Trusts Act 2019

Trustees’ powers and indemnities - Trustees’ indemnities

81: Trustee’s liability for expenses and liabilities incurred, and trustee’s right to indemnity

You could also call this:

"What happens when a trustee spends money or gets into debt for the trust"

When you act as a trustee, you are personally responsible for any expenses or liabilities you incur. If you act reasonably on behalf of the trust and incur an expense or liability, you are entitled to reimbursement from the trust property if you have paid it yourself. You can also pay the expense or discharge the liability directly from the trust property.

The rules of common law and equity relating to trusts govern how this right to reimbursement works and how it is enforced. This means the common law and equity rules apply to the indemnity in this section. The indemnity is like a protection for you as a trustee.

This section does not limit any other indemnity you may have under common law or equity, you can find more information by looking at the Trusts Act 2019 and other related laws such as the one mentioned in the 1956 No 61 s 38(2). It is also worth noting that the 1956 No 61 s 38(2) has more details on this topic. You can use these laws to understand your rights and responsibilities as a trustee.

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This page was last updated on 18 July 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7382988.

Topics:

Money and consumer rights > Banking and loansBusiness > Industry rules

80: Protection of purchasers and mortgagees dealing with trustees, or

"Safeguarding buyers and lenders when trustees deal with trust property"

82: Indemnification of trustee with agreement of beneficiaries where indemnity impaired, or

"Trustees can be protected from paying for mistakes if beneficiaries agree and conditions are met."

Part 4Trustees’ powers and indemnities
Trustees’ indemnities

81Trustee’s liability for expenses and liabilities incurred, and trustee’s right to indemnity

A trustee is personally liable for an expense or a liability incurred by the trustee when acting as a trustee.
However, a trustee who incurs an expense or a liability when acting reasonably on behalf of the trust is entitled,—
if the trustee has paid the expense or discharged the liability out of the trustee’s own funds, to reimbursement from the trust property; or
in any other case, to pay the expense or discharge the liability directly from the trust property (or to have it paid or discharged by a remaining trustee).

The operation and enforcement of the indemnity in this section is governed by the rules of the common law and equity relating to trusts.
This section does not limit any indemnity available at common law or in equity.

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1956 No 61 s 38(2)