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Episode 162
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Substantive Law
A Trustee Guide: Queensland’s New Trusts Act 2025
Law as stated: 20 March 2026
What is this?
This episode was published and is accurate as at this date.
David sits down with Lucy McPherson, Partner at Attwood Marshall, to explore recent changes in Australian trust law. They unpack Queensland’s Trusts Act 2025, what it proposes to change, and why these developments matter for lawyers, businesses and families dealing with trusts across state lines.
Substantive Law| What area(s) of law does this episode consider? | Trusts; Appointments of Trustees; Trust Management. |
| Why is this topic relevant? | Trusts are everywhere – from family trusts and super funds to commercial setups. In fact, in 2022, almost one million trusts lodged tax returns in Australia. That’s almost as many as companies! Despite how common they are, the legal rules around trusts can be pretty complex – and they vary depending on which state or territory you’re in. Recently, Queensland has been shaking things up with the Trusts Act 2025 (Qld), which aims to modernise and simplify the old laws that have been around since 1973. This new Act proposes some big changes – and these potential changes matter not just for people in Queensland, but for anyone dealing with trusts across the country – especially because so many businesses and families have trusts that cross state lines. |
| What legislation is considered in this episode? | Trusts Act 2025 (Qld) (Act) Trustee Act 1925 (NSW) (Trustee Act) |
| What are the main points? |
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| What are the practical takeaways? |
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DT = David Turner; LM = Lucy McPherson
| 00:00:00 | DT: | Hello and welcome to Hearsay the Legal Podcast, a CPD podcast that allows Australian lawyers to earn their CPD points on the go and at a time that suits them. I’m your host, David Turner. Hearsay the Legal Podcast is proudly supported by Lext Australia. Lext’s mission is to improve user experiences in the law and legal services, and Hearsay the Legal Podcast is how we’re improving the experience of CPD. TIP: Just a quick disclaimer, listeners; throughout this episode, we keep saying the Trust bill 2024 (Qld). As it was assented to on the 19th of May, 2025, it is the Trust Act 2025 (Qld). Trusts as a structuring vehicle are everywhere in Australian law from family trusts to super funds to big commercial setups. In fact, in 2022, almost a million trusts lodged their tax returns in Australia. That’s almost as many as there are companies in Australia, in fact, and despite how common they are, the legal rules around trusts can be pretty complex and they vary depending on which state or territory that you’re in. Recently, Queensland has been shaking things up with the Trusts Act 2024, which aims to modernise and simplify old laws that have been around since 1973 in that state. Now this new bill proposes some big changes, and these potential changes matter, not just for people in Queensland, but actually for anyone dealing with trusts across the country, especially because so many businesses and families have trusts with operations or finances that cross state lines. Now to help us break it all down, we’re joined today by Lucy McPherson, a partner at Attwood Marshall. Lucy’s admitted to practice in both Queensland and New South Wales, so she knows the ins and outs of trust law on both sides of the border. She’s here to walk us through the Trust Act, explain what’s changing and what these updates will mean for anyone who’s dealing with trusts. Lucy, thank you so much for joining me on Hearsay. |
| 00:01:59 | LM: | Thank you so much for having me, David. |
| 00:02:01 | DT: | Excited to talk about this. It’s one of these areas that you just think will never change, right? |
| 00:02:06 | LM: | Absolutely. I think that has been the approach of many practitioners that know this trust legislation has been around for decades not only in Queensland, but also in other jurisdictions in Australia. And it’s this sense that it’s this dinosaur legislation that will never change and never evolve. But here we are in a situation where a new trust bill has been proposed to try and address evolving needs within our society in this area of law. So yes, it’s really exciting. It’s very exciting and I’m really happy to be talking about it today. |
| 00:02:36 | DT: | Yeah, and I mean think it’s appropriate as well because as we said at the top of the show although the, leaving aside things like ATO policy or enforcement priorities or things like that, the law around trusts has been pretty stagnant, which is surprising given just how common and proliferated they are as a vehicle for both managing family finances or income or capital but also as a vehicle for doing business. |
| 00:02:59 | LM: | Absolutely. And I think that the trust law that’s in existence, not only in Queensland but other states and territories, it’s very established law in the sense that not a lot has changed. I think that the changes in the trust bill that we’ll talk about in a moment are really designed to provide a more defined scope around certain areas of law that have already been quite well established, but rather than being defined in the legislation have been interpreted by the court. So we’ve got this reliance on common law and we see that across all of the states and territories in this particular area. But it’s going to be, in my view, much more defined and specific, to have these matters spelled out in the legislation. I think it’s going to provide a much more streamlined process for trust administrations. |
| 00:03:43 | DT: | Because it really is, I suppose you’d call it almost like a root and branch approach to the regulation of trusts, it’s really not just an amendment, but also a restatement of the trust legislation in Queensland. Before we get into the bill, what it’s trying to achieve, I wanted to start by asking you how you came to specialise in this area in trusts. |
| 00:04:00 | LM: | So I’ve been working exclusively in the area of estate litigation since 2010. And I had the benefit of working underneath two accredited specialists in wills and estates in succession law across borders in New South Wales and Queensland in my earlier years. And that really paved the path for me to also specialise in this area, but also to gain a very specific interest in cross border matters. Fortunately for me, I’m now based on the border of New South Wales and Queensland, so cross border matters is part of my everyday practice. It’s not something novel that comes up every now and then, which I think is the case for a lot of people that are practicing in capital cities. So I have developed this, I guess, expertise in cross water matters. And naturally flowing on from a state litigation is of course this interest and knowledge in trust law. It corresponds, if you like, with the state litigation. So, that’s how I guess I fell into the practice. And I thoroughly enjoy it. It’s a very exciting area of law. It’s a very academic area of law, and an intellectually rewarding area of law as well. |
