Duties of Trustees

Question 1

Why do trustees have duties?

Answer 1

Trustees have extensive powers and these duties act as restrictions to these powers.
- interdependent with their powers

Question 2

3 basic duties of trustees.

Answer 2

• administer trust property
• adhere to terms of trust deed
• adhere to general trust law

Question 3

What standard of care to trustees have? (Sco v Eng position)

Answer 3

Raes v Meek
- ordinary man objective test

Know v Mackinnon

• English law has higher standard for professional trustees
• degree of care of own private affairs e.g. banks/solicitors

Question 4

Specific duties of trustees?

Answer 4

• conserve and protect trust patrimony
• secure trust property - possession
• keep trust patrimony distinct
• payment at correct time
• hold trust property in name as trustees
• distribute estate correctly - beneficiaries

Question 5

Leitch v Leitch.

Answer 5

• exceptional case

- by implication the duty to keep trust accounts had been excluded

Question 6

What information are/aren’t beneficiaries entitled to see?

Answer 6

• trust deed
• trust accounts
• vouchers
• minutes of trustees’ meetings
• truster wishes (unless ordered by court)

Question 7

What expenditure can trustees claim?

Answer 7

If trustee can prove expenditure was made in connection with trust administration.

Question 8

Investment duties of trustees? (2 cases)

Answer 8

Investments must be:

• authorised and proper
• suitable in comparison to trust purpose
• monitored
• proper advice considered

Clarke v Clarke Trs
- trustees liable for failure to monitor investment

Melville v Noble

• improper investment
• no ordinary prudent man would leave investment for 19 years

Question 9

Actor in rem suam.

Answer 9

Trustee has a fiduciary duty.

• not to advance own interests
• not to make secret profits
• not to enter into conflicts of interest

Question 10

Dale v IRC.

Answer 10

Actor in rem suam if permitted by trust deed. Trust deed authorisation.

Question 11

Examples of conflicting behaviours of trustee.

Answer 11

• purchasing assets part of trust patrimony
• selling own property to trust
• borrows/lends property to trust patrimony

Question 12

Consequence of acting in rem suam.

Answer 12

• transaction voidable at instance of beneficiaries
• transaction is reducible
• recuperate assets that have left patrimony
• property from trust can be recovered from trustee