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Trusts Act 2019

Trustees’ powers and indemnities - Trustees’ indemnities

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

You could also call this:

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

Illustration for Trusts Act 2019

If you are a trustee and you have made a mistake with the trust property, you might be able to be indemnified, which means you won't have to pay for the mistake yourself. This can happen if all the beneficiaries, who are the people who benefit from the trust, agree to it and certain conditions are met. You will need to meet the conditions set out, such as getting independent legal advice if the mistake was due to your gross negligence.

If the mistake was because you were dishonest or did something wrong on purpose, the beneficiaries cannot indemnify you. The beneficiaries must all agree to the indemnification and if any of them are unable to make decisions for themselves, the court may need to get involved, as described in section 83(2).

You should look at section 44 to see how the court thinks about gross negligence, which is when someone is very careless.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM7382989.

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Part 4Trustees’ powers and indemnities
Trustees’ indemnities

82Indemnification of trustee with agreement of beneficiaries where indemnity impaired

  1. A trustee may be indemnified from the trust property for a breach of trust if all of the beneficiaries who together hold all of the beneficial interest in the trust property agree and if the conditions set out in subsection (2) are satisfied.

  2. The conditions are that—

  3. every beneficiary consents to the indemnification; and
    1. if the breach of trust arises from the trustee’s gross negligence, the beneficiaries receive independent legal advice before consenting to the indemnification; and
      1. if any beneficiary is a beneficiary described in section 83(2), the court has made an order under section 83 approving the indemnification on behalf of that beneficiary.

        1. However, the beneficiaries cannot indemnify the trustee if the breach of trust arises from the trustee’s dishonesty or wilful misconduct.

        2. See section 44, which relates to the court’s consideration of gross negligence.