| 00:05:06 | DT: | Yeah. I’ve always enjoyed working in this area. I mean, I come at it from a different angle, not so much from the estates and estate planning perspective but from the commercial perspective and, the use of trust as a vehicle for maybe holding shares in a new enterprise. For pursuing enterprise for holding assets for that kind of corporate structuring purpose. And it is, remarkably common structure for that purpose. I think just about every entrepreneur setting out on a new venture begins by, if they don’t already have one, establishing a family trust to hold the shares in the new venture. And so, it does touch a lot of different areas of civil law practice. Let’s talk about the trusts bill then. As I said this is really a root and branch approach to amending and restating the trust legislation in Queensland. It’s pretty wide ranging. Maybe before we go into what it’s achieving, maybe we should talk about why the Queensland government is trying to achieve it. What is the big picture? Why now for introducing the trust bill 2024. |
| 00:06:01 | LM: | I think the answer to that question is that we have this piece of legislation dated 1973 and it has become outdated ultimately. And there has been a need recognised to overhaul the legislation in Queensland to attempt to, I guess, modernise and simplify the law that has already been used and established over the years, but to provide more definition in relation to certain aspects to ensure that trust law under the legislation aligns with contemporary societal expectations. So I think that the answer to that question is ultimately, yeah, there’s a, need for modernisation, so not only, a need to modernise the legislation in terms of its functionality, but also modernise the language that’s used in the legislation update the language used in to reflect current usage and, remove obsolete provisions that may exist in the current legislation. And also to streamline trust administration. So the new legislation aims to provide or introduce mechanisms to allow or facilitate smoother trust operations. So I think that, we can go through the changes and specifics of what they’re in a moment, but there is overall a need to have the legislation meet the contemporary needs of society. |
| 00:07:25 | DT: | Yeah. And just on your point of updating the language of the legislation to be more contemporary, one thing that struck me when reading the bill was that it updates the language to use some of the kind of heuristics or terms of art or language that we’re familiar with in other more modern legislation or in other fields of practice to better convey what’s expected of trustees. For example the provisions around the duties of a trustee. And there’s some interesting sort of delineations between professional trustees and trustees who aren’t professional but do hold themselves out as being pretty good at this and then everyone else. But the expression of the duties of trustees reads very much like the duties of offices of companies. |
| 00:08:06 | LM: | Absolutely. And I think that comes back to what I was saying before about providing more definition around these terms and exactly what’s expected of trustees, because historically those provisions have been interpreted by the courts and that’s what advisors are relying on, in providing advice to trustees in these situations. Providing more clear definitions and clear language in the legislation, I think, is going to create a much clearer path forward for everyone. Ultimately, it’s about time, isn’t it? Yeah, we, in law school, as you would know it’s drilled into us to be using plain English language. And part of our role is to break the law down for those who may not understand legalese. And I think this legislation does that, it’s a step in the right direction. Rather than using obsolete, outdated terms where dealing with very clear language. And, that’s gonna benefit everyone I think, in this area. |
| 00:09:01 | DT: | Yeah. Alright, well let’s talk about some of the changes. We’ve touched on the codification of the duties of trustees and the customization of those for the nature of the trustee, whether they’re a professional trustee or otherwise. And there’s also the corollary to that, which is the powers of the trustee. Now I think most lawyers who are dealing with trusts day to day are probably pretty used to looking to the common law and principles of equity for the duties of a trustee. They’re a fiduciary. We know generally speaking what that means and looking to the trust instrument itself for their powers. That the trust deed is really the instrument that you look to, to work out whether, for example, the trustee can invest the money that they’re managing or that they can borrow money, or whether they can grant security over property. But the trust’s bill codifies both of those aspects, both duties and powers. Can you tell us a bit more about that? |
| 00:09:51 | LM: | So under the new trust bill, trustees will be granted more expensive powers allowing them to exercise, I guess, authority that I would describe as akin to that of an absolute owner of trust property. So this includes the ability to make decisions about the management, investment and distribution of assets with greater flexibility and as you say, that increased power comes with tighter obligations or duties on the trustees. So trustees will be required under the legislation to uphold stricter duties than that which exists in the current legislation. So things like exercising, duty of care and diligence and skill when managing the assets of the trust. TIP: In Queensland, the amendments have tightened trustee liability, making trustees more accountable for losses related to income or capital distributed to beneficiaries, unless the loss arises from specific failures concerning conditions or security. This is a shift from the broader protection trustees previously enjoyed. In NSW, trustees have serious responsibilities, and if they breach their duties – like prioritising their own interests over the beneficiaries’ – they can be held personally liable. This could mean paying compensation to restore the trust’s assets or even handing over any profits they unfairly made. However, not every mistake results in personal liability. If a trustee can prove they acted honestly and reasonably while carrying out their duties, the law may excuse them from financial consequences. But this isn’t a blanket rule – it’s decided on a case-by-case basis. Now, in NSW, before 2019, certain beneficiaries could be personally liable for a trustee’s debts. However, this was seen as a barrier to commercial trusts, discouraging investment and complicating capital raising. Following a review by the NSW Law Reform Commission, section 100A of the Trustee Act 1925 (NSW) abolished this rule. Now, beneficiaries are generally not liable to indemnify trustees unless they have explicitly agreed to be, or the trust is an investment trust where liability arises from their financial interest. So although there’s, I guess what you would describe as a greater flexibility in the more expensive powers that are given to or provided to trustees under the bill, there are going to be strict duties and obligations as well. So those clear, ethical and legal standards that trustees must follow to prevent conflicts of interest for instance, or mismanagement, more clearly defined in the legislation also. |
