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Imagine you are the parent of young children who depend on a trust to help cover their living costs, school fees, and day-to-day needs. The trustee manages the money diligently — perhaps too diligently. Every request for support is met with hesitation, delay, or outright refusal. The reason given? Approving distributions would “erode the inheritance.” The children’s future is being protected. Their present is being ignored.
This is not a hypothetical. It is, in essence, what happened in Smith v Kennedy [2025] QSC 27, a decision of Cooper J in the Queensland Supreme Court delivered on 27 February 2025. The outcome: the trustee was removed. The message to trustees across Queensland is unmistakable.
The Facts of Smith v Kennedy
Smith v Kennedy concerned a testamentary trust established for the benefit of minor children. The trustee held assets for the children’s benefit, with the trust due to vest when the children reached adulthood. In the meantime, the sole parent — the children’s primary carer — sought financial support from the trust for the children’s welfare, education, and daily living.
The trustee’s approach was consistent and, from a narrow financial perspective, arguably coherent: preserve the capital, protect the inheritance, minimise distributions. The problem was that this approach treated the trust as a savings vehicle rather than what it actually was — a mechanism to support real children with real needs, right now.
The court found that the trustee was “primarily focussed on preserving and enhancing the value of the Trust assets” and had “approached requests for financial support from the position that approving such requests would erode the value of their inheritance.” The relationship between the trustee and the primary carer had broken down to the point where continued administration by that trustee was untenable. The application was brought under section 80 of the Trusts Act 1973 (Qld) for removal and replacement.
What the Court Found
Cooper J made clear that a trustee’s obligations extend well beyond balance sheet management. At paragraph [111], his Honour held:
“The interests of the beneficiaries cannot be considered solely by reference to the value of the assets that will pass to them when the Trust ultimately vests. Consideration must also be given to the children’s need for financial support in the period before the Trust vests.”
This is a fundamental articulation of what it means to act in a beneficiary’s best interests. The “interest” of a minor beneficiary is not confined to maximising the pot of money they eventually receive. It encompasses their welfare during the trust’s life — their education, health, housing, and day-to-day support. A trustee who loses sight of this misunderstands the very nature of the office.
At paragraph [124], Cooper J identified another significant failure: the trustee had not adequately consulted or deferred to the knowledge of the primary carer. His Honour described the sole parent as “the central, most important source of relevant knowledge about those interests.” The practical implication is significant — a trustee of a trust for minor children who routinely dismisses or sidelines the primary carer’s input is not just administratively deficient; they are making decisions without the most relevant information.
The court removed the trustee and replaced them with an independent solicitor. Both parties’ costs were ordered to be paid from the trust on an indemnity basis — a further signal that the litigation was, in the court’s view, necessitated by the trustee’s conduct.
The Legal Framework: When Can a Trustee Be Removed?
In Queensland, the court’s power to remove a trustee arises primarily under section 80 of the Trusts Act 1973 (Qld), which confers a broad jurisdiction to appoint new trustees whenever it is “expedient” to do so and “inexpedient, difficult or impracticable” to do so without the court’s assistance.
The governing principles were laid down by the High Court in Miller v Cameron (1936) 54 CLR 572, where it was confirmed that the court’s jurisdiction to remove a trustee is not limited to cases of fraud or dishonesty. The guiding principle is the welfare of the beneficiaries and the proper execution of the trust. Where a trustee’s continued appointment is inimical to those objectives, removal is available.
Locally, the Queensland Supreme Court applied this framework in JPD v DMS [2022] QSC 181 (Henry J), which Smith v Kennedy follows. That line of authority establishes that removal does not require proof of bad faith. A trustee may act with entirely honest intentions and still be removed if their conduct — or their ongoing relationship with beneficiaries or carers — undermines the proper administration of the trust.
