MCW Trust Series – Who can be appointed as a trustee?

Private Client

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DATE PUBLISHED: February 10, 2025

mCW Trust Series


The Trusts Bill 2024 (Qld) (Proposed Bill), introduced into the Queensland Parliament on 21 May 2024, aimed to modernise and simplify the existing Trusts Act 1973 (Qld) (Existing Act). The Proposed Bill lapsed upon the dissolution of the Queensland Parliament on 1 October 2024. This means that the Existing Act remains in effect until the Proposed Bill is re-introduced into Parliament, has been passed and receives royal assent. We consider it likely that the Queensland Parliament will re-introduce the Proposed Bill and take steps to achieve its goal of modernising and simplifying the Existing Act.

To address these potential changes and common questions regarding trusts, the McInnes Wilson Lawyers (MCW) Tax and Private Advisory Services team has created the MCW Trust Series, covering:

  1. Who can be appointed as a trustee?
  2. How are trustees removed and appointed?
  3. What are the powers of the trustee?
  4. Can the trustee delegate their powers?
  5. What are the duties of the trustee?
  6. What are the rights and obligations of beneficiaries of a trust?
  7. When does a trust become a foreign trust?

This article explores the first of seven topics: Who can be appointed as a trustee? Future articles will delve into the remaining topics available at the links above.

We note that the MCW Trust Series considers the trusts legislation in Queensland. If you have questions about trust legislation outside Queensland, please contact us for tailored advice.

key takeaways

  • It is necessary to review the trust deed and the applicable Trusts Act provisions to determine who can be appointed as a trustee.
  • Generally, a trust can have no more than four trustees appointed.
  • The new Trusts Bill 2024 (Qld) proposes to prohibit certain individuals and entities (including children, bankrupt persons, and companies under administration, receivership, or winding up) from being appointed as trustees.

What is a trustee?

The trustee of a trust is a person or company appointed to manage the day-to-day operations of a trust. This includes managing assets, engaging professional advisors (e.g. financial advisors, accountants or lawyers), and distributing income or capital from the trust to beneficiaries.

rules governing trusts

Broadly, in Queensland, trusts are governed by: 

  1. the trust deed; and
  2. the Existing Act (or potentially the Proposed Bill).

In order to determine who can be the trustee of a trust, it is necessary to consider both the trust deed and the Existing Act.

trust deed - who can be appointed as the trustee?

The trust deed will record the establishment of the trust and will generally set out the rules, powers of the trustee, and the rights of any beneficiaries of the trust, including:

  • who can be appointed as a trustee;
  • the number of trustees allowed; and
  • the process to appoint and remove trustees.

Generally, the appointor (sometimes referred to as a principal or guardian) named in the deed has the authority to appoint and remove trustees.

It is important to review the terms of the trust deed and ensure that any steps taken are in compliance with these terms when making appointments or changes.

Act and Bill – Who can be appointed as the Trustee?

The Existing Act applies to all trusts governed by Queensland law, outlining a range of powers, obligations, and entitlements of parties involved in a trust.

The Proposed Bill confirms its application to all trusts governed by Queensland law, regardless of whether the trusts were established before or after its commencement. It also overrules any conflicting provision in the trust deed (unless explicitly permitted by the Proposed Bill).

We outline the relevant provisions of the Proposed Bill and Existing Act below.

Who can be a Trustee?

The Existing Act does not prohibit any person from becoming a trustee. However, it does provide for the removal of trustees in certain circumstances, which we discuss in our second article in the series. Click on the link here to read now.

The Proposed Bill introduces restrictions on who can be appointed as a trustee of a trust. Under the Proposed Bill, the following individuals or entities are prohibited from being appointed:

  1. a child;
  2. an individual who is bankrupt;
  3. a corporation that is being wound up, is under administration, has a receiver appointed, or has an executed Deed of Company Arrangement still in force; or
  4. a person disqualified by a court order due to breaches of trust deemed serious enough to render that person unfit to act as trustee.

It is not possible to bypass these restrictions by appointing a company as trustee of a trust with a director who is a child or bankrupt, as a person who is a child or bankrupt cannot act as a company director.

If a prohibited individual or corporation is appointed as trustee, the appointment will be invalid. If enacted, the Proposed Bill will require careful consideration of whether any new trustees meet these requirements.

What are the Maximum Number of Trustees that can be Appointed?

Both the Existing Act and Proposed Bill limit the maximum number of trustees of a trust to four, with exceptions for charitable trusts and exemptions authorised by the court.

The Proposed Bill also provides an exemption for self-managed superannuation funds (SMSFs). We note that the Superannuation Industry (Supervision) Act 1993 (Cth) sets out the rules in relation to who can be appointed as a trustee of an SMSF.

If you would like to appoint more than four trustees of a trust, you may wish to consider appointing a corporate trustee as there is no limit on the number of directors of a company.

What are the Minimum Number of Trustees that can be Appointed?

The minimum number of trustees will depend upon the terms of the trust deed. Generally, the trust must have the following:

  1. at least one trustee if the trustee is a corporation; or
  2. at least two trustees if trustees are individuals.

However, the trust can have a single individual trustee if this was specified in the original appointment or permitted by the trust deed.  

Who can Appoint an Additional Trustee?

The Existing Act and Proposed Bill both confirm that:

  1. where there is an appointor of the trust, that appointor can appoint an additional trustee of the trust; and
  2. where there is no appointor of the trust, the trustee(s) of the trust can appoint an additional trustee.

Neither the appointor nor the trustee is required to exercise this power unless they choose to. These provisions ensure a mechanism exists to appoint additional trustees when necessary or desirable to do so.

removal and appointment of trustees

There are several circumstances where it may be necessary to remove or replace a trustee of a trust.

Our next article in the MCW Trust Series discusses when a trustee can be removed and how a new trustee can be appointed. Click here to read more.

Hint: Be sure to consider both the trust deed and Existing Act to confirm the process for removing and replacing trustees.  

conclusion

Both the trust deed and the relevant trust legislation must be considered when appointing trustees. Currently, the Existing Act allows the person with the authority under the trust deed to appoint a new or additional trustee.

The Proposed Bill retains this power but introduces prohibitions on certain individuals and entities from acting as trustee of a trust. If the Proposed Bill is enacted, it will be essential to ensure that any person or corporation appointed as trustee is not a prohibited person, as such appointments will be invalid.

how can mcw help?

Contact Emily Ryan or Kimberley Barnes from our Tax and Private Advisory Services team if you would like to discuss who can be appointed as a trustee of a trust, or if you would like to discuss trusts generally. 

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