| 00:12:16 | DT: | Yeah, absolutely. And what struck me about that actually was I mean, one of the challenges of drafting legislation like this is backwards compatibility, right? There are well, we know, in fact in Australia there’s about a million of these trust deeds circulating around that we need to interpret in light of the legislation without creating some real inconsistencies or difficulties in interpretation because of the language of those. And when we talk about powers, for example, I think it’s quite cleverly done in that the legislation grants or, by default, says that trustees have certain powers for example, to invest the money that they manage unless the instrument says otherwise. So there’s this permissive but not prescriptive approach to handling a lot of these things where the trust deed might be inconsistent with that. |
| 00:13:02 | LM: | Absolutely. And I think that’s really necessary, particularly when you consider the current state of play with, as you mentioned, the figure that you said at the beginning of this episode about how many trust tax returns have been lodged. I mean, that’s quite astounding, isn’t it, when you think about it, it’s almost as many company tax returns that have been lodged. It’s a huge number, and as you mentioned it’s part of the day-to-day operations now in our modern society and in the way that people operate businesses. So, it’s no surprise I think that the legislation needs to take that into account and the trust deed. We always say in advising clients, what does the trust say? Go back to the instrument. It’s always gonna be necessary to do that. And I think, with the introduction of this bill there will be a need for individuals to review those instruments to make sure that those instruments are keeping up with the new legislation in terms of the provisions of the legislation and also the language that’s been used in those instruments. Because a lot of trust instruments use very outdated language. Unfortunately and some trusts that have been established quite some time ago, those instruments may need to be updated. |
| 00:14:12 | DT: | Yeah. And for practitioners who are looking at some of these outdated trustees or you know, who are even drafting a new trust deed, establishing a new structure tomorrow with the knowledge that the trusts bill will become law. What should they be looking at in terms of drafting things like a governing law and jurisdiction provision to deal with the inconsistency between Queensland and New South Wales, for example? |
| 00:14:36 | LM: | Really good question and follows on from our discussion in relation to forum shopping. So forum shopping occurs when parties are seeking to have their case voted in a jurisdiction that may be more favourable to their interests. And is a particular concern when Trusts operate across jurisdictions. In terms of, you know, drafting tips in those situations, having clear jurisdictional clauses in the instrument specifying which state or jurisdiction will govern the trust, any disputes in relation, which may minimise the of or trustees trying to bring legal issues in other courts or jurisdictions that are going to be more favourable for their particular interests, ensuring the trusts are compliant with multiple jurisdictions if the trust operates across multiple jurisdictions as well. So that may be a drafting consideration. And things like variation of trustee powers liability provisions and the jurisdiction in which the trust is gonna be generally administered. Just generally, I think it’s always advisable to review and update trustees regularly. Especially with the bills changes. Lawyers need to be reviewing and updating deeds regularly to ensure that the instrument stays aligned with evolving laws in the jurisdiction. And it may ultimately prevent issues coming up in the administration of trusts. I think one of the big points that we’ve discussed in this episode is clarity on trustee powers and the bill does broaden these powers. So I think also lawyers need to ensure that trustees clearly outline the trustee’s powers and responsibilities along with any restrictions on those powers to avoid any ambiguity that could lead to legal challenges or disputes. And I think, by taking those proactive steps, you’re going to ensure the trust operates more smoothly and within the confines of the jurisdiction, which would reduce the chance of complications or legal challenges down the path. That’s particularly the case for instruments, updating instruments and making sure that there’s clarification around things like powers and liabilities. Because as you would know from practice, these older instruments tend to be quite outdated using their archaic language and read our practice of that archaic way of doing things. |
| 00:16:50 | DT: | Yeah. What you just said reminds me of something. We spoke with an estate planning solicitor a couple of seasons ago now. Now you’re on the estate litigation side, but he was more of a front end estate planning solicitor. We spoke to him on the show and he said clients are very comfortable going back to their accountants annually to get a check in on their finances. They’re very comfortable doing that with financial planners. But when they plan for what will happen to their property after they die, when they make their will or they otherwise establish the structure for estate planning, they see that as a bit of a once off, “well, I’ve done it now I don’t need to come back to it anymore.” Rather than thinking, “well, that’s something that needs to be periodically reviewed.” And I’d say the same is true for a lot of areas of transactional practice and, this is one big event the passing of this legislation that should prompt that review. But I guess it’s a good tip more generally, outside of the context of this legislation that we think about these instruments, especially trust deeds as static and monolithic. You settle the trust. It exists as it does for the next, one to 40 years, maybe 80 years depending on the rule against perpetuities. And then you just never look at it again. Whereas this legislation is emblematic of the need to, yeah, occasionally think about whether it’s still fit for purpose. |
