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Trusts Act 2019

Trustees’ powers and indemnities - Powers of trustee - Exercise of trustee powers and functions by others

67: Trustee’s power to appoint others to exercise or perform certain powers or functions

You could also call this:

"Trustees can choose someone to help with certain trust jobs, but not all decisions."

As a trustee, you have the power to appoint others to help you with certain tasks. You can appoint someone to make decisions about the trust property, or to hold and deal with the property on your behalf. This person is called a nominee or custodian. You can also appoint someone to exercise certain powers or functions, but you must make sure they act according to your instructions and the terms of the appointment. If you appoint someone to help you, they do not take on all of your duties as a trustee, but they must follow your directions and the terms of their appointment.

You cannot appoint someone to make decisions about distributing the trust property, or to decide how the property should be used. You also cannot appoint someone to decide whether payments should be made from the income or capital of the trust, or to appoint or remove other trustees. There are some powers that only you, as the trustee, can exercise, and you cannot give these powers to someone else.

When you appoint someone to help you, you need to make sure they are eligible to hold or deal with the trust property. An eligible person is someone who carries on a business as a nominee or custodian, or a company controlled by you, or an incorporated law firm. A company is controlled by you if you have a controlling interest in it, or if you have the power to make decisions about its financial and operating policies.

If someone you appoint fails to follow your instructions or the terms of their appointment, they may be liable to you. This means they may have to compensate you for any losses or damages that result from their failure to comply.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7382963.

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66: Trustee not liable for certain losses in relation to amounts paid or applied for beneficiary’s welfare, or

"Trustees are not responsible for losses when using money to help someone, in certain situations."

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68: Trustee’s duties to keep appointments under review and to fulfil general duty of care, or

"Trustees must check and control decisions made by others to ensure they are fair and responsible."

Part 4Trustees’ powers and indemnities
Powers of trustee: Exercise of trustee powers and functions by others

67Trustee’s power to appoint others to exercise or perform certain powers or functions

  1. A trustee may—

  2. appoint a person to exercise or perform, on behalf of the trustee, specified powers or functions in relation to the trust:
    1. appoint a person to make specified decisions in relation to all or part of the trust property:
      1. appoint an eligible person to hold or deal with all or part of the trust property as nominee or custodian and vest all or part of the trust property in that person.

        1. However, a trustee may not under this section or under any comparable power in the terms of the trust appoint a person to exercise or perform, on behalf of the trustee, any of the following powers or functions:

        2. a function that is, or is related to, the determination of whether, when, or in what way any trust property should be distributed, used, possessed, or otherwise beneficially enjoyed, including a power of appointment:
          1. a power to decide whether any fees or other payment due to be made out of the trust funds should be made out of income or capital (where the decision affects a beneficiary’s entitlement to trust property):
            1. a power to decide whether payments received by, or payable to, the trustee should be appropriated to income or capital (where the decision affects a beneficiary’s entitlement to trust property):
              1. a power to appoint a person to be, or to remove, a trustee of the trust:
                1. a power to set or change the distribution date of trust property:
                  1. a power to resettle the trust, or to amend, revoke, or replace all or any terms of the trust:
                    1. a right to apply to the court:
                      1. the trustee’s powers conferred by subsection (1) (which are powers exercisable only by the trustee personally) and any other power conferred by an enactment or the terms of the trust and exercisable only by the trustee personally.

                        1. A person appointed under subsection (1) or under any comparable power in the terms of the trust—

                        2. does not take on the duties of the trustee under this Act, but must act in accordance with the terms of the appointment and with any directions of the trustee; and
                          1. is liable to the trustee for any failure to comply with those terms or directions.

                            1. For the purposes of subsection (1)(c), eligible person means—

                            2. a person who carries on a business that consists of or includes acting as a nominee or custodian; or
                              1. a body corporate that is controlled by the trustee; or
                                1. an incorporated law firm.

                                  1. For the purposes of subsection (4)(b), a body corporate is controlled by the trustee if—

                                  2. the trustee has a controlling interest in the body corporate; or
                                    1. the trustee has the capacity (for example, because of practical influence) to determine the outcome of decisions about the body corporate’s financial and operating policies.