Queensland trustees get enhanced powers and duties under new Trusts Act 2025 (Qld)

Changes intended to modernise and simplify trust law in Queensland are close to becoming law.

The Trusts Act 2025 (Qld) (2025 Act) which received royal assent on 19 May 2025 and will commence on a day to be fixed by proclamation, will replace the Trusts Act 1973 (Qld) (1973 Act).

The changes aim to modernise and simplify the 1973 Act to reflect modern trust practices, including through adopting modernised drafting and repealing and replacing provisions that are obsolete or no longer appropriate or relevant to modern trusts legislation. It also introduces enhanced trustee powers and duties, and streamlines the mechanisms for dispute resolution in relation to the administration of trusts.

Key changes to the 1973 Act

Expanded definitions

The 2025 Act adopts some important amended and expanded key definitions, as follows:

• Beneficiary – broadened to include a person in whose favour a power to distribute may be exercised which would include beneficiaries and potential beneficiaries (section 137, see definitions of "claimant" and "potential claimant").

• Capacity and Impaired Capacity – these terms were not previously defined. Definitions from the Guardianship and Administration Act 2000 (Qld) have been adopted (section 10).

• Court – broadened to include the District Court (in addition to the Supreme Court).

• Guardian – this term was not previously defined. "Guardian", in relation to a child means the parent of the child or another person who has the legal parental responsibility for making decisions about the long-term care, wellbeing and development of the child.

Trustee powers

Trustees now have broader powers to deal with trust property.

For example, the trustee has all of the powers of an absolute owner of trust property subject to fiduciary duties and any contrary express terms in the trust instrument (section 82). Previously, the general powers of the trustee in respect of trust property were restrictive and amounted to less than the powers of an absolute owner of property.

Another example, the 2025 Act confers a new power for the trustee to delegate the trustee's investment power to another person on terms the trustee considers appropriate, although trustees will remain liable for delegate acts and omissions (section 76). Previously, there was no power to delegate the trustee's investment powers to another person.

Part 7, Division 4 of the 2025 Act further clarifies section 56 of the 1973 Act, which allowed a trustee temporarily absent from Queensland or physically incapacitated to delegate any of the trusts, powers, authorities, and discretions to another person residing in Queensland by deed, by:

• limiting delegates to persons eligible to be trustees under section 13 (discussed below);

• replacing the power of attorney requirement with a signed instrument between the trustee and delegate;

• limiting the duration of the delegation to a 12-month period, and setting out clear commencement, expiry and revocation conditions; and

• requiring written notice of the delegation to be given to co-trustees, appointors, or (if none) to beneficiaries where practicable.

Codified trustee duties

Part 5 of the 2025 Act introduces new minimum statutory duties for trustees, including:

• a general duty to exercise care, diligence and skill in administering trusts;

• a duty to act honestly and in good faith;

• for a charitable trust, to act to further the purposes of the trust, and for any other trust, for the benefit of the beneficiaries of the trust; and

• a duty to keep accurate trust records and accounts and make them available to beneficiaries to inspect and copy, upon request.

Professional trustees who manage the affairs of other persons or non-professional trustees who hold themselves out as having special knowledge or experience in administering trusts are held to higher standards of care and diligence. All other trustees must exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of other persons.

These new minimum statutory obligations for trustees largely reflect and clarify the general common law in relation to those duties.

Accurate trust records and accounts need to be kept at least three years after the termination of the trust.

Trustee eligibility, appointment and replacement

While the 1973 Act did not place any restrictions on who may be appointed as a trustee, the 2025 Act prevents a person from being appointed trustee if they are a child, an individual who is insolvent under administration, a "Chapter 5 body corporate" as defined under section 9 of the Corporations Act 2001 (Cth), or a person who has been disqualified by court order from being appointed as a trustee (section 13).

The 2025 Act also introduces simplified processes for appointing trustees, allowing appointment of a trustee not only by the appointor of the trust, but also by any other mechanisms under the trust instrument, to be exercised in a reasonable period, before other mechanisms for appointment of a new trustee under the 2025 Act will apply (section 19).

Additional provisions have been introduced to provide more efficient and cost-effective mechanisms for appointing replacement trustees. Mechanisms for replacing trustees under section 12 of the 1973 Act have been modernised, with section 20 of the 2025 Act elaborating on the circumstances in which a trustee may be replaced to include if:

• the trustee becomes insolvent under administration;

• the trustee is disqualified from managing corporations under the Corporations Act; or

• the trustee is a corporation that has stopped carrying on business, a Chapter 5 body corporate under the Corporations Act, or has been deregistered or otherwise ceased to exist.

Additionally, while the 1973 Act requires a court application to replace a sole trustee with impaired capacity, the 2025 Act (section 22) allows their attorney or administrator (with authority over all financial matters) to appoint a new trustee, including themselves, if no one else is available or willing to act under the trust instrument within a reasonable time. The 2025 Act (section 23) also allows the last continuing trustee who is insolvent under administration to appoint a replacement trustee where there is no appointor under the trust instrument, no appointor is willing or able to act, and any other appointment mechanism has not been exercised within a reasonable time.

Remedies for wrongful distribution of trust property

There is an important new provision in the 2025 Act where trust property is wrongly distributed by the trustee.

The 2025 Act (sections 274 and 275) applies retrospectively to allow a claimant to enforce a remedy for the wrongful distribution of trust property against a recipient of trust property by issuing proceedings against them without first having to exhaust all remedies available to them against the trustee who wrongfully distributed trust property to the recipient, but only if a proceeding was not started before the commencement of the 2025 Act.

This new provision will benefit both the person who suffered the loss and the trustee who wrongfully distributed trust property, enabling the person to pursue a remedy directly against the recipient of the trust property.

Jurisdiction of courts and dispute resolution

Additional statutory powers have been conferred on courts to address gaps in the 1973 Act, including the power for the court to:

• approve the appointment of more than four trustees to a trust (section 15);

• appoint and/or remove a trustee where it is impossible to do so without order of the court and make orders both on application and on its own initiative (section 166); and

• disqualify a trustee from acting in any trust if they have committed serious breaches of trust (section 168).

Additionally, the Attorney-General may now consider and determine certain cy-près applications for charitable trusts where the trust value is within District Court limits and no prior changes have been made by the court, streamlining the process for matters with lower monetary values (Part 12, Division 3). Cy pres applications apply where the purpose of a charitable trust is incapable of being carried out and the trust property is to be applied to another charity which has a charitable purpose as near as possible to the original charitable purpose.

Protections for beneficiaries

The 2025 Act introduces strengthened protections for beneficiaries, including increasing the explicit threshold of capital that a trustee can apply for the maintenance and education of beneficiaries from $2,000 to $100,000 (sections 128 and 130).

There is also a new power for courts to review and reduce excessive amounts of remuneration and commissions charged by a trustee (section 161).