| 00:18:02 | LM: | Absolutely. And I’d agree with the other speaker that you had. You know, I think that, individuals particularly, your mums and dads have a great deal of trust in their accountant. They see them every year to do their tax return and they check in on their situation. And I think, all due respect to accountants they’re not legally trained and they’re not gonna be up to speed with the requirements that exist. So, having reviewed, having instruments updated, particularly older instruments to reflect any changes and ensure that the trust remains, both valid, effective, and compliant with the evolving legal landscape, it’s going to reduce the risk of any complications or disputes that may arise in the future. |
| 00:18:43 | DT: | Absolutely. Now, the other side of the coin to powers and duties are liability, the liability of the trustee to beneficiaries and, the personal liability of the trustee and certain circumstances. And also the trustees ability to be indemnified out of the trust assets. So, what’s changing around the liability of the trustee under the act? |
| 00:19:01 | LM: | So the trust bill does introduce quite significant sweeping changes in relation to trustee liability. It aims to make trustees more accountable but also in making them more accountable, providing them with clearer protections in certain situations. So under the new provisions, trustees will be personally liable for breach of trust, but only if they act negligently, dishonestly or in bad faith, which aligns with heightened standards with respect to duty of care and diligence and skill. Importantly though, the bill also allows trustees to seek indemnification from the trust fund for certain liabilities provided that they have acted in good faith and within the parameters of their power. So in that regard, I think with respect to trustee liabilities it’s my opinion that it does create a more balanced approach. Whilst it does give trustees a little bit more leeway with respect to managing risk, without fear of personal financial ruin it does provide some protections as well. So, overall it’s a very balanced approach. |
| 00:20:00 | DT: | Yeah. And to me that really codifies a pretty widespread practice in the market, right? That most trust instruments, at least that have been drafted in the last 20 years probably contain a similar sort of prescription around where the trustee will not be able to be indemnified out of the trust assets in terms of willful acts in dishonesty, gross negligence, that sort of thing. One aspect of trustee liability that’s interesting to me is, we said at the top of the episode that trusts are used all the way from, as an estate planning device to, as a financial planning device when starting a new business all the way through to a vehicle for conducting operations that involve ASX listed companies. I think of some of our well-known trustee and custodian services in the market like perpetual that operates as a trustee for thousands of businesses as a custodian. They often have quite prescriptive approaches to their liability under these trusts. And, they are certainly the sorts of trust as we’ll talk about in a moment that are operating nationally and will be subject to Queensland legislation even where they might not think of it as a matter of dealing with Queensland property. Those custodian trustees or those large sort of commercial trustees, how’s the Act gonna affect them and their liability? |
| 00:21:12 | LM: | Well, I think we’ll come to this in a moment. As you mentioned, it’s going to be affecting those that operate a nationwide basis across borders because even though this legislation is being passed in Queensland trustees that operate across borders, will need to be aware of the way in which this legislation’s gonna affect their operation. So, things like trustee indemnification is an issue that we’ve just spoken about and how that will impact, I guess, the trustee’s reluctance to act in certain situations. Because even though there is a clearer scope as to indemnification there is also this personal liability that is going to be more narrowly defined and will have some protection when acting within their duties. But I think that, those more, as you say custodian trustees, it’s more so, considering in detail it’s very complicated when you consider how that’s gonna affect the operation of their powers across borders. Yeah, it’s gonna be very interesting in fact. |
| 00:22:16 | DT: | And I wanna ask you a bit more about the cross border implications, but before I do you practice in both New South Wales and Queensland? Now New South Wales Parliament doesn’t have a similar bill before it at the moment. So there’s going to be a pretty substantial disconnect, I suppose, or a difference in practice between New South Wales and Queensland. Can you tell me about some of the main differences that we’re gonna see in terms of the management and treatment of trusts between Queensland and New South Wales after this bill passes? |
| 00:22:42 | LM: | So, there are a lot of I guess what you’d call main similarities and differences in the current state of play within New South Wales and Queensland. Both jurisdictions have trust laws that regulate the duties and powers of trustees, but there’s also notable differences in the legislative frameworks that currently exist. Both states operate under legislation that defines trustee duties and the administration of trusts with general trustees being required to act in the best interest of beneficiaries and exercise care and maintain trust property, et cetera. However, the new bill in Queensland is going to majorly overhaul and modernise the language and expanding powers of trustees. In Queensland, such as, I think we mentioned before, the ability to lease, sell mortgage trust property with uh, clearer definition with respect to indemnification of trustees. And I think when we contrast that to the situation in New South Wales, New South Wales operates under the Trust Act 1925, much older than the legislation in Queensland that we spoke about, which although similar in I guess many respects does not currently have the same updates particularly in terms of clarifying trustees powers and indemnification protections which we’ve just spoken about in detail, I think that’s gonna be one of the distinct differences once this legislation’s passed, is that clearer definition on those two matters in particular, trustees powers of identification. But another difference, I think in New South Wales is that New South Wales has also already incorporated some modernisations around trustee liability, which Queensland hasn’t done until this new bill. So both states do share common principles and I guess New South Wales has taken a bit of a leap forward and Queensland’s now following and taking quite a giant leap forward. But Queensland’s reforms I think are going to push for more reform to be addressed in other states and jurisdictions. I mean, ultimately it just