Insights for consumers
If you are involved in a family trust, it is important to understand how trustee company fees are charged and how property expenses are recorded. Keep clear records, review accounts regularly, and raise concerns early if something does not look right. Where there are cashflow issues, trustees may have to make difficult decisions to meet ongoing costs. If you are unsure whether fees or expenses are reasonable, you can seek independent advice or make a complaint.
Dispute over trustee fees and property repairs
*Andrea was a beneficiary and protector of a family trust established in 2015. The trust owned several rental properties. Over time, there were significant repair and ongoing maintenance costs across the trust’s property portfolio which were necessary to uphold healthy home standards and tenancy laws. The professional trustee arranged and paid for this work from the trust funds. However, the trust then experienced ongoing cashflow issues, leading to funds being made available via an overdraft facility provided by the trustee, and by the trustee selling one of the trust properties.
Andrea believed the trustee’s fees were excessive, at $138,000 over seven years. She also believed two repair costs were duplicated. She considered these overpayments should offset the overdraft balance and that she should not be required to repay it. She also considered the trustee should not have sold one of the trust properties.
Trustee’s position
The trustee said it had managed the trust according to its obligations and that its fees were fair and reasonable given the number of properties, the extent of repair work required, and the level of communication involved over several years.
The trustee said the trust had not been overcharged for any repairs. It explained that while the property manager’s summary showed duplicate entries, these had been reconciled in the trust’s accounts and did not result in a double payment.
The trustee maintained that the overdraft represented genuine trust expenses and remained payable, and that it had been necessary to sell one of the properties to ensure there was enough cash flow to meet ongoing repair and maintenance costs.
Unable to resolve the matter with the trustee company, Andrea complained to FSCL in 2022.
FSCL’s view on the repair costs
We reviewed information, invoices, and accounting information from both parties.
The trustee provided evidence, including invoices from contractors, showing that the repair costs had not been charged more than once.
We agreed that the trust had not been overcharged for these repairs.
FSCL’s view on the overdraft, the property sale, and general fees
As the trust had not been overcharged, we said that it was fair for the overdraft to remain payable.
It was also clear that the sale of the property was necessary, because otherwise there would have been insufficient funds to meet ongoing repair and maintenance costs.
We also considered the trustee’s fees. The trustee provided a detailed breakdown of fees charged since the trust was established. Considering the number of properties, the level of repair work required, and the administration involved over several years, we considered the fees charged to be fair and reasonable.
This was a fair outcome because the trustee incurred genuine costs on behalf of the trust and supported those costs with evidence.
Outcome of the complaint
We decided not to uphold Andrea’s complaint.
