By Tara Grant - 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.