will need to happen eventually. The other states will need to follow particularly New South Wales because it does push for more flexibility and clarity. Coming back to what we spoke about earlier is aligning with more contemporary practices in this area. TIP: So Lucy was just talking about how the duties of trustees have changed due to the Queensland bill. The legislation that governs trustees in NSW is the Trustee Act 1925. There aren’t many major differences between trustee duties in Queensland and NSW – both states follow similar principles under their respective Trusts Acts. However, one notable difference is how long a trustee can remain out of the state before they are replaced. Both states set a 1 year limit where the trustee is out of the state and has not delegated their responsibilities, however, NSW has a hard limit of 2 years on the trustee being out of state, whether or not their responsibilities are delegated. Also Queensland specifically mentions that a trustee who is an infant can be replaced, a point not noted in NSW. |
| 00:25:41 | DT: | And for those trusts that do operate in both New South Wales and Queensland or indeed nationally we touched on this a little bit in the context of large corporate trustees, like perpetual limited for example. But there’ll be many that run the gamut from a family trust for someone who lives in Tweed Heads, for example, all the way through to, small national businesses or east coast businesses have some trust component to their structuring. How are they gonna be dealing with this you said, similarities and differences, but the differences that are present, and I suppose, particularly what are some of the unexpected applications of the Queensland Act to trustees that may, primarily have property in New South Wales or elsewhere? |
| 00:26:23 | LM: | I think the answer to your question about the unexpected or real significant difference in the operation of cross border trust is going to be how much more autonomy on a trustee and also protection under the whilst states are subject to the traditional framework. So that’s administration, particularly if trustees need to make decisions that affect assets or interest in a different jurisdiction that has different rules. I think that’s really the key point as to what’s going to be really interesting as to how this plays out with cross border states. Just coming back to talking about how these proposed changes in Queensland will affect trusts that operate across both jurisdictions. I think the proposed changes in Queensland will have significant implications for trusts that operate across jurisdictions, particularly if they involve parties or assets in other states like New South Wales or anywhere else really. Within Australia, the broadening powers that we’ve spoken about and the clearer trustee liability indemnification provisions are going to create significant disparity in terms of how trusts are managed and governed across state lines. So I think, trustee powers, trustee autonomy, trustee indemnification, that is going to be the most significant disparity that we’re going to see, I think when it comes to trust that operate across jurisdictions after this bill has passed. |
| 00:27:51 | DT: | I can see that being a really curly issue for a superior court to have to deal with. I mean, is it conceivable that like let’s take an extreme example; A trustee who has defrauded the trust who’s not just mismanaged it, but has done so intentionally well, maybe that’s not such a good example because that’s going to be productive of liability wherever you are. But maybe we think of a less exciting example where we’ve got a set of duties for non-professional trustees under the Queensland Act that is proportionate in the way that the duties of officers are proportionate under the Corporations Act. That it’s the language is what a person of business would do in managing the affairs of others. North of the border, that’s the duty that applies south of the border. It’s the maxims of equity and the common law around fiduciary responsibilities that apply. Could one act mean that the same trustee is liable in respective trust property in Queensland and not liable in respective trust property in New South Wales? |
| 00:28:45 | LM: | I think the answer to that is absolutely, it’s entirely possible. That a situation like that may eventuate, but time will tell, won’t it, in terms of how the courts deal with these sorts of situations. TIP: When it comes to trusts, location really does matter. Each trust falls under the laws of a particular state or territory. The trust deed usually states which jurisdiction governs it, and this decision affects everything from how the trust operates to which courts handle disputes. But things can get complicated when a trust’s assets or trustees are spread across multiple states. If a trust holds assets in different states, courts may look beyond the nominated governing law and apply the rules of the state with the closest connection factors like where the trustee resides, where assets are located and where the trust is managed. All play a role. And if a trustee tries to shift the trust governing law, perhaps to take advantage of tax benefits or avoid expiry rules, there’s a risk of resettling the trust, which can trigger significant tax consequences. For trust that cross state borders, the governing law isn’t always clear cut. If all assets are in one state that state’s laws will apply. If most assets and the trustee are in one state, the trust may still be governed by that jurisdiction, even if it has some assets elsewhere. But if a trust claims to be under a jurisdiction where it has no assets or real connection, courts are likely to reject that claim. Given the complexity of multi-state trusts, it’s important to get professional advice before making any changes. It’s gonna be really interesting when looking at these cross border matters and what happens in those sorts of situations because it’s a very curly question, and I’m just thinking it through. It’s quite complicated in terms of which jurisdiction would apply and which forum would be, hearing these types of matters because you’d have to consider things like where the trust assets are located, where the instrument is, et cetera, et cetera. I think it’s going to be a very complicated question, but also interesting in terms of how it plays out. I think the only other comment that I’d make in terms of that is that there really needs to be the same level of progression in other states and jurisdictions. Everyone in Queensland is so excited about the implementation of this new bill because of the clear definitions that exist within the legislation that have not existed in other states and territories and, in other outdated pieces of legislation. And I’m very hopeful that in the near future other states and territories will follow so that we’ll have more uniformity across jurisdictions to deal with those more complicated questions. Ultimately I think that approach is the approach that will foster the appropriate or the proper administration of justice, if you would put it that way. |
