Appointment and Removal of Trustees Flashcards
Who can be a trustee?
Anyone of sound mind, except a minor (s20 LPA 1925)
What happens if a will names a different person as trustee and executor?
Once the estate is administered, if the testator has named someone different as trustee, the executors must transfer the property to them.
What if the will names the same people as executors and trustees?
After administration (i.e. payment of debts and legacies), the executors will now hold the legal title to the trust property in their capacity as trustees instead of as executors.
What are the 5 ways of appointing replacement trustees?
· Using any express powers to appoint trustees found in the trust instrument.
· Using statutory powers to appoint trustees (s36 TA 1925)
· By the beneficiaries exercising their Saunders v Vautier rights.
· In the case of charitable trusts, by the Charity Commission.
· By the court (s41(1) TA 1925)
Who can exercise the general statutoruy power to appoint trustees in s36 TA 1925?
The person nominated in the trust instrument to appoint trustees
If no person is nominated for that purpose, then the **surviving/continuing trustees
If all the trustees have died, the power is exercisable by the PRs of the last to die (s18(2) TA 1925).**
Describe the powers of beneficiaries under Saunders v Vautier as concerns appointing trustees
- Can collapse trust if all agree, and set up new one with new trustees
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S.19 TOLATA 1996: Beneficiaries with Saunders v Vautier rights can direct the trustees to appoint a new trustee.
NB This power must be exercised in writing and cannot be exercised in cases where the trust instrument contains an express power to appoint trustees.
What principles will the court take into account when exercising its statutory power to appoint trustees to save a trust?
· The wishes of the settlor/testator (if such wishes are expressed or evidenced in the trust instrument)
· The views of beneficiaries: court should not appoint a trustee where there a dispute between the beneficiaries as to whether that person would be appropriate.
· The court should consider whether the appointment will promote or impede the trust administration. This means the court should take into account the views of the existing trustees, but must consider whether those views are reasonable.
What are the 4 ways of removing a trustee?
- Express powers in trust instrument
- The general statutory power to remove trustees in the circumstances where it is considered necessary to replace them.
- The court also has both statutory (ss36, 41) and common law powers to remove trustees.
- The Charity Commission also has the power to remove charity trustees.
In what circumstances can the court appoint and remove a trustee under s41 TA 1925?
Can replace trustee if he is bankrupt, lacks capacity or is a company which is in liquidation or has been dissolved.
The same power is exercisable by the Charity Commission where the trust is charitable.
Describe the court’s inherent jurisdiction to remove a trustee
The court has an inherent jurisdiction to remove trustees in cases where it is concluded that it is not appropriate for the trustee to remain in office (e.g. where they act dishonestly).
How can a trustee retire?
A trustee can voluntarily retire by deed ONLY IF:
(1) after retiring the trust will be left with at least two trustees or one trust corporation to act as trustees; and
(2) the co-trustees and any person with a power to appoint trustees consents (s39(1) TA 1925)
In what circumstances can surviving trustees appoint replacement trustees under s36 TA 1925 without involving the court?
S.36 allows for the appointment of new or replacement trustees without court involvement in some cases, specifically where there are situations such as:
* A trustee dies.
* A trustee wishes to retire and be replaced.
* A trustee is unfit or incapable of performing their duties (e.g., due to illness or mental incapacity).
* A trustee refuses to act or is absent from the UK for more than 12 months.
