Trustee Powers of Attorney

Can a trustee give an enduring power of attorney to someone, empowering them to sign in relation to trust assets and activities?

While in the process of managing investment portfolios and investment matters generally, when a trust is involved, it is sometimes a frustrating inconvenience to find that a trustee is remotely located or difficult to contact when time is of the essence. Trustees sometimes suggest that it might be better to hold a power of attorney so the remote trustee does not get involved with these decisions day to day – less hassle as it were.

This is a valid simple question that seems ideal, but the simple answer is - no.  Enduring Powers of Attorney, in relation to property, enable a person to authorize somebody else such as a friend, adviser or trustee company to deal with their own personal property.  Property held in a trust no longer legally belongs to them personally but to the trustees who hold those assets subject to the terms of the trust.

The general rule is that trustees are not allowed to delegate their responsibilities.  There are however a few exceptions where a trustee is going overseas or is temporarily incapable of performing their duties due to physical sickness.  In these situations the Trustee Act does provide that the trustee may, by a special power of attorney, appoint somebody else during that period to stand in their place and exercise any trust powers, authorities and discretions.  This special power of attorney should be prepared by folk with full legal knowledge.

Trustees should note that these special powers of attorney cannot be used where a trustee has lost mental capacity (as is normally the case with an enduring power of attorney).  If a trustee is incapacitated in such a way, then the trustee should be removed and replaced either by the person appointed under the trust deed with the power of appointment of trustees or failing that, by the Court.

Original Article published March 2007