| 00:31:27 | DT: | Yeah, that’s sort of where I was getting to, which is probably not so much the case that there’s going to be an inconsistent treatment of, one act by a trustee in respect of property in different places but more so that there’s going to be a choice of forum issue where. Hard are going to either, be incentivized to bring litigation in Queensland depending on the way those, duties and, powers and rights fall or incentivized not to bring that litigation in Queensland it doesn’t fall the way they do. And there’s going to be competition over, appropriate jurisdictions and governing law clauses and that sort of thing. So, the sooner there’s uniformity between those jurisdictions, the sooner we start to eliminate those issues. |
| 00:32:04 | LM: | Absolutely. And I think, applies in other areas of law where you do have that choice of forum that, as soon as you have an individual that can go forum shopping that’s when you see situations that may not necessarily meet what one would, or what the community might consider to be the proper administration justice, because you’re sort of picking and choosing as to which piece of legislation you wanna apply to any certain fact scenario. That’s where it gets very complicated and very difficult for individuals, for those parties that affect, rather than, for us and for the courts as advisors, but for the individuals and the administration of justice. |
| 00:32:39 | DT: | I suppose talking about choice of forum and, and how some of these, provisions in the new act might be litigated is a good segue to talking about one of the other aspects of the bill that I wanted to ask you about, which is how the bill empowers courts to make orders about the way trusts are managed including to remove or disqualify a trustee from holding office. Tell me a bit more about that. |
| 00:33:00 | LM: | So the new powers granted to courts under the bill include powers to remove or disqualify trustees as you’ve stated. And, I think this could significantly impact how trusts are governed because it will increase the level of judicial oversight and intervention in the management of trusts. Wherever you’ve got judicial oversight, I think it always enhances accountability. Ensuring that those trustees who may be failing in meeting their duties or acting appropriately can be either swiftly removed or managed in the situation with some sort of court intervention or judicial oversight, on the other hand, and safeguarding the interest of beneficiaries. TIP: So Lucy just mentioned the new powers given to the court following the Act. The bill brought in some important changes to the powers of the court when it comes to managing trusts. While the general rule is that a trust can only have up to four trustees, the court can now approve the appointment of more than four if there’s a good reason. This adds flexibility for more complex arrangements. The court will also gain clear powers to appoint or remove trustees, and even disqualify someone from acting as a trustee altogether, helping ensure that only suitable individuals are in charge of managing trust assets for charitable trusts. The rules around changing their purpose will be broader two. The court will take into account not just the original intent of the trust, but also current social and economic conditions. Interestingly, for smaller charitable trusts, so anything under $750,000, the Attorney General can now approve certain changes without involving the court at all, which streamlines the process. So I think that the inclusion of these new provisions will enhance the levels of accountability with respect to trustees and their power. I guess the flip side of that is that there may be a level of uncertainty or an element of uncertainty for trustees because they face greater risk of being disqualified if their actions are inconsistent with the trust objective or these more clearly defined powers that we have that are set out under the act. So when we are gonna ultimately benefit because it’s gonna be a more proactive and responsive judicial oversight with respect to trustees and their duties. And, hopefully that shifts to having a more rigorous standard of conduct when it comes to trustees. But time will tell as we’ve been saying it’s difficult to predict what’s going to happen. But I think that’s the way that the legislation has been drafted to just develop a more rigorous standard of conduct when it comes to trustees. |
| 00:35:30 | DT: | Well, and I suppose one could argue superior courts have always had an inherent jurisdiction to deal with many of these issues. Courts of equity have had a broad discretion to make orders about the management of trusts. But at the top of the episode we were talking about this as kind of a codification, right? an effort to demystify a lot of this arcane and archaic law around trusts. And I think that’s what it’s doing. You could probably make the argument that any of the orders described in the legislation were capable of being made by a court in a circumstance already. But adding that sort of clarity and codification around those powers is part of the goal here. |
| 00:36:08 | LM: | Absolutely. I would agree entirely with everything that you just said. It’s about providing more clearly defined terms or provisions within the legislation that may have already existed, as you say, in terms of principles of equity or the common law. But I think that providing clear provisions is not only going to assist those who are involved in the operation of trust, but also gonna assist the judiciary when it comes to these types of applications that come before the court. And I agree with you, it’s the goal here. The ultimate goal is to provide more clarification and um, more clearly defined terms so that expectations and obligations are more easily and more readily understood. |
| 00:36:49 | DT: | Yeah. And on the one hand it’s great that we’re going to have a more readily understandable framework for managing trusts in the business community and the community at large. This has been a pretty arcane area of the law that would be difficult for most people to get their heads around without the assistance of a specialist practitioner. On the other hand, as you said there’s a lot of sort of wait and see around how or to what extent this is going to change things day to day for people who act as trustees, especially who act as trustees of, what you might call an active trust. You know, It’s one thing to be the trustee of your family discretionary trust and make a decision every year about distribution of property largely to yourself or your close family members. It’s another to be the trustee of a trading trust, for example, or a charitable trust that operates for a purpose rather than for the investment property, on behalf of beneficiaries. So, I think there are a lot of people out in the community both, practitioners and otherwise who probably need to prepare for the bill to come into force. I guess we could break that down into lawyers practicing in this area fairly regularly, such as yourself, who are going to be dealing with this legislation on a weekly, maybe daily basis. People who act as trustees now and who may have different responsibilities, different powers, different consequences for the use and misuse of them, and beneficiaries, people who are entitled to expect something of a trustee who is acting on their behalf. Let’s start with the practitioners first. What should lawyers be doing to prepare for the Trust Act coming in? |
