Trust Disputes Under Queensland’s New Trusts Act 2025: What Trustees, Beneficiaries and Litigants Need to Know

Queensland’s Trusts Act 2025 (Qld) is the most significant change to Queensland trust law in more than 50 years. It commenced on 28 April 2026, repealing and replacing the Trusts Act 1973 (Qld). For trustees, beneficiaries, and anyone involved in or contemplating a trust dispute, the new Act fundamentally reshapes the litigation landscape in Queensland.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.

What Changed Under the Trusts Act 2025 (Qld)?

The Trusts Act 2025 (Qld) gives effect to reforms recommended by the Queensland Law Reform Commission in its 2013 review. Supported by the Trusts Regulation 2026, the Act applies to all trusts in existence on commencement, including trusts created under the old 1973 Act.

The key changes most relevant to trust disputes in Queensland are:

• Codified trustee duties: For the first time, the core duties of a Queensland trustee are set out plainly on the face of the legislation. A trustee must act honestly and in good faith, exercise reasonable care, diligence and skill (measured against a “prudent person of business” standard), act in the best interests of beneficiaries, and keep accurate records retained for at least three years after trust termination.
• Expanded trustee powers, with sharper accountability: Trustees now have, by default, the powers of an absolute owner of trust property (subject to the trust deed and statutory duties). They may also delegate investment and other decisions to qualified third parties. But the higher duty bar means disputes over poor investment performance, failed delegations, and conflicts of interest will become more common.
• Strengthened beneficiary rights: Beneficiaries’ rights to inspect trust records are now expressly protected by statute. Trustees must maintain records and make them available upon request. Critically, the capital threshold for maintenance, education, and advancement of beneficiaries has been raised from $2,000 to $100,000, reducing routine court applications.
• Direct action against third parties (ss 274-275): Beneficiaries can now sue third parties who wrongfully received trust property directly, without first compelling a recalcitrant trustee to act. This removes a significant procedural obstacle that previously made many meritorious claims uneconomic.
• District Court jurisdiction: The District Court of Queensland now has jurisdiction in trust matters where the value of trust property does not exceed $750,000. This opens a faster, less expensive pathway for lower-value trust disputes.
• Limits on exoneration clauses: The Act confirms that trustees cannot contract out of liability for dishonest or grossly negligent conduct, even through broad exclusion clauses. Trustees relying on wide indemnity provisions should expect those clauses to be tested more rigorously in litigation.

How the New Act Changes Trust Dispute Litigation in Queensland

The codification of trustee duties changes the litigation landscape in three important ways.

First, plaintiffs have a clearer statutory hook. Breach of trust claims no longer need to be anchored in patchwork common law and equity. Beneficiaries can now plead breach of the statutory duty of care (the prudent person of business standard) directly, without arguing through multiple equitable principles. Trustees will have less scope to argue that an obligation was uncertain or unsettled at common law.

Second, information disputes are escalating. With beneficiaries now having an express statutory right to inspect trust records, disputes over access to accounts and financial information are becoming more frequent. Trustees who historically refused or delayed disclosure are now exposed to a clear statutory breach claim, not merely an equitable application for account.

Third, the direct action against third parties in ss 274-275 is a game changer. Previously, if a trustee refused to pursue a third party who wrongfully received trust property, beneficiaries had to either compel the trustee to sue (often expensive and uncertain) or bring a derivative claim. Now, beneficiaries can proceed directly against that third party. These provisions apply retrospectively to trusts created before commencement, provided proceedings had not already commenced before 28 April 2026.

Trust Disputes Where the New Act Has Immediate Practical Effect

Breach of Trust Claims

Existing breach of trust claims, particularly those concerning investment decisions, delegation failures, and conflicts of interest, may need to be re-pleaded or recalibrated to reflect the codified duties. The prudent person of business standard will generate early litigation testing its scope, particularly in family discretionary trusts and trading trusts where commercial judgment intersects with fiduciary obligation.

Directors of corporate trustees have an additional exposure: the new trustee duties under the Trusts Act 2025 (Qld) sit alongside their personal duties under ss 180-184 of the Corporations Act 2001 (Cth). A corporate trustee that causes the trust to make a negligent investment may expose both the corporate trustee to a breach of trust claim and individual directors to a breach of the duty of care under s 180.

Trustee Removal Applications

The Act includes streamlined procedures for removing and replacing trustees who are unfit, unsuitable, or no longer eligible. Trustees are now expressly excluded from appointment if they are minors, insolvent individuals, insolvent companies, or persons disqualified by court order. Disputes about the validity of a trustee’s appointment, and what consequences flow from invalid administration, have become more clear-cut under the codified eligibility rules.

If a trustee company becomes insolvent, the corporate trustee is automatically disqualified. The trust assets should not form part of the corporate trustee’s insolvency estate, but this requires careful legal work to establish, particularly where the trust deed, the company’s records, and the PPSR have not been maintained correctly. Boss Lawyers regularly acts in matters at the intersection of corporate insolvency and trust law. See our insolvency lawyers Brisbane page for further information.

Recovery Against Third Parties (ss 274-275)

The new direct action provisions in ss 274-275 are significant for beneficiaries who have suspected for years that trust property was wrongly paid away, but could not bring proceedings because the trustee refused to sue and a derivative claim was too expensive.

The provisions apply where a person has wrongfully received trust property. A beneficiary can now commence proceedings directly against that person, seeking recovery of the trust property or its value. Critical considerations:

• The retrospective application means trusts where trust property was misapplied before 28 April 2026 may now be subject to direct beneficiary action, provided proceedings had not commenced before that date.
• The third party’s defences (including change of position and bona fide purchaser for value) remain available.
• The limitation period under the Limitation of Actions Act 1974 (Qld) still applies: generally six years from the date of the breach or when the beneficiary could with reasonable diligence have discovered it.

