administering a trust.
Division 3 Duties and powers in relation to
investments
69 Power to invest
(1) A trustee may invest trust funds in any form of investment,
other than a forbidden form of investment.
(2) Also, a trustee may, at any time—
(a) vary an investment of trust funds; or
(b) realise an investment of trust funds and reinvest an
amount resulting from the realisation in any form of
investment, other than a forbidden form of investment.
(3) A trustee must, in exercising power under subsection (1) or
(2), comply with any provision of the trust instrument that is
binding on the trustee and requires the trustee to—
(a) obtain a consent or approval in relation to trust
investments; or
(b) comply with a direction in relation to trust investments.
(4) In this section—
forbidden form of investment, in relation to trust funds,
means a form of investment that is expressly forbidden by the
trust instrument.
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Authorised by the Parliamentary Counsel
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Part 6 Investments
Note—
See, however, section 75 for a power that can not be forbidden, or
otherwise limited, by a trust instrument.
70 Law and equity preserved
(1) A rule or principle of law or equity that imposes a duty on a
trustee exercising an investment power continues to apply
except to the extent it is inconsistent with this Act or another
Act or with the trust instrument.
(2) Without limiting subsection (1), the rules or principles
mentioned in that subsection include a rule or principle
imposing any of the following duties—
(a) a duty to exercise the powers of a trustee in the best
interests of all present and future beneficiaries of the
trust;
(b) a duty to invest trust funds in investments that are not
speculative or hazardous;
(c) a duty to act impartially towards beneficiaries and
between different classes of beneficiaries;
(d) a duty to obtain advice.
(3) A rule or principle of law or equity relating to a provision in a
trust instrument that purports to exempt, limit the liability of,
or indemnify a trustee in relation to a breach of trust continues
to apply.
(4) If a trustee is under a duty to obtain advice, the reasonable
costs of obtaining the advice are payable out of the trust
funds.
71 Matters to which trustee must have regard in exercising
investment power
(1) A trustee must, in exercising an investment power, have
regard to the following matters, to the extent they are
appropriate to the circumstances of the trust—
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Part 6 Investments
(a) the purposes of the trust and the needs and
circumstances of the beneficiaries;
(b) the desirability of diversifying the trust investments;
(c) the nature of, and the risk associated with, the existing
trust investments and other trust property;
(d) the need to maintain the real value of the capital or
income of the trust;
(e) the risk of capital or income loss or depreciation;
(f) the potential for capital appreciation;
(g) the likely income return and the timing of income
return;
(h) the length of the term of the proposed investment;
(i) the probable duration of the trust;
(j) the liquidity and marketability of the proposed
investment during, and at the end of, the term of the
proposed investment;
(k) the total value of the trust property;
(l) the effect of the proposed investment for the tax liability
of the trust;
(m) the likelihood of inflation affecting the value of the
proposed investment or other trust property;
(n) the cost (including commissions, fees, charges and
duties payable) of making the proposed investment;
(o) the results of a review of the existing trust investments.
(2) Subsection (1) does not limit the matters to which a trustee
may have regard in exercising an investment power.
72 Advice for particular investment purposes
(1) A trustee may obtain independent and impartial advice, from
a person the trustee reasonably believes is competent to give
the advice, if the advice is reasonably required for—
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Part 6 Investments
(a) the investment of trust funds; or
(b) the management of the trust investments.
(2) If the trustee obtains advice under subsection (1), the
trustee—
(a) must consider the advice; and
(b) may pay, out of the trust funds, the reasonable costs of
obtaining the advice.
73 Duty to review investments
A trustee must, at least every 12 months, review the
performance, individually and as a whole, of the trust
investments.
74 Investment in securities under RITS system
(1) A chose in action arising under the RITS system that entitles
its holder to a security of a particular description (the
underlying security) is, for this Act and a trust instrument,
taken to be the same in all respects as the underlying security.
(2) The holding or acquisition by a trustee of a chose in action
mentioned in subsection (1) is taken to be an investment by
the trustee in the underlying security.
(3) It does not matter that the right conferred by the chose in
action is a right in relation to securities of a particular
description and not in relation to particular securities.
(4) In this section—
RITS system means the Reserve Bank Information and
Transfer System operated by the Reserve Bank of Australia,
as operating from time to time.
75 Power to provide residence for beneficiary to live in
(1) A trustee may do any of the following for a beneficiary of the
trust—
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Part 6 Investments
(a) buy or construct a residence for the beneficiary to live
in;
(b) retain a residence that is part of the trust property for the
beneficiary to live in;
(c) enter into an agreement or arrangement to secure a right
to use a residence for the beneficiary to live in.
Example for paragraph (c)—
entering into a residence contract under the Retirement Villages
Act 1999
(2) Also, a trustee who exercises power under subsection (1) may
make the residence available to the beneficiary to live in on
the conditions the trustee considers appropriate.
(3) However, a trustee may exercise power under subsection (1),
or impose conditions under subsection (2), only if the exercise
of the power, or the imposition of the conditions, is consistent
with the extent of the beneficiary’s interest under the trust.
(4) A trustee may retain a residence bought, constructed, retained
or otherwise secured for use by a beneficiary under this
section after the beneficiary has stopped living in the
residence.
(5) To remove any doubt, it is declared that subsection (4) does
not limit the operation of the Retirement Villages Act 1999 or
any other Act.
(6) Despite section 69, a trust instrument can not forbid the
exercise of, or otherwise limit, a trustee’s power under this
section.
(7) In this section—
residence includes—
(a) a building or part of a building designed, or converted or
capable of being converted, for use as a residence; and
(b) amenities or facilities for use in association with the use
of a residence; and
(c) an interest in a residence.