| 00:38:18 | LM: | Well, I think the most obvious answer to that question is really to familiarise themselves with the new legislation and how it’s gonna impact their practice on a day to day level. Coming back to the cross border issue that we’ve discussed, I think that any practitioner that sits outside, so a practitioner in Sydney, for instance, is exempt from having to familiarise themselves with this legislation. There is a need for practitioners who act in this space, whether they’re in Queensland or not, to become familiar with the new legislation. I think you just, you’re not giving your clients the best service if you have that. And when it comes to individuals as you spoke about or businesses preparing for the bill I think we touched on it earlier, but really, reviewing their trust instrument, reviewing their existing trust arrangements to make sure that they’re compliant with the anticipated changes. As part of that individuals and businesses will inevitably need to seek some legal advice around those aspects, particularly trustees, I think in this area to make sure the trustees familiarize themselves with the expanded powers, the updated duties and also the judicial oversight so that they can adjust their day-to-day practices accordingly. I think it’s also important for those who are involved in this area to familiarise themselves with the updated indemnification provisions and trustee liability, but also on the part of, I think you mentioned beneficiaries or stakeholders if you like as well. They, also in anticipation of these changes, need to be ensuring that their governance structures, such as trustee selection, decision making processes are going to be robust to minimise any sort of challenge under the new legislation. So I think everyone that’s involved in this, whether it’s from the position of a practitioner or a trustee or a stakeholder or beneficiary, needs to be preparing for these changes that are coming through. |
| 00:40:12 | DT: | And then for beneficiaries, I suppose, who are entitled to expect something from their trustees, the role of beneficiary is usually a pretty passive one. Do you imagine that there’s anyone in the community who looks at the work that trustees are doing, at the role that they’re playing and is watching this legislation with a keen eye? |
| 00:40:33 | LM: | I think that from my perspective, I’d have to say that I don’t think beneficiaries are passive parties particularly having the experience in a state litigation. Well, that’s true, and what I’m talking about there is, other types of trust perhaps, you testamentary trust in particular. We do see a lot of actions being taken by beneficiaries with respect to the mismanagement of trust, et cetera. So, from a business perspective, I think that what you’ve just said may be true, but we’ve got to remember that this piece of legislation applies to a broad range of scenarios. And I think that it may be true to say that there’s not a beneficiary sitting out there waiting for this piece of legislation and thinking, well, I’m gonna be taking this particular step, or doing X, Y, and Z. But I do think that this piece of legislation is consistent with the principles of equity and common law that have been in existence for, you know, hundreds of years. That it aims to protect the interests of those who ultimately entitled the trust assets, which are the beneficiaries. And in that regard beneficiaries will be able to be ready to safeguard themselves because I think that there are mechanisms within this new legislation that will more easily allow that to occur. |
| 00:41:45 | DT: | It’s interesting to hear you say that, that in the estate planning domain beneficiaries are pretty active parties in terms of looking at what the trustee is doing and being aware of their rights. I mean, one area that we keep our eye on in a commercial setting is many managed investment schemes, operators trusts, there are a lot of investment vehicles structured as unit trusts where the security on offer is an interest in the trust and those operate nationally. We have seen an increase in activist investors and shareholder class actions over the last 10 years. As expectations of trustees get uplifted or codified I do wonder whether there is some prospect of litigation, arising from that where there’s a clearer expectation around what the trustees of some of these, managed investment schemes and unit trusts might be expected of them for investors. |
| 00:42:37 | LM: | You raise a really interesting point, David, and I think you could be right. This more clearly defined legislation may I guess provide more opportunity for those stakeholders to bring legal challenges. It may in fact increase litigation in that particular space. In particular. I think it’s a really interesting point that you raise and as we’ve said a couple of times, we’ll have to wait and see as to what happens. |
| 00:42:59 | DT: | Speaking of which now we said earlier in the episode that there are going to be some choice of forum issues potentially. While ever there’s an inconsistency between states about how trusts are managed and, what’s expected of trustees, do you expect that other states will follow Queensland’s lead soon or there anything on the horizon when it comes to legislation in other states? |
| 00:43:23 | LM: | I think that given the scope of the proposed changes in Queensland, it’s likely that other states will follow suit, especially as the trust bill addresses. As we’ve discussed more modern issues that trust structures face in today’s society. States like New South Wales and Victoria, in particular New South Wales’s got a very old trust act, might, you know, consider similar reforms to update trustee powers and clarify things like liabilities and streamline that trust management. However, the scope and the pace of the reforms it’s difficult to tell and different states may prioritise other aspects of the law or face other, legal or economic considerations that shape their approach to this particular area of reform. Nonetheless, I think that Queensland’s move in this direction could serve as a catalyst for a broader discussion on the needs to update trust governance across all states and jurisdictions in Australia. |
