Wellington Lawyers: What Happens When a Trustee Needs to Be Removed?

WELLINGTON, New Zealand - Dec. 5, 2024 - PRLog -- The role of a trustee is fundamental to the proper functioning of a trust. When a trustee becomes incapable of fulfilling their duties—whether due to loss of capacity, misconduct, or other reasons—it may become necessary to remove them to safeguard the trust's integrity. Here's what you need to know about removing a trustee, the process involved, and how the Trusts Act 2019 applies.

The Importance of Trustee Capacity

Trustees hold significant responsibility in managing a trust's assets and ensuring compliance with its terms. When a trustee can no longer perform these duties, such as in cases of dementia or other impairments, their continued role may put the trust at risk of dysfunction or legal non-compliance.

Removing a trustee is governed by the trust's Deed and, where applicable, the Trusts Act 2019. However, the authority to remove and appoint trustees—known as the Power of Appointment—is a distinct role that must be understood and managed effectively.

What Is the Power of Appointment?

The Power of Appointment refers to the authority to appoint and remove trustees. This power is often held by the Settlor of the trust or another individual specified in the trust deed.

Key considerations include:

• Trust Deed provisions: The Deed typically outlines who holds the Power of Appointment and how it can be passed on.
• Succession planning: It's essential to document how this power will transfer in case of incapacity or death, often through a will or another legal instrument.
• Fallback provisions: If the Trust Deed does not specify a holder for the Power of Appointment, the remaining trustees may assume this power under the Trusts Act 2019. https://www.corelegal.co.nz