7. Trustees: Appointment, Removal and Retirement

Question 1

Who can be a trustee?

Answer 1

mentally capable adults and authorized companies can be trustees.

Question 2

What is the minimum number of trustees for trusts over land?

Answer 2

At least two human trustees or a sole trust corporation.

Question 3

What is the minimum number of trustees for trusts of personalty?

Answer 3

One trustee

Question 4

What is the maximum number of trusteed for trusts over land?

Answer 4

Four trustees

Question 5

What is the recommended number of trustees for express trusts and why?

Answer 5

• Between two and four
• Because express trusts can be a mix of both land and personalty.

Question 6

What are the three ways the retirement of a trustee can take place?

Answer 6

1. Trust instrument - can contain express retirement power
2. Section 39 of the TA 1925
3. Section 36(1) of the TA 1925

Question 7

What is the effect of Section 39 TA 1925 and what are the conditions?

Answer 7

Effect: allows a trustee to retire without being replaced
Conditions:
* there will be two trustees or a trust corporation left
* the trustee retires by deed
* the other trustees consent by deed

Question 8

What are the conditions of Section 36(1) TA 1925?

Answer 8

1. Retiring trustees need to be replaced.
2. The new trustee can be appointed by:
   * The person nominated in the trust instrument (if specified).
   * Continuing trustee(s), which can include the retiring trustee if they agree.
3. appointment must be in writing (deed)

Question 9

Why is it advantageous to use a deed, regarding s36 TA?

Answer 9

A deed automatically vests the trust property in the continuing and new trustee

Question 10

What are the four ways to remove/replace a trustee?

Answer 10

1. Trust instrument - can contain express retirement power
2. Section 41 of the TA 1925
3. Section 36(1) of the TA 1925
4. Section 19 of the TLATA 1996

Question 11

What are the grounds for replacing a trustee?

Section 36(1) of the TA 1925

Answer 11

(a) the trustee is dead
(b) remains outside the UK for more
than 12 months
(c) desires to be discharged (retire)
(d) refuses to act (disclaims)
(e) is unfit to act
(f) is incapable of acting (eg mental
or physical incapacity)
(g) is a minor.

Question 12

Who effects the removal/replacement of a trustee?

Section 36(1) of the TA 1925

Answer 12

(a) The person nominated in the trust instrument with s 36 power, if specified.
(b) The continuing trustee(s), including a retiring trustee if they agree.
(c) If all trustees died, the PRs of the last surviving trustee.

Question 13

What is the effect of Section 41 TA 1925?

Answer 13

1. The court may replace a trustee if:
   * It is expedient to do so.
   * It is otherwise inexpedient, difficult, or impractical to appoint a new trustee without the court’s assistance.
2. The court will make the appointment after an application by the trustees or beneficiaries.
3. The court will only replace a trustee if it is not in the best interests of the trust for them to continue. Mere dislike of a trustee is generally insufficient as a reason

Question 14

What is the effect of Section 19 TLATA 1996?

Answer 14

Allows beneficiaries to serve a written direction on a trustee or trustees to retire and appoint thhe person (if any) specified in the direction

Question 15

When does section 19 not apply for the removal/replacement of a trustee?

Section 19 TLATA 1996

Answer 15

s 19 does not apply if the trust instrument:
* excludes it, or
* the trust instrument nominates
someone to appoint new trustees

Question 16

When does section 19 apply for the removal/replacement of a trustee?

Section 19 TLATA 1996

Answer 16

only if the beneficiaries are of full age + capacity + absolutely entitled to the trust property

Question 17

Under what circumstances must a trustee retire by deed based on a valid written direction?

Answer 17

(a) reasonable arrangements have been made to protect their rights,

(b) after their retirement, there will be** two trustees or a trust corporation left**, and

(c) another person is appointed to replace them or the continuing trustees consent by deed to their retirement.

Question 18

What are the four ways the appointment of additional trustees can be made?

Answer 18

1. Trust instrument - can contain express retirement power
2. Section 41 of the TA 1925
3. Section 36(6) of the TA 1925
4. Section 19 of the TLATA 1996

Question 19

What is the maximum number of trustees once additonal appointments have been made?

Section 36(6) of the TA 1925

Answer 19

Four

Question 20

What happens to legal title when two or more trustees are appointed?

Answer 20

Legal title is held as joint tenants.

Question 21

In the event of the death of one trustee, what happens to the legal title?

Answer 21

The legal title devolves to the surviving trustees

Question 22

If there is only one surviving trustee left, what action should be taken to ensure the continuity of trust administration?

Answer 22

The remaining trustee should be advised to appoint a replacement trustee under s 36(1) of the TA 1925.

Question 23

When should a trustee consider delegating their functions to an attorney?

Answer 23

if they anticipate being unable to perform their trust duties for a period of time.

Question 24

What is the required method for appointment of an attorney?

Answer 24

delegation should be made by deed

Question 25

How long can the delegation to an attorney last?

Answer 25

The delegation can run for a period of up to 12 months.

Question 26

Who needs to be informed when a delegation is made?

Answer 26

Written notice about the delegation must be given to all other trustees and any person with the power to appoint new trustees within seven days of the delegation.

Question 27

What is the liability of the delegating trustee regarding the acts or defaults of the attorney?

Answer 27

The delegating trustee is automatically liable for the acts or defaults of the attorney as if they were the acts or defaults of the trustee.