Queensland is set to overhaul its trust laws with the Trusts Act 2025 (Qld), which received royal assent on 19 May 2025, and will take effect on a date to be announced. This new legislation replaces the outdated Trusts Act 1973 (Qld), aiming to simplify and modernize trust practices to better align with contemporary needs. Below, we explore the key changes introduced by the 2025 Act and what they mean for trustees and beneficiaries.
Key Updates in the Trusts Act 2025
Expanded and Clarified Definitions
The 2025 Act introduces and refines several key definitions to provide clarity and relevance:
- Beneficiary: Now includes anyone who may benefit from a trustee’s power to distribute trust property, encompassing both current and potential beneficiaries (section 137).
- Capacity and Impaired Capacity: These terms, previously undefined, now adopt definitions from the Guardianship and Administration Act 2000 (Qld) (section 10).
- Court: Expanded to include the District Court alongside the Supreme Court, broadening access to judicial oversight.
- Guardian: Defined for the first time as a parent or someone with legal responsibility for a child’s long-term care, wellbeing, and development.
Enhanced Trustee Powers
The 2025 Act significantly expands trustee powers to provide greater flexibility:
- Trustees now have the same powers as an absolute owner of trust property, subject to their fiduciary duties and the trust instrument’s terms (section 82). This is a shift from the more restrictive powers under the 1973 Act.
- A new power allows trustees to delegate investment decisions to another person on terms they deem appropriate, though they remain liable for the delegate’s actions (section 76).
- Delegation rules (Part 7, Division 4) modernize section 56 of the 1973 Act by:
- Limiting delegates to those eligible to be trustees (section 13).
- Replacing the power of attorney requirement with a signed agreement.
- Capping delegation at 12 months with clear start, end, and revocation terms.
- Requiring written notice to co-trustees, appointors, or beneficiaries (if applicable).
Codified Trustee Duties
The 2025 Act introduces clear, minimum statutory duties for trustees (Part 5), aligning with common law principles:
- Exercise care, diligence, and skill in trust administration.
- Act honestly and in good faith.
- For charitable trusts, act to further the trust’s purpose; for other trusts, act for the benefit of beneficiaries.
- Maintain accurate trust records and accounts, available for beneficiary inspection and copying upon request, for at least three years post-trust termination.
Professional trustees or those with specialized knowledge are held to a higher standard of care, akin to a prudent businessperson managing others’ affairs.
Trustee Eligibility and Appointment
The 2025 Act tightens eligibility and streamlines appointment processes:
- Eligibility (section 13): Prohibits children, insolvent individuals, certain corporations under the Corporations Act 2001 (Cth), or court-disqualified persons from being trustees.
- Appointment (section 19): Simplifies processes by allowing appointments via the trust instrument or other mechanisms within a reasonable period.
- Replacement (sections 20, 22, 23): Modernizes replacement rules, allowing replacements for insolvent trustees, disqualified corporations, or non-operational entities. Attorneys or administrators can appoint replacements for sole trustees with impaired capacity, and insolvent trustees can appoint replacements under specific conditions.
Remedies for Wrongful Distribution
A significant new provision (sections 274 and 275) allows claimants to pursue remedies directly against recipients of wrongly distributed trust property without first exhausting claims against the trustee. This applies retrospectively but only for proceedings started after the Act’s commencement.
Enhanced Court Powers and Dispute Resolution
The 2025 Act strengthens judicial authority and streamlines dispute resolution:
- Courts can approve trusts with more than four trustees (section 15), appoint or remove trustees when necessary (section 166), and disqualify trustees for serious breaches (section 168).
- The Attorney-General can handle certain cy-près applications for charitable trusts within District Court limits, simplifying processes for smaller trusts (Part 12, Division 3).
Stronger Beneficiary Protections
Beneficiaries gain enhanced protections:
- The threshold for capital applied to beneficiary maintenance and education increases from $2,000 to $100,000 (sections 128 and 130).
