Trust administration in Australia: what you need to know

In general terms, the trustee's role is to:

• ensure the proper and appropriate investment and management of trust assets;
• ensure all taxation and compliance obligations of the trust are met; and
• distribute trust capital and income to the beneficiaries, in accordance with the trust instrument. 

A  trustee can only delegate their powers if this is expressly allowed by the trust instrument or the relevant state or territory legislation.

The role of the trustee is a fiduciary one, meaning they must act in the interests of the beneficiaries and use their powers honestly and in good faith. As a fiduciary, trustees owe a duty of care to the beneficiaries. 

Some duties of a trustee are:

• acting in good faith;

• acting in the best interests of beneficiaries;

• carrying out their specific duties as outlined in the trust instrument, case law and legislation; and 

• keeping proper records. 

Beneficiaries of a trust have certain rights and entitlements. For discretionary trusts, these generally include the right to:

• insist that the trustee exercise its discretion;
• insist on the proper administration of the trust;
• see the accounts of the trust; and
• call on unpaid distributions. 

You can read our previous article, ‘Guide to a beneficiary’s right to information’ for more information.

A trustee has a legal right to use trust assets to cover personal liabilities and expenses incurred while properly managing a trust, for example debts or taxes of the trust. This right doesn’t extend to dishonesty, wilful misconduct or grossly negligent actions.