8. Trustees' duties, powers and liability Flashcards
What general duty is on trustees?
To act
- honestly and
- in good faith,
-for benefit of beneficiaries
What is the difference between trustee duties and trustee powers?
Powers: authorised but not compulsory
Duties: mandatory
How can trustees be appointed?
-No minor can be one
- No fixed number necessary (except for trusts of land where max is 4)
- Usually appointed by settlor and for testamentary trusts, may be named in will e.g. the executors may be named trustees as well
What methods are there for appointing replacement trustees?
- Any express powers in trust instrument
- Beneficiaries exercising S v V rights
- Statutory powers
- The court
- Charity Commission for Charitable trusts
In what circumstance does the general statutory power to appoint replacement trustees apply and who is it exercised by:
- death of trustee,
- trustee abroad for over 1 year,
- minor/lacks capacity,
- wants to retire/refuses/unfit
Exercised by - persons nominated in instrument or - surviving/continuing trustees
- If all trustees are dead, by PRs of last to die
How do beneficiaries exercising S v V rights appoint a replacement trustee?
- In writing
- Cannot be used where instrument contains express power to appoint trustees
When shouldn’t the court appoint a trustee?
Where there’s dispute between beneficiaries as to whether they’d be appropriate
How can trustees be removed?
- Check trust instrument
- statutory powers
- Court can where trustee is bankrupt, lacks capacity or is a company in liquidation
- Charity Comission
In what 2 ways can trustees retire?
- Voluntary retirement
- Direction of beneficiaries: in writing & all agree
How can trustees voluntary retire?
- By deed
- Where at least 2 other people or 1 trust corporation are there to act as trustees
- Co-trustees & anyone else with power to appoint trustees consent
- Should also obtain formal discharge of liability from beneficiaries
If a trustee is given a power of appointment, what kind of power is it, and the consequence? And if not a trustee?
Trustee = fiduciary power (don’t need to exercise but must consider doing so periodically)
Not Trustee = personal power (don’t need to consider exercising it)
What words suggest a discretionary trust vs power of appointment?
Discretionary: ‘must’
Power: ‘may’
What words suggest a discretionary trust vs power of appointment?
Discretionary: ‘must’
Power: ‘may’
What are discretionary trusts?
Trustees must exercise discretion and do so within a reasonable time
If trustees of a discretionary trust don’t exercise it, what can beneficiaries do (and not do)?
Can sue to enforce trust and ensure discretion is exercised
Cannot compel them to exercise it in their favour
What trustee obligations are there for a discretionary trust?
- Consider range of possible beneficiaries
- Don’t require trustees to identify all people, just an appropriate survey of the class
- Is/Is Not Test: trustee must be able to say with certainty whether any given individual is a member of the class or not
- Requires conceptual certainty
- For evidential certainty, it’s for C to prove that they’re within the class