Duties and Powers of PR

Question 1

What are 3 Duties of a PR and where do they arise from?

Answer 1

(1) Duty to NOT COMMIT WASTE (common law)
(2) Duty of CARE (statute - TA 2000)
(3) FIDUCIARY Duties

Question 2

One Duty of a PR is ‘Duty to NOT COMMIT WASTE (common law)’.

What is an example of a BREACH of this?

Answer 2

Giving assets WRONG Beneficiary

Question 3

One Duty of a PR is ‘Duty to NOT COMMIT WASTE (common law)’. An example of a BREACH of this is Giving assets WRONG Beneficiary.

(1) What is the name for a breach of this duty?
(2) What liability will the PR have? 2 components
(3) What is the key defence by the PR to this?

Answer 3

(1) ‘DEVISTAVIT’
(2)
(a) PERSONALLY liable
(b) LOSS caused
(3) COURT RELEIF if “acted honestly & reasonably”

Question 4

One Duty of a PR is ‘Duty of CARE (statute - TA 2000).

(1) What is the standard ‘Duty of Care’?
(2) When will this standard be varied?

Answer 4

(1) PR must exercise “REASONABLE CARE AND SKILL”
(2) Raised for PROFESSIONAL (e.g. lawyer)

Question 5

PRs have ‘Fiduciary Duties’.

What are the 2 rules that make this up?

Answer 5

(1) ‘NO CONFLICT’ Rule
(2) ‘NO PROFIT’ Rule

Question 6

PRs have ‘Fiduciary Duties’. One component of this is the ‘NO CONFLICT’ Rule.

What is an example of this?

Answer 6

Purchasing assets from Estate

Question 7

If a PR has breached a ‘Fiduciary Duty’ (i.e. No Conflict / No Profit Rule). What must they do

Answer 7

Account to Estate (i.e. payback) any unauthorised PROFIT
(regardless of if estate suffered LOSS)

Question 8

What 4 DEFENCES exist to a claim for BREACH of the following PR Duties:

(1) Duty to NOT COMMIT WASTE (common law)
(2) Duty of CARE (statute - TA 2000)
(3) FIDUCIARY Duties

Answer 8

(1) COURT RELEIF if “acted honestly & reasonably
(2) CONSENT of all ADULT BENEFICIARIES
(3) AUTHORISED by WILL

Question 9

What are the 2 ways PRs derive their POWERS from?

Answer 9

(1) Statute (e.g. Trustee Act 2000)
(2) Will

Question 10

Can Statutory Powers for PRs be OVERRIDDEN by Express instructions in the Will?

Answer 10

Yes

Question 11

What are 7 examples of PRs Powers from STATUTE?

Answer 11

POWER TO:
(1) INVEST
(2) APPROPRIATE
(3) MAINTENANCE
(4) ADVANCEMENT
(5) INSURE
(6) SALE
(7) CLAIM EXPENSES & RENUMERATION

Question 12

A PR power is the ‘POWER TO INVEST’.

(1) What is the general rule about what types of ‘investment’ are permitted?
(2) What is the exception to the rule in (1)?
(3) What 2 criteria should be considered when investing?

Answer 12

(1) Any type of investment
(2) EXCEPT NON-UK LAND
(3)
(a) Suitability &
(b) Diversification

Question 13

A PR power is the ‘POWER TO APPROPRIATE’.

(1) What does this mean?
(2) What 2 conditions must be satisfied for this power to be used?

Answer 13

(1) A PR can satisfy a GENERAL / PECUNIARY LEGACY by gifting them an ASSET instead (e.g. for a legacy of £100, an £100 vase could be given instead)

(2)
(a) Asset NOT given as a SPECIFIC LEGACY
(b) Beneficiary CONSENTS

Question 14

A trustee power is the ‘POWER TO APPROPRIATE’.

Can this power be used to provide an asset tp the Beneficiary worth:
(a) LESS than the legacy
(b) MORE than the legacy

Answer 14

(a) YES (difference paid to B)
(b) NO

Question 15

A PR power is ‘POWER OF MAINTENANCE’.

(1) What type of beneficiary can this ONLY be used for?
(2) What must the purpose be?
(3) What part of the trust is this paid from?
(4) What 2 choices can the PR pay it to?

Answer 15

(1) MINOR beneficiary
(2) “maintenance, education or benefit”
(3) Income
(4)
(a) Parent / guardian
(b) Third Party (e.g. school)

Question 16

A PR power is ‘POWER OF ADVANCEMENT’.

(1) What type of beneficiary can this be used for?
(2) What must the purpose be?
(3) What part of the trust is this paid from?
(4) Up to how much can be advanced?
(5) If there is anyone with a PRIOR INTEREST in the Capital (e.g. life tenant), what must be obtained?

Answer 16

(1) Adult OR Minor
(2) Improve ‘MATERIAL SITUATION’ of B
(3) Capital
(4) Up to 100% Capital / Beneficial Entitlement
(5) Written consent

Question 17

A PR power is ‘POWER TO INSURE’.

How can the ‘Insurance PREMIUMS’ be paid?

Answer 17

From Estate’s income / capital

Question 18

A PR power is ‘POWER OF SALE’.

What does this mean?

Answer 18

PR can SELL ASSETS to obtain cash and pay off debts / IHT

Question 19

A PR power is ‘POWER TO CLAIM EXPENSES AND RENUMERATION.

What can be claimed by a NON-PROFESSIONAL PR?

Answer 19

EXPENSES in carrying out duty (e.g. travel costs)

Question 20

A PR power is ‘POWER TO CLAIM EXPENSES AND RENUMERATION.

(1) What can be claimed by a PROFESSIONAL PR (e.g. lawyer, accountant)
(2) What 3 conditions must be satisfied for a PROFESSIONAL PR to claim this?

Answer 20

(1) “Reasonable renumeration”
(2)
(a) >1 PR (i.e. NOT sole PR) +
(b) Written Consent of Co-PR(s) +
(c) ‘CHARGING CLAUSE’ in Will

Question 21

PR’s Powers can be EXPRESSLY granted by the Will. What are 3 examples of this?

Answer 21

(1) ‘Carrying on a Business Clause
(2) Indemnity Clause
(3) Charging Clause

Question 22

One PR power that can be EXPRESSLY granted by the Will is a ‘CARRYING ON A BUSINESS CLAUSE’.

(1) What does this allow?
(2) What is the purpose of it?

Answer 22

(1) PRs able to carry on running the business and sell as a ‘GOING CONCERN’
(2) Better value for the estate

Question 23

One PR power that can be EXPRESSLY granted by the Will is a ‘INDEMNITY CLAUSE’.

What does this do?

Answer 23

Protects the PRs from claims by Beneficiaries for LOSSES suffered by the Estate