Trading Trust Disputes and Director Liability

Trading trusts, where a corporate trustee carries on business on behalf of the trust, are one of the most complex structures in Queensland commercial law. The Trusts Act 2025 (Qld) adds another layer of complexity because:

• The codified trustee duties apply to the corporate trustee, supplementing (not replacing) the Corporations Act duties on individual directors.
• Trustees of trading trusts that become insolvent must navigate both the Trusts Act 2025 (Qld) regime and the Corporations Act 2001 (Cth) insolvency provisions simultaneously.
• If the corporate trustee incurs liabilities in excess of trust assets, the question of whether those liabilities can be met from trust assets, and whether individual directors are personally exposed, has become more acute with the codified prudent person standard.

For director disputes within a trading trust structure, see our director disputes page. For shareholder and beneficiary disputes involving trust-held companies, our shareholder disputes team regularly acts in these matters.

What Trustees Must Do Now: A Practical Checklist

If you are a trustee, or a director of a corporate trustee, the following steps should be undertaken as a matter of priority:

1. Review your trust deed against the new default rules. The Act’s default rules (including the codified duties and beneficiary rights) apply unless the trust deed validly excludes or modifies them. Not all exclusion provisions drafted under the old 1973 Act will be effective under the new regime.
2. Audit your record-keeping. Trustees must keep accurate records and retain them for at least three years after the trust terminates. If your record-keeping has been inconsistent, address this now, before a beneficiary makes a formal request or commences proceedings.
3. Review delegation arrangements. If you have delegated investment or other decisions, check that the delegate is suitably qualified and that you have established (and documented) appropriate monitoring and review mechanisms. Undocumented or unmonitored delegations are a significant litigation risk under the new regime.
4. Assess indemnity and exoneration clauses. Clauses that purport to exclude all liability, including for negligent or grossly negligent conduct, are now expressly limited by statute. Seek legal advice on whether your current indemnity structure is adequate.
5. Consider trust deed amendments. Where bespoke drafting is needed to address specific commercial circumstances not covered by the Act’s defaults, trust deed amendments may be appropriate. This requires careful planning around stamp duty and other transactional costs.
6. If an insolvency event is possible, act immediately. An insolvent corporate trustee is automatically disqualified from acting. The consequences of continued administration after disqualification are severe, including personal liability for the directors of the corporate trustee.

What Beneficiaries Must Do Now

If you are a beneficiary who suspects mismanagement, the following steps are now available to you under the new Act:

1. Request trust records formally. You now have an express statutory right to inspect trust records and accounts. Make the request in writing. If the trustee refuses or delays, that refusal is itself a basis for court relief.
2. Assess whether there has been wrongful receipt by a third party. If you believe trust property has been paid away to a third party without authority, ss 274-275 may give you a direct right of action against that person, without needing the trustee’s cooperation.
3. Consider whether removal of the trustee is warranted. Under the new Act, streamlined trustee removal is available where the trustee is unfit, unsuitable, or no longer eligible. This is a faster pathway than the old regime in many cases.
4. Check the limitation period. Trust claims are generally subject to a six-year limitation period under the Limitation of Actions Act 1974 (Qld). Do not delay, once a limitation period expires, even a strong claim may be unenforceable.

Frequently Asked Questions About Trust Disputes Under the Trusts Act 2025 (Qld)

When did the Trusts Act 2025 (Qld) commence?

The Trusts Act 2025 (Qld) commenced on 28 April 2026, repealing and replacing the Trusts Act 1973 (Qld). It applies to all trusts in existence on that date.

Can a beneficiary sue a third party who received trust property without the trustee’s involvement?

Yes. Sections 274-275 of the Trusts Act 2025 (Qld) now allow beneficiaries to issue proceedings directly against a third party who wrongfully received trust property, without needing the trustee’s cooperation. The provisions apply retrospectively.

What happens if a trustee company becomes insolvent?

An insolvent company is expressly disqualified from acting as trustee. Trust assets should not form part of the corporate trustee’s insolvency estate, but establishing this requires careful legal and accounting work. Directors of the corporate trustee may face personal liability under the Corporations Act 2001 (Cth).

How do the new trustee duties affect trust litigation strategy?

The codified duties give plaintiffs a clearer statutory hook for breach of trust claims. Existing claims may need to be re-pleaded. Trustees have less scope to argue that obligations were uncertain at common law.

What is the limitation period for trust disputes in Queensland?

Generally six years from the date of breach or when the beneficiary could with reasonable diligence have discovered it (Limitation of Actions Act 1974 (Qld)). Seek legal advice promptly.

How Boss Lawyers Can Help

Boss Lawyers is a boutique commercial litigation and insolvency firm in Brisbane CBD. We act for trustees, beneficiaries, and corporate trustee directors in trust disputes throughout Queensland, including:

• Breach of trust claims and trustee removal applications
• Recovery proceedings against third parties under ss 274-275 of the Trusts Act 2025 (Qld)
• Trading trust insolvency and corporate trustee liability
• Beneficiary information disputes and access to trust records
• Trust deed reviews and compliance advice under the new regime

If you are a trustee, beneficiary, or director of a corporate trustee with a trust dispute or compliance question under the Trusts Act 2025 (Qld), contact Mark Harley and the Boss Lawyers team for a confidential discussion: 1300 267 711 | Brisbane CBD QLD 4000.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.