Wellington Lawyers: Can Trustees Delegate Their Powers to Someone Else?

WELLINGTON, New Zealand - Nov. 26, 2024 - PRLog -- As a trustee of a charitable, trading, or family trust, you are entrusted with significant powers and obligations. Trusts often hold substantial assets, requiring time, effort, and careful decision-making from trustees. However, life circumstances may occasionally make it difficult for trustees to fulfill their duties, raising the question: can trustees delegate their responsibilities to someone else?

The role of a trustee is generally personal and cannot simply be transferred or delegated. This principle has been upheld for centuries by courts and reinforced by legislation. However, the Trusts Act 2019 provides a key exception that allows for limited delegation under specific circumstances.

Delegation Under the Trusts Act 2019

Section 70 of the Trusts Act 2019 allows trustees to delegate their powers and functions to a qualified person via a formal power of attorney. This must be done through a deed signed by both the trustee and the delegate, witnessed independently.

However, this delegation is subject to strict conditions:

1. Permissible Circumstances: Delegation is only allowed if the trustee:
   • Is absent from New Zealand.
   • Is temporarily unable to be contacted.
   • Is temporarily physically incapacitated.
   • Temporarily lacks the capacity to perform trustee functions.
2. Temporary Nature: Delegation is strictly temporary and limited to:
   • The duration of the qualifying circumstances; or
   • A maximum of 12 months.
   
   If the circumstances persist beyond 12 months, the delegation can be extended, but this requires formal action.
3. Delegation to a Sole Co-Trustee: Trustees can delegate powers to a sole co-trustee only if that co-trustee is a body corporate or trustee corporation authorised to act as an executor or administrator under the Trusts Act 2019. Delegation to an individual sole co-trustee is not permitted.

Limitations on Delegation

The ability to delegate is designed for exceptional circumstances and is not a tool for general convenience. Trustees remain responsible for ensuring that the delegation is carried out appropriately and within the bounds of the law. https://www.corelegal.co.nz