Reviewed by Jacintha Atkinson
The purpose of this book is to educate anyone who is currently a trustee of a trust or those considering becoming a trustee on what the role entails, how liability can arise, and what protections can be put in place to mitigate personal liability. The book is written in such a way that practical examples are used in a Question and Answer format, to make it easy to follow for someone with no or little legal knowledge.
This book would also make a useful resource for any lawyer who sets up and advises clients in regards to trusts, with helpful references to case law and relevant sections of the legislation within the examples given and discussed.
The “Q & A” format is practical and follows a clear step-by-step process, covering all areas of the subject matter in sufficient depth to provide appropriate guidance, but not too much to overwhelm a lay person.
The book was published in April 2015 and provides current case law on the subject matter, which is helpful.
The index is easy to follow and the chapters follow a logical progression, covering being appointed as a trustee, what a trustee’s obligations and duties are and who are they liable to, the extent to which that liability is personal, removing trustees, and liability in regards to court costs and IRD. It finishes with a chapter providing some guidance on how best to minimise trustee liability through appropriate governance of the trust itself.
There are a lot of references to case law and legislation throughout the book, which could be off-putting for some lay trustees, but the intent to be of benefit to anyone who is a trustee (and not just lawyers) is clear in the book’s simplistic and practical layout and approach to some pretty intricate topics.
I felt that there were two key messages that the book delivers:
- while it may be commonly known that owners of trust property have the same rights and obligations as any person who owns property, it is often not made clear or understood by trustees that they need to own and manage that property within the terms of the Trust Deed and for the benefit of the beneficiaries, some whom are not yet realised, which is where the pitfalls can arise; and
- liability can flow from any breach of trust, and the breadth or risk can be often difficult for trustees to fully appreciate because the rules that govern trustees are not limited to the terms of the Trust, and the aspect of personal liability is often under appreciated.
Often trusts are set up and trustees are appointed without much thought as to what that role entails and the responsibilities attached. The current legislation and case law shows a clear trend that arguing ignorance of your responsibilities is not acceptable, and we as legal advisors need to ensure that trustees fully appreciate the responsibilities and liability that the role of a trustee entails – particularly where the trustee is “independent” and will not benefit from the trust. So often the appropriate structure or limitations are not put in place from the start to mitigate the personal liability.
This book is a great “go to” resource to work through the appropriate issues that arise in regards to trustee liability, and by giving practical examples, makes it a useful book to have on hand when advising clients, or if you are a trustee yourself, with little or no knowledge of the extent of your obligations. The author, in my view, has done a good job at trying to make this topic more accessible to all.
CCH New Zealand Ltd, April 2015, 978-1-775470-89-2, 146 pages, paperback and e-book, $92.00 (GST included, p&h excluded).
Jacintha Atkinson is an associate solicitor at Richmond Law. She is experienced in advising on property and commercial law matters and wills, trusts and powers of attorney.