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Trustee's responsibilities
Updated April 2011
We are often asked for information about the responsibilities and liabilities of trustees of trusts registered with the Charities Commission.
This information sheet answers some of the most commonly asked questions.
To understand your responsibilities fully, you may wish to talk to someone who is experienced in trust law at your local Community Law Centre, or seek advice from another professional experienced in trust law, such as an accountant or lawyer.
Does the Charities Act limit my liability as a trustee?
No. The Charities Act does not limit or change your liability as a trustee.
As a trustee, what are my legal obligations?
As a trustee you are subject to the legal obligations created by your trust deed and by the law relating to trusts. It's important to note that in certain situations, your legal obligations may continue even after you have resigned and are no longer a trustee.
As a trustee, you must understand and comply with the terms of the trust deed that created your trust. It sets out your powers and obligations as a trustee.
It's a good idea to talk to the other trustees of the trust, to make sure you have fully understood the terms of your deed.
Helpful tip: a copy of your charity's trust deed is available to read or download from the Charities Register.
It goes without saying that, as a trustee, you should always act honestly and in the best interests of the trust.
You should also make sure that you are actively involved with the trust by being part of the decision making process. Trustees who regularly skip meetings and let the other trustees make the decisions for them are not acting responsibly.
It may not always be in the best interests of the trust to accept professional advice - for example, if you don't fully understand the consequences of following the advice, or if you and the other trustees don't agree with it.
As a trustee, you and the other trustees are collectively and ultimately responsible for all trust decisions.
Apart from legal duties, what other duties do trustees have?
Other duties include:
- using care and skill at all times in relation to trustee duties
- making sure the trust keeps suitable accounts
- making sure that payments are made to the correct beneficiary and for the right amount (the trust may hold you personally liable to account to them for any overpayments)
- treating potential beneficiaries without prejudice
- actively advancing the charitable purposes of the trust
- doing what is considered reasonable to ensure that you have suitable skills and knowledge to guide the management of the trust.
Helpful tip: you won't be able to delegate your duties to someone else unless your trust deed specifically allows you to do so.
As well as these general obligations, trustees also have some specific obligations relating to the investment of trust funds.
Who is responsible for the governance of the trust?
Trustees are responsible for the governance of their trust.
Governance responsibilities include developing strategy and policy, budgeting and planning.
The Department of Internal Affairs has published a resource called the Community Resource Kit. It includes a 'How to guide' about Governance which has information about roles and responsibilities and governing body processes.
What should we do about potential conflicts of interest?
Trustees have the responsibility of ensuring that conflicts of interest don't arise.
Your trust should have a conflicts policy in place to ensure that conflicts between the duties of a trustee and their personal interests don't occur.
If a conflict of interest does occur, the trustee involved must not be part of any decision relating to the conflicting issue.
Helpful tip: Your conflicts policy could include a requirement to keep a regularly updated ‘disclosure register', listing any potentially conflicting personal interests of trustees
Summary
- It is important for trustees to be familiar with, and understand the terms of the trust deed that created the trust.
- To understand your responsibilities fully, you may wish to seek advice from someone who is experienced in trust law.
- The Charities Act does not limit or change your liability as a trustee.
- As a trustee you are subject to the legal obligations created by your trust deed and by the law relating to trusts.
- You won't be able to delegate your duties to someone else unless your trust deed specifically allows you to do so.
- Trustees are responsible for the governance of their trust.
- Trustees have the responsibility of ensuring that conflicts of interest don't arise.
