The trustees of a trust have fiduciary duties to manage the trust property and exercise powers relating to that property in good faith for the purposes set out in the trust deed. The trustees may also have the duties imposed upon them as “responsible persons” of the charity by the ACNC legislation.
In summary this means the trustees must:
- exercise care, diligence and skill in managing the affairs of the body corporate
- act with skill, competence, prudence and reasonable care
- abide by all laws, rules, regulations and founding documents
- avoid conflicts of interest
- avoid insolvent trading
- not misuse position or information.
Practically this means:
- Acquaint yourself with the role and responsibilities and the terms of the deed and any governance documents
- Ensure you have sufficient information to properly oversight the systems and processes in place to protect and preserve the trust property and resources
- Exercise your decision- making powers in good faith, upon real and genuine consideration
- Understand the risks (financial and non-financial (culture, reputation, harm to persons) and oversight that these risks are being managed appropriately
- Ongoing education and professional development
- Take care when delegating decision-making.
Trustees can be personally liable for the liabilities of a trust.
Usually, a trustee who exercises his or her powers appropriately in accordance with their fiduciary duties is entitled to be indemnified out of trust property. There are exceptions.
Under other laws trustees may incur personal liability.