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Part 6 Investments
76 Power to authorise another person to exercise trustee’s
investment powers
(1) A trustee may, by instrument, authorise another person to
exercise any of the trustee’s investment powers.
(2) The authorisation may be made on the terms the trustee
considers appropriate, including terms relating to
remuneration.
(3) However, the authorisation of the other person does not limit
any duty or other requirement applying to the trustee under
this part or part 5 in relation to the exercise of the trustee’s
investment powers.
Note—
See also section 77 in relation to the liability of the trustee for the acts
done, and the omissions made, by the person in exercising the trustee’s
investment powers.
(4) This section applies subject to an express contrary intention in
the trust instrument.
Division 4 Liability of trustees in relation to
exercise of investment powers
77 Liability of trustee for acts and omissions of person
authorised to exercise trustee’s investment powers
(1) This section applies if a trustee authorises another person
under section 76 to exercise any of the trustee’s investment
powers.
(2) The trustee is liable for the acts done, and the omissions made,
by the other person in exercising the trustee’s investment
powers as if the acts and omissions were the trustee’s own acts
and omissions.
(3) This section applies subject to an express contrary intention in
the trust instrument.
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78 Particular loans by trustee not in breach of trust
(1) This section applies if a trustee lends trust funds on the
security of property.
(2) The trustee is not in breach of trust only because of the
comparison of the amount of the loan with the value of the
property when the loan was made if—
(a) it appears to the court that—
(i) in making the loan, the trustee was acting on an
independent valuation of the property; and
(ii) the amount of the loan was not more than
two-thirds of the value of the property stated in the
independent valuation; and
(iii) the loan was made in reliance on the independent
valuation; or
(b) the trustee is insured by a prescribed insurer against all
loss that may arise because of the borrower’s default.
(3) For this section, a valuation of a property made by a person is
an independent valuation of the property if the trustee—
(a) instructed and employed the person, independently of
any owner of the property, to make the valuation; and
(b) reasonably believed the person was competent to make
the valuation.
(4) In this section—
prescribed insurer means an entity, prescribed by regulation,
that carries on the business of insurance.
79 Limitation of liability of trustee for loss on improper
investment
(1) This section applies if—
(a) a trustee improperly lends trust funds on the security of
property; but
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Part 6 Investments
(b) the loan would have been a proper investment if a lesser
amount had been lent.
(2) For the trustee’s liability in relation to the investment—
(a) the security is taken to be a proper investment in relation
to the lesser amount; and
(b) the trustee is liable only for the difference between the
actual amount lent and the lesser amount, with interest.
80 Court may take into account investment strategy etc. in
proceeding for breach of trust
(1) This section applies in relation to a proceeding against a
trustee for a breach of trust in relation to the exercise of an
investment power.
(2) The court may, in considering the question of the trustee’s
liability, take the following matters into account—
(a) the nature and purpose of the trust;
(b) the amount of the trust funds invested in the exercise of
the investment power;
(c) whether the trustee had regard to the matters mentioned
in section 71 to the extent they were appropriate to the
circumstances of the trust;
(d) whether the trust investments have been made under an
investment strategy formulated in accordance with the
duty of a trustee under this part;
(e) the extent to which the trustee acted on advice that the
trustee reasonably believed—
(i) was given by a person who was independent and
competent to give the advice; and
(ii) was impartial.
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Trusts Bill 2025
Part 7 General powers of trustees
81 Court may set off gains and losses
(1) This section applies in relation to a proceeding against a
trustee for a breach of trust in relation to an investment if a
loss has been, or is expected to be, sustained by the trust.
(2) The court may set off all or part of the loss resulting from the
investment against all or part of any gain resulting from any
other investment, whether or not the other investment is a
breach of trust.
(3) The power of set-off conferred under subsection (2) is in
addition to any other power or entitlement to set off all or part
of any loss against any property.
Part 7 General powers of trustees
Division 1 Powers in relation to trust property
82 General powers in relation to trust property
(1) A trustee has, in relation to the trust property, all the powers of
an absolute owner of the property.
Notes—
1 See, however, part 5 in relation to the duties of a trustee in
administering a trust.
2 See also the Succession Act 1981, section 49B in relation to
particular limitations on a personal representative’s power to carry
on a business.
(2) Without limiting subsection (1), the powers conferred on a
trustee under subsection (1) include the following powers—
(a) the power to sell the trust property;
(b) the power to lease the trust property or to renew, extend
or vary a lease of the trust property;
(c) the power to mortgage the trust property or to renew,
extend or vary a mortgage of the trust property;
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Part 7 General powers of trustees
(d) for trust property that is securities of a corporation—the
power to deal with the securities;
(e) the power to settle a debt or claim in relation to the trust
property;
(f) the power to insure the trust property against the loss of
or damage to the trust property or any risk or liability
relating to the trust property.
(3) A power conferred under subsection (1), other than a power
mentioned in subsection (2)(a) to (f), may be excluded or
modified by an express statement to that effect in the trust
instrument.
Note—
See, however, section 216 in relation to the exercise of particular
powers under this section by a statutory trustee.
83 Power to postpone sale, calling in and conversion of
particular trust property
(1) A trustee may postpone the sale, calling in or conversion of
trust property that the trustee has a duty to sell.
(2) Subject to an express contrary intention in the trust
instrument, if the trustee’s duty to sell arises because of a trust
or direction for sale, the trustee may postpone the sale of the
trust property for an indefinite and unlimited period, whether
or not that period is longer than the period during which the
trust or direction for sale remains valid.
(3) However, this section does not apply if the trust property is of
a wasting, speculative or reversionary nature.
Notes—
1 See, however, the Succession Act 1981, section 49B in relation to
particular limitations on a personal representative’s power to carry
on a business.
2 See also section 216 in relation to the exercise of power under this
section by a statutory trustee.
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