Big changes are coming to Queensland’s trust laws — are you ready? Find out what’s changing, what it means for you, and why now might be the time to review your trust deed.
Trusts Act 2025 (Qld)
Michael Klatt, Partner
Mullins Lawyers
The new Queensland Trusts Act 2025 will commence on a date to be fixed by proclamation. The Act will replace the existing Trusts Act 1973. The new Act was passed on 1 May 2025 and received royal assent on 19 May 2025, however, we are waiting for the commencement date to be proclaimed.
The new legislation aims to modernise and simplify trust law in Queensland. Many business structures include trusts, sometimes unit trusts, other times discretionary trusts. Accordingly, the changes to the Trusts Act may affect business owners.
The Trusts Act also applies to executors and administrators of deceased estates.
The most significant change appears to be reversing the position under the previous Act so that the provisions of the new Act will now override conflicting provisions in the trust instrument, that is, the trust deed or the Will. The trust instrument can confer additional powers and expand provisions, but not reduce or exclude their operation.
A trust can have a maximum of four trustees unless the trust is a charitable trust or self-managed superannuation fund. A child, a bankrupt or insolvent individual or a company being wound up or under administration cannot be appointed as trustee. However, those individuals or companies who become bankrupt or insolvent following their appointment are not automatically excluded after this event. Further, the Act provides that bankrupt individuals are not excluded from being executors or administrators automatically. However, the court always has a discretion as to whether to make a Grant of Probate or Letters of Administration in an estate matter to individuals and it would be possible to argue that the bankrupt person is not a fit and proper person to hold these positions.
A problem that sometimes arises with family trust deeds is the lack of appropriate succession clauses in relation to the trusteeship. Most trust deeds appoint a person or persons to be an appointor or principal of the trust. That person or persons have the power to remove and appoint trustees. The new act provides for succession of the trustee position where the trust deed does not otherwise provide such succession. Generally, the new provisions will avoid the need for a court application. The court continues, however, to have the discretion to remove trustees and appoint new trustees of trusts. Interestingly, the court now has the power to also remove appointors nominated under a trust deed, whereas the previous act did not specifically provide the court with this power.
The previous Trusts Act did not prescribe general duties of trustees. The new Trusts Act now provides minimum mandatory duties for all trustees which includes acting with reasonable care, diligence and skill (s 26) and to act honestly and in good faith for all beneficiaries or for the purpose of the trust (s 63). These duties mirror the case law in relation to trustees’ duties but go further to entrench core irreducible duties. The minimum standard of care, diligence and skill is defined as being a prudent person in business, which cannot be excluded by the trust instrument.
Trust instruments usually limit the liability of trustees for a breach of trust to negligence, wilful default or fraud, excepting inadvertent mistakes. However, it is likely that, under the new Act, excepting inadvertent mistakes will probably not be valid. The new Act provides higher duties for professional trustees, defined as a prudent person in the relevant profession or having special skill (ss 60, 61).
The trustee has a duty to keep accurate records and accounts for three years after the termination of the trust. All beneficiaries of the trust, including potential beneficiaries, have a right to inspect records and accounts (s 64). This was previously a little uncertain and, in most cases, required beneficiaries to make an application to the court for disclosure by the trustee.
The new Act provides that a trustee has all the powers of an absolute owner. The trustee has the power to appropriate expenditure between income and capital, recoup capital from income and income from capital (s 86). Trustees have a broad power to postpone the sale of trust assets indefinitely (s 83).
The Succession Act has also been amended to provide a new section 49B, which limits the time an executor or administrator can carry on business after the death of a business owner to two years (subject to an extension by the court). This is a significant change which will require executors and administrators to be mindful of the time they continue the operation of a business. Sometimes, business owners specifically want the executors and administrators to continue on with the control of the business for a period in excess of two years, but clearly, even if the Will contemplates this, an application by the executor or administrator to the court will be required to do this.
Most Wills provide a power to the executor or administrator to apply income and capital in favour of minors, irrespective of whether they have an absolute interest in the estate or not. The new Act will now mandate that the executor or administrator can only distribute up to one half of the capital or $100,000 (adjusted by CPI), whichever is the greater, without approval of the court. This may well require executors or administrators to make an application to the court where they are administering an estate for infant children.
The new Act significantly increases the court’s supervisory role regarding trusts. The court has enhanced disciplinary powers, including the power to disqualify a trustee from managing any other trusts in the future. The court continues to have the power to make directions upon application by a trustee (s 184). The new Act allows the District Court to exercise the same powers as the Supreme Court if the value of the trust property is $750,000 or less. Previously, only the Supreme Court had jurisdiction in relation to trusts.
It is appropriate to have business structures, including companies and trusts, reviewed from time to time to ensure that they meet the needs of the business and generally, trust deeds can be amended and modified where necessary.