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Trustees know your duties - or prepare to pay up!

By Tara Hurley - 27 Mar 2012

The recent High Court decision of Spencer v Spencer serves as a good reminder to trustees of the importance of knowing and complying with the terms of the trust you are heading.

The terms of the Spencer Family No.2 Trust provided for $200 to be paid per week out of net income to a specific beneficiary.  The trustees failed to make the $200 payments, instead, diverting trust funds to another beneficiary - who was also a trustee and the father of the beneficiary entitled to receive the income.  The other trustees were close friends of the father.

The son claimed a breach of trust by the trustees.  The court found in the son's favour.  The court also found that trustees could not rely on the indemnity clause in the trust deed to exempt them from personal liability for their breach.  The defendant trustees are appealing the decision and the outcome will be of interest to many.  In the meantime, knowing what your duties are and ensuring you carry out those duties is certainly wiser than waiting to see if you can rely on an indemnity clause to limit your personal liability for wrongdoing.

Contact Tara Hurley or Catherine Atchison for more information on trustee duties.

 

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