Appointment, Retirement and Removal of Trustees Flashcards
How many trustees does a trust need?
Trusts over land need two human trustees or a sole trust corporation - Cannot have more than four
Trusts of personalty need a sole trustee only - Can have more than four, but would become impractical
When will the statutory rules about appointments etc be overriden?
If there are express provisions in the trust deed
How can a trustee retire (if there are no express provisions in the declaration of trust)?
1) A trustee can retire without being replaced by another appointed trustee, if:
- There will be two trustees or a trust corporation left
- The trustee retires by deed
- The other trustees consent by deed
3) If these conditions aren’t met, the retiring trustee must be replaced by the appointment of a new trustee
- The appointment is made by the continuing trustee (who isn’t retiring)
- The appointment must be in writing - if using a deed, the trust property will automatically vest in the continuing and newly appointed trustee
Are retiring trustees liable for breaches of trust?
They remain liable for their own breaches of trust, but will not be liable for future breaches, unless they retired to facilitate the breaches
How may a trustee be replaced (if there are no express provisions in declaration of trust)?
1) Continuing trustees can remove and replace a trustee in certain circumstances
- The appointment must be put in writing, but best to use a deed
- If all trustees are dead, the PRs of last surviving trustee appoints the new trustee, otherwise the continuing trustees effect the replacement
2) Court will replace a trustee if it is inexpedient, difficult or impractical to appoint without the court’s assistance - usually only in cases of maladministration
3) Beneficiaries can serve a written direction on a trustee to retire and appoint the person specified in the direction, if, between them, they are absolutely entitled to the trust property + of full age and capacity
- If there would only be one trustee left about their direction, they must direct another person to be appointed too
3a) Following a valid written direction, the trustee must retire by deed if:
- Reasonable arrangements have been made to protect their rights
- After their retirement, there will be two trustees or a trust corporation left; and
- Another person is appointed to replace them or the continuing trustees consent by deed to their retirement
What is important to note about the written direction that beneficiaries can give?
It is not a condition of s19 TLATA that each beneficiary needs to have a vested interest, instead the beneficiaries must be together absolutely entitled to the trust property
This is satisfied, so long as one of the beneficiaries has satisfied the contingency, even if the others do not, because they will benefit from the whole of the trust property.
On what grounds can a trustee be replaced?
The trustee is dead
The trustee remains outside UK for more than 12 months
The trustee desires to be discharged (retire)
The trustee refuses to act (disclaims)
The trustee is unfit to act
The trustee is incapable of acting (mental/physical incapacity)
The trustee is a minor
How can an additional trustee be appointed (if there are no express provisions in declaration of trust)?
1) The continuing trustees can appoint a new trustee in writing - Best to use a deed, as trust property will automatically vest in them
- Cannot have more than four trustees
2) The court can appoint another trustee if it is inexpedient, difficult or impractical to appoint a trustee any other way (without court’s assistance)
3) The beneficiaries can serve a written direction on the current trustees, requiring the appointment of an additional trustee, if they are absolutely entitled + of full age and capacity
Explain what attorneys are in the context of a trust
Deputies who manage the trust for trustees
Appointment must be made by deed and cannot last more than 12 months
Trust is vicariously liable for acts of the attorney
Can the settlor appoint a new trustee?
No, unless they expressly reserved the power in the trust instrument