| 00:44:23 | DT: | I suppose, there would’ve been a pretty substantial law reform process around this in Queensland. A lot of consultation with the profession. Draft legislation published for comment. Was there an awareness of this coming at a fairly early stage in Queensland because of that consultation process? |
| 00:44:39 | LM: | Yes. The answer to that is definitely yes within the profession. And certainly definitely amongst practitioners. There was a lot of discussion in the years leading up to when this has been proposed. The profession, particularly those who practice in this area quite frequently, were quite heavily consulted in relation to the legislation. I do know of practitioners who are involved with the Queensland Law Society specialist groups who were consulted and provided a lot of time in the discussions that took place before this bill was proposed. So in answer to your question, I think yes, it was known in the profession, particularly those who were practicing in this space that this was coming. And there was a very heavy level of consultation and discussion involved. |
| 00:45:20 | DT: | I mean, I suppose that suggests to us that, there will at least be a period in which we have a trusts act in Queensland. And no equivalent legislation in neighboring states because so far as I know that consultation process hasn’t really begun in New South Wales. So, maybe what it will take is some observation of the change in practice in Queensland, some observation of the tangible issues that that creates in terms of cross border trusts before we see that change elsewhere. |
| 00:45:49 | LM: | Quite right. It might be that Queensland’s being used as a bit of a guinea pig. |
| 00:45:52 | DT: | Yeah. Maybe. Maybe in that way. Yeah, absolutely. Well, Lucy, we’re nearly out of time. Before I let you go, we always like to finish every episode with a tip for young lawyers, either students or lawyers who’ve just joined the profession about the area we’ve been talking about. Now, I remember at law school trust was not the most popular subject. It was not the one everyone sort of relished doing. I think everyone still has stressful dreams about what a quist close trust is. Exactly. So, sell it to our younger listeners. Lucy, why would you even want to specialise in trusts. |
| 00:46:27 | LM: | I think I might have been the old one out at law school because I remember loving equity and trust. It was an area of law that just naturally made sense to me. I really relished those areas. And, I guess that’s why I’ve fallen into this space and I enjoy it so much. If I were to sell it to young professionals and law students, I would say this in my area of practice, I’m involved in people’s personal lives on a day-to-day basis. And it can be incredibly rewarding to facilitate change in individuals’ personal lives, and to help people with their lives. Not only is it rewarding for those that you are helping, but it’s also a very intellectually rewarding area of law. It’s constantly changing. No two cases are ever the same. So, it certainly never becomes boring. And it’s always evolving. It’s quite fast paced as well. So, it maintains your interest if you like. And it also I think is an area that involves a level of what I’ll say, personable or soft skills as a lawyer when you’re dealing with individuals in their personal lives day in, day out they’re the reasons why I enjoy it. If young professionals or law students feel as though they align with those particular points, then perhaps it is something that they’ll enjoy too. |
| 00:47:44 | DT: | Yeah, I mean, we said earlier, we come at this subject from different directions. What I often say to undergraduate law students is, if you are interested in going to work for those big law firms, if you’re interested in being a commercial lawyer, the subject you need to be really good at and you need to learn in and out. It’s not IP, it’s not the commercial law elective you do in year four. It’s equity and trusts. That’s kind of the core of commercial practice in Australia and, if the subject matter is not, to you inherently interesting, and I agree with you. I think it is, I think it’s one of those areas where you’re really called upon as a lawyer and as a student to think about ethical conduct and responsible conduct and the conduct that’s expected of a fiduciary, for example, an interesting area of law to think about, but even if you’re not interested in that, if you’re interested in having a job in commercial law, you need to be really good at this stuff because as we said at the top of the episode, there’s nearly as many trusts as there are companies because there is such an important central vehicle to the way our economy works. |
| 00:48:43 | LM: | Absolutely. I agree with everything that you just said, David, and the way that you described trust and equity in terms of considering these issues such as ethical considerations and things like that, it’s what struck me, I think when I was studying, is that equity and trust is so much broader than your, black letter law, where matters are much more clearly defined, it’s broader and requires some more thorough thought in terms of implications and ramifications for those who all outside of the vehicle of what’s going on. So, yeah I’d agree with everything that you just said. It’s a really interesting area. I’ve always found it really interesting and I don’t think I’ll ever practice in another space to be quite frank with you. It’s really rewarding. |
| 00:49:26 | DT: | Fantastic. Well, Lucy, thank you so much for joining us today on Hearsay. |
| 00:49:29 | LM: | You’re welcome. Thanks for having me. |
| 00:49:30 | TH: | As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank my guest today, Lucy McPherson, for coming on the show. Now, if you’re someone who practises in estates, check out our episode with Niki Schomberg and Chelsea Baker on the intersection of family law and estate planning in both Queensland and NSW. That one is episode 130 and is called ‘The Great Wealth Transfer: Harmonising Family Law and Estate Planning’. If you’re an Australian legal practitioner, you can claim one continuing professional development point for listening to this episode. Whether an activity entitles you to claim a CPD unit is self assessed, as you know, but we suggest this episode entitles you to claim a substantive law point. For more information on claiming and tracking your points on Hearsay, go to our website. Hearsay the Legal Podcast is brought to you by Lext Australia, a legal technology company that makes the law easier to access and easier to practise, and that includes your CPD. I’d like to ask you a favour, listeners. If you like Hearsay the Legal Podcast, please leave us a Google review. It helps other listeners to find us, and that keeps us in business. Thanks for listening, and I’ll see you on the next episode of Hearsay. |
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