The grounds most commonly relied upon include:
- Breakdown in the relationship between trustee and beneficiaries (or their representatives)
- Conflict of interest, whether actual or perceived
- Failure to act in the interests of beneficiaries
- Misapplication or excessive restriction of trust funds
- Failure to consult those with relevant knowledge of beneficiaries’ needs
- Prolonged dispute or deadlock making proper administration impossible
Smith v Kennedy makes clear that an excessive focus on capital preservation — at the expense of current beneficiary welfare — can itself constitute a ground for removal.
What This Means for Trustees Right Now
If you are currently acting as a trustee of a trust for minor children (whether as a family member, a professional trustee, or someone appointed by a will), this decision carries direct practical consequences.
Balance current welfare against future inheritance. Your duty is not simply to hand over a large fund when the trust vests. It is to administer the trust in the genuine interests of the beneficiaries — and those interests are happening now. Education costs, medical expenses, extracurricular activities, housing — these are legitimate trust purposes, not threats to the trust’s integrity.
Engage meaningfully with the primary carer. If the beneficiaries are young children, the person raising them has unique and irreplaceable knowledge about their needs. Refusing or dismissing that input is not just a relationship failure — it is an evidentiary failure. Cooper J’s observation at [124] should be read as a direct instruction: listen to the primary carer.
Document your decision-making. When you approve or decline a distribution request, record why. A trustee who can demonstrate that they genuinely turned their mind to the children’s current needs — not just the long-term balance — is in a far stronger position if removal proceedings are ever threatened.
Relationship breakdown alone can warrant removal. The court did not require the trustee in Smith v Kennedy to have been dishonest or grossly negligent. The combination of a flawed administrative approach and an irreparably broken relationship was enough. If you are in a trust dispute, do not assume you are safe simply because you have done nothing “wrong” in a narrow sense.
Costs risk is real. Both parties’ costs were paid from the trust on an indemnity basis. That reduces the fund available to the beneficiaries — the very outcome the trustee claimed to be protecting. Trustees who resist reasonable requests and force litigation do not protect the trust; they diminish it.
The Trusts Act 2025 Connection
Queensland’s new Trusts Act 2025 commenced on 28 April 2026, replacing the Trusts Act 1973. The new Act represents a comprehensive modernisation of trust law in this state, and the principles affirmed in Smith v Kennedy are now directly reflected in its provisions.
Part 5 of the new Act codifies trustee duties in greater detail than its predecessor, expressly requiring trustees to act in the best interests of beneficiaries — a concept that, as Smith v Kennedy confirms, encompasses present welfare and not merely future capital value. The Act’s expanded removal powers under sections 166–168 make it procedurally easier for courts to intervene where a trustee’s continued appointment is no longer serving the trust’s purposes.
In short, Smith v Kennedy was decided under the old Act, but it pointed exactly where the legislature was heading. The new Act formalises and accelerates that direction. Trustees operating under Queensland trusts should treat both the decision and the new statutory framework as the current standard against which their conduct will be measured.
If your trust was established before 28 April 2026, the transitional provisions of the Trusts Act 2025 will determine which regime applies to your specific circumstances. This is an area where early legal advice is strongly recommended.
How Boss Lawyers Can Help
Trust disputes — whether you are a beneficiary seeking proper support, a trustee facing removal proceedings, or a primary carer trying to secure your children’s welfare — are among the most complex and emotionally charged matters in civil litigation. The intersection of family dynamics, fiduciary duty, and trust law creates disputes that require both precise legal analysis and practical judgment.
At Boss Lawyers, we focus on trust administration disputes and have experience acting in applications under Queensland’s trust legislation, including trustee removal proceedings and applications for judicial advice on trustees’ obligations. We understand the legal framework, the evidentiary requirements, and the practical realities of these disputes.
Whether you need to understand your rights as a beneficiary, assess your exposure as a trustee, or take urgent action where a trust is being misadministered, we can help you navigate the process clearly and efficiently.
Call Mark Harley, Principal Solicitor, on 1300 267 711 for a consultation, or visit bosslawyers.com.au to learn more.
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This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances. Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000 | 1300 267 711 | bosslawyers.com.au | ACN 143 136 645
