How to change the trustee of a trust
Changing the trustee of a trust is a common but legally significant event. It may be necessary because the current trustee has died or become incapacitated, the current trustee wishes to retire, the beneficiaries have lost confidence in the trustee, or the trust is being restructured. The process for changing a trustee depends on the terms of the trust deed, the type of trustee (individual or corporate), and the assets held by the trust.
The trust deed will typically set out the process for removing an existing trustee and appointing a new one. This usually requires a resolution of the appointor (the person named in the deed with the power to appoint and remove trustees), the retiring trustee’s written consent to retirement, and the new trustee’s written consent to appointment. If the deed does not name an appointor, the state Trustee Act may allow the continuing trustee or the legal personal representative of the last trustee to appoint a replacement; otherwise a court application may be needed.
When the trustee changes, all trust assets must be transferred into the name of the new trustee. For real property, this means a transfer of the property title at the relevant state land titles office. For shares, bank accounts, and other financial assets, the relevant institutions must be notified and the registrations updated. For companies held by the trust, the ASIC register must be updated to reflect the new trustee as the shareholder.
Stamp duty is one of the most important considerations when changing a trustee. In most states, a change of trustee that does not involve a change in the beneficial ownership of the trust property should be exempt from stamp duty. However, the exemption conditions vary by jurisdiction, and failure to satisfy the relevant conditions can trigger full stamp duty on the market value of the trust’s assets.
CoSec Partners can prepare all documentation for a change of trustee including the retirement and appointment deed, consents, asset transfer documentation, and ASIC lodgements for any companies held by the trust.
Frequently asked questions
Who has the power to remove and appoint a trustee?
Usually the appointor, the person named in the deed with that power. Where the deed names no appointor, or the appointor has died without a documented succession, the state Trustee Act may allow the continuing trustee or the legal personal representative of the last trustee to appoint a replacement; otherwise a court application may be needed. Reviewing the appointor clause before a trustee change is the first step, not the last.
Is stamp duty payable when a trustee changes?
In most states a change of trustee that does not change beneficial ownership of the trust property is exempt or concessionally treated. The conditions differ by jurisdiction, and failing them can expose the full market value of the trust assets to duty, so the exemption should be confirmed before the deed is executed.
What happens to companies owned by the trust when the trustee changes?
The ASIC member register for each company has to be updated to show the new trustee as the holder of those shares, notified on a Form 484 within 28 days. This step is frequently missed, and it surfaces years later during due diligence when the ASIC record does not match the trust records.
This article is general information only and does not constitute legal, financial, or tax advice. While we endeavour to keep content accurate and current, laws and regulations change frequently. For advice specific to your circumstances, please consult a qualified professional adviser. CoSec Partners Pty Ltd accepts no liability for actions taken based on this content.