Legal Tip 44: Director Liability with Trustee Companies

Discussion in 'Legal Issues' started by Terry_w, 1st Aug, 2015.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Director Liability withTrustee Companies


    By now you will know the trustee of a trust is personally liable for the debts of the trust. You might be thinking you could cause the trust deed to exclude the power for the trustee to indemnify himself from the assets of the trust.

    Firstly no one would want to take on the role of trustee if they cannot be reimbursed for their legitimate expenses.


    Secondly s197 Of the Corporations Act makes directors of trustee companies personally liable for the debts of the trust if they are not entitled to be fully indemnified out of the assets of the trust.
    http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s197.html

    Trustees, and especially Directors of Trustees, need to check the trust deed to make sure there is a right of indemnity.
     
    Terry_w, 1st Aug, 2015
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