TRUSTEES HAVE a duty of care to the beneficiaries of trusts and must act in good faith, according to the Law Reform Commission.
This is one of the recommendations in its report on the Law of Trusts, to be launched by Mrs Justice Mary Finlay Geoghegan tonight.The report completes a major part of the commission's review of the law of trusts.
A trust is usually created when a person transfers assets to another person or persons, the trustees, to be held for the beneficiaries of the trust.
A Law Reform Commission report on charitable trusts was published in 2006, and a number of its recommendations have been incorporated into the Charities Bill 2007, currently being debated in the Oireachtas.
This can happen when assets (like houses or shares) are to be held by trustees for the children of the person transferring them, or a trust created for a charitable purpose. The existing law is covered by the 1893 Trustee Act, and the report also contains a draft Trustee Bill 2008 to bring the law up to date.
Among its recommendations are that the new legislative code should include a clear statement that the office of trustee is a fiduciary one (like a company director), and must be carried out honestly and in good faith.
It also recommends that there should be a general statutory duty of care, with particular reference to those trustees with special expertise who are paid for their services.
It also recommends that trustees be given clearly stated powers to borrow, and buy and sell property.
The current arrangements, where trustees can invest in "authorised securities" specified by the Minister for Finance, should be retained and updated.
Trustees should also be permitted to delegate certain administrative functions, to ensure that the work of the trust is carried out efficiently.