Being the trustee of a Māori land trust is hard work and trustees have many legally enforceable obligations. It is not a job for Aunty just because she is the whanau kuia or cousin only because he lives nearby. It can be a tough and technical job when done correctly.

The principal duties of a trustee are to maximise the assets of a trust and minimise its liabilities; to hold on to and grow the value of existing assets, such as land or shares, without incurring significant costs to the trust. Two Acts govern Māori trustees: Te Ture Whenua Maori Act 1993 and the Trustees Act 1953. The trust order for a particular trust then tailors these requirements to your trust.

Twelve principles summarise the duties of a trustee

Adherence: The Trustees are bound by the terms of the Trust order and must act in accordance with those terms. So, get to know that order and any trust deed well. You will be held to it.

Acquaintance: The Trustees must be familiar with all aspects of the trust, including:

  • the property administered by the trust
  • the terms of the trust order; and,
  • all issues affecting the trust.

So, learn what the trust has and does.

Diligence and prudence: Trustees must act with diligence and prudence, the test being the diligence, prudence and good judgement expected of business people managing the affairs of others. Unauthorised or unnecessary payments are not acceptable. Trustees can’t be negligent or careless – it can be hard work.

Impartiality: Be fair to everyone. Trustees must treat all beneficiaries equally, and act in the best interests of all beneficiaries. A trustee cannot favour one beneficiary over others. Trustees may have to stand up to pressure groups.

Investments: Any investments must be made concerning the trust and must also be following the Trustee Act 1956. A trustee who is investing trust funds should seek expert financial advice before doing so.

The delegation of responsibilities: Trustees are not allowed to delegate responsibilities unless the trust order expressly permits it, or unless delegation is authorised by law. An exception is that trustees can employ professionals to assist the trust.

Act jointly: You are all responsible for what is done. All trustees are accountable to the beneficiaries, so must work together and share responsibility for successes as well as mistakes or any wrongdoing.

Act without personal profit or gain: It is not for your benefit. Trustees must not personally benefit from their role as trustee. They may be entitled to be paid for trustee meetings or reimbursed for expenses, but only if the trust order permits it and if it is reasonable. If in doubt, the trustee should apply to the Court for direction. Even if a trustee thinks they are doing the right thing or entitled to be paid, mistakes are no excuse.

Pay the right people: Trustees must pay trust “profits” to the right people, being those beneficiaries listed on the trust order. Mistakenly paying the wrong person is no excuse, even if a trustee misinterprets what is meant in the trust order. Professional advice does not excuse paying the wrong person, so trustees must be careful in this duty.

Trust account information: It is essential trustees keep full, proper, up to date and audited accounts. Beneficiaries of the trust may access the accounts on request, as well as any other information about the trust, at any time as may the Court.

Declare conflicts of interest: Trustees should avoid situations where a conflict of interest may arise. If it cannot be avoided, the trustee’s interests must be declared, and those trustees should remove themselves from any further involvement (such as negotiations or decision-making) relating to the relevant issue.

Regular disclosure: The trustees must regularly inform their beneficiaries of the financial details of the trust and performance of the trust. There will be requirements for beneficiaries’ meetings and presentation of reports, including those detailed, up to date accounts.

For more information:

Trustees can be personally liable if they get these requirements wrong. Seek professional advice if you are unsure or are facing problems. Our team are happy to help you understand the complexities and responsibilities of a Māori trust, give us a call today on 04 472 0020 or email Bryan.gilling@morrisonkent.com.